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Court overturns orders under Income Tax Act, grants relief to directors. Bank accounts remain attached pending fresh notice. The court sets aside the challenged orders under Section 179(1) of the Income Tax Act and Section 264 of the Act, citing a previous case as precedent. The ...
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Court overturns orders under Income Tax Act, grants relief to directors. Bank accounts remain attached pending fresh notice.
The court sets aside the challenged orders under Section 179(1) of the Income Tax Act and Section 264 of the Act, citing a previous case as precedent. The court allows the writ petition, discontinuing the recovery of dues from the directors before the defaulting company. The attachment of bank accounts by the company remains valid, and the Assessing Officer is granted liberty to issue a fresh order with proper notice to the petitioner. The matter concludes in favor of the petitioner with no costs awarded.
Issues: Challenge to orders under Section 179(1) of the Income Tax Act, 1961 and Section 264 of the Act.
Analysis: The petition challenges orders dated 2nd March, 2016 and 13th June, 2017, concerning the recovery of dues from a defaulting company's directors. The petitioner contends that the orders proceed on a misconception that the revenue can recover tax dues from directors without recovering from the defaulting company first, which is a condition precedent under Section 179(1) of the Act. The petitioner, a director of the defaulting company, argues that the revenue cannot recover dues from directors before the company. Reference is made to a previous case where a similar petition was allowed, establishing a precedent in favor of the petitioner.
The court, considering the precedent set in a previous case, sets aside the impugned orders dated 2nd March, 2016 and 13th June, 2017. However, it clarifies that the attachment of the bank accounts by the delinquent private limited company, dated 3rd August, 2015, will continue. The court grants liberty to the Assessing Officer to pass a fresh order after providing an appropriate notice to the petitioner. The writ petition is allowed with no order as to costs, concluding the matter in favor of the petitioner.
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