Court quashes tax order under Section 230, finds no valid basis. Appellate tribunal nullifies tax liability.

The court quashed the impugned order issued under Section 230 of the Income Tax Act as the liabilities on which it was based were resolved. The appellate tribunal's order nullified the tax liability of the company and substantially reduced the individual tax liability of the petitioner. Consequently, the court found no valid basis for the restrictive order under Section 230 and set it aside, allowing the writ petition in favor of the petitioner.

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Issues:
Proceedings under Section 179 of the Income Tax Act, 1961 for income tax dues of a Company and personal tax liability imposed on the petitioner. Impugned order issued under Section 230 of the Income Tax Act, 1961 restricting petitioner's movement. Change in circumstances during the pendency of the writ petition affecting the basis of the impugned order.

Analysis:
The petitioner was facing proceedings under Section 179 of the Income Tax Act, 1961 for the income tax dues of a company along with a personal tax liability. An order was issued under Section 230 of the Act, restricting the petitioner from leaving India without a tax clearance certificate. However, during the pendency of the writ petition, significant events occurred that altered the basis of the impugned order. The learned Senior Counsel argued that due to certain appellate tribunal orders, the tax liability against the company was eradicated, and the individual tax liability of the petitioner was reduced substantially. Consequently, the liabilities forming the basis of the impugned order under Section 230 of the Act were no longer valid.

The learned Senior Counsel contended that since the liabilities mentioned in the impugned order had been resolved, the petitioner should not be subjected to any restrictive order under Section 230 of the Act. The Standing Counsel for the Income Tax Department acknowledged that the company's liability was no longer applicable, and the individual liability had been cleared by the petitioner. The court considered these arguments and noted that the tax liability of the company had been nullified by the appellate tribunal's order. As a result, there was no basis for imposing a restrictive order under Section 230 of the Act on the company or its directors. Additionally, the individual liability of the petitioner, which was the basis of the impugned order, had been settled. Therefore, the impugned order under Section 230 of the Act was deemed invalid and was set aside by the court.

In conclusion, the court quashed the impugned order dated 19.07.2018 issued under Section 230 of the Income Tax Act, as the liabilities on which it was based no longer existed. The writ petition was allowed in favor of the petitioner, confirming that the impugned order was no longer valid given the changed circumstances and resolution of the tax liabilities involved.

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