TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Directors' liability under Section 179 requires a finding of non-recoverability from the company before proceeding against directors, order set aside</h1> Liability of directors under Section 179 is contingent on a prior finding that tax dues cannot be recovered from the company; absent any finding of ... Liability of directors of private company u/s 179 - Contingent liability upon non-recovery from the company - amount due from the Company held on account of assessee/non-executive Director of subsidiary company - HELD THAT:- There is no finding recorded regarding inability to recover from the Company which is an Assessee in default. Unless there is a finding recorded that dues cannot be recovered from the company, the question of proceeding against the Directors of the Company as contemplated under Section 179 of the Act does not arise. Accordingly, on such sole ground, the order at Annexure-A is set aside. Needless to state that during the course of recovery of tax dues from the Company, if the pre-condition of tax dues not being able to be recovered is satisfied and circumstances so arise for invocation of Section 179, it is open to invoke such power strictly as per law. Issues: Whether proceedings under Section 179 of the Income-tax Act, 1961 can be initiated against a director of a private company without an affirmative finding that the tax dues cannot be recovered from the company.Analysis: Section 179 imposes personal liability on directors of a private company only upon satisfaction of the statutory contingency that tax due from the company 'cannot be recovered'. The impugned order initiating proceedings under Section 179 against the petitioner records no finding that recovery from the company was not possible. The Court relied on the requirement that the pre-condition of non-recoverability must be established before making a director liable and noted authority to similar effect. The matter was therefore examined only on whether the requisite finding of inability to recover was recorded prior to invoking Section 179.Conclusion: The impugned order is set aside for want of any finding that the tax dues could not be recovered from the company. The petitioner (director) succeeds on this issue and the petition is disposed of accordingly.
TaxTMI 
TaxTMI 
