TaxTMI 
TaxTMI 
2020 (2) TMI 267
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.... (d) to provide for the cost of this petition." 3. The subject matter of challenge in this writ-application at the instance of the writ-applicant is an order passed by the respondent under Section 179 of the Income Tax Act, 1961 (for short the "Act,1961"). The impugned order reads thus:- "ORDER U/S.179 OF the Income Tax Act, 1961 In the case of M/s. Tirupati Proteins Pvt.Ltd (PANAABCT8423E) demand of Rs. 9074.34 lakhs is outstanding as on date and the breakup of the demand as mentioned is given as under:- No. A.Y. Demand (Lakhs) Nature of Demand (Tax/Interest /Penalty) 1 2011-12 7983.85 Tax + Interest 2 2012-13 782.36 Tax 3 2013-14 292.99 Tax 4 2014-15 15.14 Tax Total 9074.34 2. The said demand has not been paid till date. Despite being given a number of opportunities, the company did not make the payment of outstanding demand of Rs. 9074.34 lacs. 3. At the relevant point of time the directors of the assessee company were Smt. Sonal Nimish Patel and Smt. Ashita Nilesh Patel. Further, it is noticed from the records of the company that there are no recoverable....
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.... and it is not necessary that action against the company should be exhausted. 7. Thus, from all the angles, the assessee company falls within the ambit of Section 179 of the I.T.Act. Smt.Sonal Nimish Patel and Smt. Ashita Nilesh Patel, were the directors of the company for the period under consideration during which demand was raised an the default of non-payment of tax occurred. In response to the proceedings initiated u/s. 179(1) of the IT Ac, the directors failed to furnish any reply to the notice u/s. 179(1) of the I.T.Act. It is therefore, presumed that the directors have no objection for passing order u/s. 179 of the I.T.Act. In light of the discussion made in the foregoing paragraphs, since the demand is not recoverable from the assessee company, responsibility is fixed upon the then directors u/s. 179(1) of the IT Act and they will be treated as assessee in default in respect of tax, interest and penalty recoverable from the assessee company. 8. Considering the above facts, Smt.Sonal Nimish Patel and Smt. Ashita Nilesh Patel are held jointly and severally liable to make payment of outstanding demand of Rs. 9074.34 lakhs as well as any future demand which m....
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....onrecovery of tax due against the company could not be attributed to any gross negligence, misfeasance or breach of duty on their part in relation to the affairs of the company. 6. According to Mr.Soparkar, just because the Department failed in recovering the dues towards the tax from the company, it could not have proceeded to seek such recovery from the properties of the writ-applicant. It is also the case of the writ-applicant that she had resigned as a Director of the Company long time back, and therefore, could not have been fastened with any liability. 7. Mr.Soparkar has invited the attention of this Court to the show-cause notice dated 02.09.2017. According to Mr.Soparkar, the show-cause notice is bereft of the material particulars as regards the steps said to have been taken by the Department for the purpose of recovering the tax from the company. It is submitted that it is obligatory on the part of the Department to demonstrate, by some material on record, that it had taken the necessary steps to recover the dues from the company, but such steps failed. 8. Mr.Soparkar would further submit that even the order passed by the Assistant Commissioner of Income Tax dated....
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....ment against the company is concerned. 14. Today, when the matter is taken up for further hearing, an additional affidavit-in-reply, duly affirmed by the Deputy Commissioner of Income Tax, Circle 4(1)(2), Ahmedabad, is being tendered to indicate the steps taken against the company for the recovery of the dues. A copy of the same has been furnished today to Mr.Soparkar, the learned counsel appearing for the writ-applicant. The additional affidavit-in-reply is ordered to be taken on record. 15. Over and above the same, there is an affidavit-in-reply on record dated 26.06.2019. 16. Mr.Bhatt would submit that there is quite a sizable amount in the bank account of the writ-applicant maintained with the HDFC Bank Limited. As the Department has not been able to recover anything from the Company, the only hope for the Department is now to recover some of the dues by attaching the bank accounts of the Directors. 17. In such circumstances, referred to above, the learned counsel Mr.Bhatt prays that there being no merit in the writ-application, the same be rejected. 18. Having heard the learned counsel appearing for the parties and having gone through the materials on record, th....
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....private company can be initiated against the directors, to make them jointly and severally liable for such dues, it is necessary for the Revenue to establish that such recovery cannot be made against the company and then alone it can reach to the directors who were responsible for the conduct of the business during the previous year in relation to which liability exists. 21. There is no escape from the fact that the perusal of the Notice under Section 179 of the Act, 1961, reveals that the same is totally silent as regards the satisfaction of the condition precedent for taking action under Section 179 of the Act, 1961, viz. that the tax dues cannot be recovered from the Company. In the show-cause notice, there is no whisper of any steps having been taken against the Company for recovery of the outstanding amount. Even in the impugned order, no such details or information has been staled. 22. In such circumstances, referred to above, the question is, whether such an order could be said to be sustainable in law. The answer has to be in the negative. At the same time, in the peculiar facts and circumstances of the case and more particularly, when it has been indicated before us ....