TaxTMI 
TaxTMI 
2022 (7) TMI 1309
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 13th February 2018 passed under section 179 of the Income Tax Act, 1961 ('The Act') holding the petitioner liable to pay a demand of Rs.3,98,19,430/- alongwith interest under section 220(2) of the Act which was otherwise due and payable by the company, CPML. The demand outstanding against CPML was for the assessment year 2010-11. 2. Briefly stated the material facts in the light of which the present controversy has arisen are as under :- (a) A Show Cause Notice dated 24th January 2018 was served upon the petitioner by the Assistant Commissioner of Income Tax, Circle 9(2)(2), Mumbai informing the petitioner that tax dues for an amount of Rs.3,88,19,430/- were outstanding against M/s. Crest Paper Mills Ltd. for the assessment year 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r section 179 was initiated because the assessee was unwilling and non-co-operative to pay its tax dues. 6. On the issue whether section 179 could be resorted to against the directors of the assessee company being a public company, it was held that no evidence had been furnished by the petitioner to prove that it was a public company. 7. It was further held that the assessee company having been delisted from the stock exchange as a penal measure for failure to comply with the requirements of the Listing Agreement did not not warrant that the benefits attached to a public company should be accorded to the assessee company. 8. It was further held that assuming the assessee was a public company, yet by lifting the corporate veil, even the d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Act before the Deputy Commissioner of Income-tax which too was dismissed vide order dated 12th February 2019 in a summary fashion and hence the present petition. Scope and ambit of section 179 : 11. Before we proceed to deal with the issues raised during the course of hearing and the arguments in support thereof, it would be beneficial to briefly refer to the provisions of section 179 of the Act which envisages that if the tax dues from a private company, in respect of any income of any previous year cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that non-recovery cannot be a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nor the impugned order refers to certain crucial facts including as to the extent of share holding of the directors, the extent of control exercised by them regarding the affairs of the company and the extent of their representation on the board of directors. It would also be necessary to consider the Articles of Association of the company and any other agreements that may exist between the share-holders inter se. There are several other factors also which must be taken into consideration including as to whether the company was converted into a public limited company for the purpose of avoiding statutory liability benefiting the petitioners alone and/or conferring any other benefits upon the petitioners or any one or more of them alone. Lif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 179 of the Act can be exercised against the Directors upon satisfaction of certain conditions only if the tax dues cannot be recovered from the private company. To justify that the tax dues cannot be recovered, the Assessing Officer has to enumerate the steps taken towards recovery of tax dues from the company. For example, attachment of the accounts of the company as also, its movable and immovable assets, efforts made by the Assessing Officer in identification of the various movable and immovable assets of the company, and so on and so forth. The Show cause notice under section 179 of the Act, dated 24th January 2018, on the other hand, reads as under :- "1 In the case of M/s. Crest Paper Mills Limited (PAN : AAACCC4343D), the....