2023 (2) TMI 1073

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....17 passed by respondent no.1 under section 179 of the Income Tax Act, 1961 (For short "the Act") fastening the liability upon the petitioners to pay the outstanding dues of M/s. G P Shah Investment (here-in-after referred to as "the said company") as the petitioners are the Directors of the said company for the Assessment Year 2013-2014. 3.Brief facts of the case are that the petitioners were appointed as the Directors of M/s. G P Shah Investment Private Limited. 3.1) Respondent no.1 carried out assessment under section 143(3) of the Act against the said company for the Assessment Year 2013-2014 and passed the assessment order dated 21.03.2016 resulting into additional demand of Rs. 5,51,56,520/-. Consequently demand notice dated 21.0....

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....the present case. It was submitted that in the facts of the case there is nothing on record to suggest that the respondent authorities have been satisfied before invoking powers under section 179 of the Act vis-a-vis the recovery of the outstanding dues of the private limited company and there is no finding that such non recovery of taxes is attributable to the gross negligence, misfeasance or breach of duty of the petitioners. It was submitted that except issuance of recovery notice, respondent no.1 has neither issued any notice of demand nor taken any assertive steps for the purpose of recovering the outstanding tax dues from the private limited company. In support of his submissions, reliance was placed on the following decisions: ....

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....2.08.2016. It was submitted that as per the provisions of section 179 of the Act, the petitioners are liable to pay the outstanding tax in capacity of the Directors of the assessee company who have neglected to make the payment of outstanding demand. 6.2) In support of his contention that despite all possible efforts, entire outstanding tax dues could not be recovered from the company leaving department with no option but to recover the same from the Directors, reliance was placed on the judgment of Delhi High Court in case of Rajeev Behl v. Principal Commissioner of Income-tax reported in (2021) 132 taxmann.com 283 (Delhi). 6.3) It was further submitted that reliance placed by the petitioners on the various decisions of this Court ar....

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....g demand. The petitioners have prima facie shown that non recovery cannot be attributed to any gross negligence, misfeasance or breach of duty as Directors of the assessee company. In the impugned order, the Assessing Officer has failed to consider the fact that the petitioners have tendered their explanation and the petitioners have not remained negligent nor there is any misfeasance or beach of trust on part of the petitioners and only because the petitioners have been unable to deposit 20% of the demand raised in the assessment order, the petitioners cannot be said to be negligent and respondent no.1 cannot therefore, invoke jurisdiction under section 179 of the Act. 9.This Court in case of Sadhna Ramchandra Jeswani v. Income Tax Offi....