TaxTMI 
TaxTMI 
2026 (7) TMI 624
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....w-Cause Notice dated 14.12.2018 and impugned order dated 31.12.2018 passed under Section 179 of the Income Tax Act, 1961 (for short 'the Act') and the impugned Notice of demand under Section 156 of the Act. 2. The Coordinate Bench while issuing the Notice and granting the ad-interim relief vide order dated 31.01.2019 had specifically recorded contentions made by the learned Counsel appearing on behalf of the petitioners to the extent that the petitioners were granted short time in filing the reply i.e. less than two days to the Show-Cause Notice dated 14.12.2018, as they had received the said Notice belatedly. The other ground canvased and recorded in the order is related to the company in question, is that it is a public limited company....
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....ppears that thereafter, by the impugned order passed under Section 179 of the Act the respondents have recorded that the assessee- Company is a closely held Private Limited Company and hence, the Directors are responsible for payment of the outstanding demand and recovery proceedings for the assessment years mentioned therein, as the assessee-Company did not pay the outstanding dues despite several letters which have been issued to the company as well as the Directors. 3. Learned advocate Mr. Arjun Sheth while placing reliance on the judgment of the Coordinate Bench in the case of Padmashi Devji Vithlani. vs. Commissioner of Income Tax (2014) 44 taxmann.com 231 (Guj.) has submitted that the impugned notice as well as the orders are requi....
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....orated as a Public Limited Company, however, the maximum shares of 96.67% are held by the Directors. Thus, it is urged that the writ petition may not be entertained. 5. Heard learned advocates appearing for the respective parties, at length. 6. Having perused the materials on record, we are of the considered opinion the impugned notices and orders are required to be quashed and set aside on two counts. Firstly, the petitioners have not been offered a reasonable time to respond to the Show-Cause Notice as they were barely having only two days to respond to the Show-Cause Notice dated 14.12.2018, which directs the petitioner to file the reply by 24.12.2018 by 10:30 pm, however, they had received the Notice on 22.12.2018 and subsequently....
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....t of private and public limited company contained in the Companies Act, 1956 recovery under Section 179(1) can be made from the director of a public company in question. We need not answer in this petition. This is so because even assuming for a moment that it was so, the revenue had to lay a foundation of facts to come to the conclusion, as canvassed before us by the counsel that despite its lag of a public limited company, for the purpose of the companies Act, in reality the said company was a closely held company with all its characters of a private limited company. Even for lifting of the corporate veil as within the narrow confines permitted in the case of Pravinbhai M. Kheni (supra), the foundational facts must be found in the notice ....
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....n satisfaction from the assets of its members. However, with ever developing world and expanding economic complexities, the Courts have refused to limit the scope and parameters or areas where corporate veil may have to be lifted. 16. Howsoever cautiously, the concept of piercing of corporate veil is applied by the Courts in various situations. Two situations where such principle is consistently applied are, one where the statute itself so permits or provides for and second where due to glaring facts established on record it is found that a complex web has been created only with a view to defraud the revenue interest of the Stat. If it is found that incorporation of an entity is only to create a smoke screen to defraud the revenue ....
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....standing dues. The company was formed for taking over business of the partnership. The members of the partnership firm and other family members of the same family became the directors of the company. Shares of the company were held by them and not by any members of the public. The directors had amassed huge wealth in the form of immovable property. The Assistant Commissioner therefore, was of the opinion that the company was only a conduit for creation of unaccounted money and appropriating in directors. 19. If the facts are duly established, we have no hesitation in holding that principle of lifting the corporate veil should be applied. By application of section 179 of the Act, the recovery of the tax dues of the company can be so....