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2014 (2) TMI 1292 - GUJARAT HIGH COURTIssuance of order under section 179 - recovery of arrears of tax from the petitioner being the director of the company - petitioner resigned from the company on 31.5.2000 due to change in the management - Held that:- The petitioner herein was the director of the company which was originally incorporated as Ravit Vinimay with the Registrar of Companies, Gujarat on 19.8.1992. It obtained certificate of commencement of business on 17.9.1992. The company changed its name from Ravit Vinimay to Lanzorate Finance (India) Limited and was registered with Registrar of Companies vide certificate dated 14.12.1995. The petitioner also brought on record a certificate issued by the ROC, being the certificate of incorporation as also the certificate of commencement of business and further changed the name to Lanzorate Finance (India) Limited. It appears that the company thus from the very incorporation was a public limited company and its public issue also were out on 18.6.1996. The petitioner was the promoter/director and continued to be with the company till he resigned from the post on 31.5.2000. The arrears of tax demand raised on the petitioner in his capacity of Director by issuance of the impugned notice under section 179 is for the assessment year 1996-1997. The provision of section 179 permits recovery of such tax arrears of a company from the director of the company which is a private company or a private limited company. The provision makes it amply clear that when the company is a public company or a public limited company, such provision would not be applicable Section 179 says where any tax is due from a private company in respect of any income from the said company or any other company in respect of any income of the company of the previous year during which year such company was a private company, if the Revenue is not in a position to recover, every person who was a director of the private company, during such relevant previous year would be jointly and severally liable for the payment of such tax, unless he proves that non recovery could not be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. Subsection (2) of section 179 of the Act also provides the situation that where the private company converted into public company and the tax in respect of private company could not be recovered, nothing contained in subsection (1) would be applicable to any person who was a director of such private company in relation to any tax due in respect of any income of such private company assessable for any assessment year commencing before the 1st day of April, 1962. The earlier petition preferred before this Court was not entertained on the ground that necessary documents for the Court to arrive at a decision, whether the company was a public limited company or not, were absent. That ipso facto itself cannot be the ground for the concerned authority not to examine the subject matter on merits in the revision petition. Therefore, both, the order under section 179 and the consequential order under section 264 in the revision application, in light of the above discussion, must fail. Petitions are allowed. Impugned orders under section 179 dated 11.1.2005 and under section 264 dated 19.3.2008 are quashed with all consequential proceedings.
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