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2014 (4) TMI 210 - GUJARAT HIGH COURTValidity of order u/s 179(1) of the Act – Liability of directors of private company in liquidation - Held that:- The assessees were the directors of a private company - The company had tax dues towards the Department - Despite the efforts by the Department, such dues could not be recovered – Relying upon Maganbhai Hansrajbhai Patel v. Asst. CIT [2012 (11) TMI 189 - GUJARAT HIGH COURT ] - the company had run into losses - The company had substantial dues towards the State Bank of India from which it had taken loans and also enjoyed overdraft facility. Certain properties of the company were also mortgaged to the bank - the AO ought to have held that the assessees had succeeded in establishing that non-recovery of the tax dues of the company could not be attributed to gross neglect, misfeasance or breach of duty on the part of the directors in relation to the affairs of the company - It does not appear that the assessees had consented that the bank dues may also be recovered from such fixed assets - It was the DRT which had given such liberty to the bank - the contention of the counsel for the Revenue that the petitioners should have offered the said properties for recovery to the Department, can still not bring the action of the petitioners within the expression of gross neglect, misfeasance or breach of duty on their part – thus, the order passed by the CIT set aside – Decided in favour of Assessee.
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