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2017 (7) TMI 818 - GUJARAT HIGH COURTRecovery of dues u/s 179(1) - seeking recovery of unpaid tax of the said company and penalty under section 271(1)(c) of the Act of the same company from the director - Held that:- In the present case, we do not find a single notice on record issued to any of the directors why order under sub section (1) of section 179 should not be passed for whatever reasons that may be available at the command of the income tax authority. The notices, which we have referred to, are all issued to the company. These notices are in the form of recoveries or reminders of unpaid tax or penalty. None of these notices contain even a reference to any recoveries being made personally from the directors for the failure of the company to discharge its tax dues. If one reads the order, it seems to be suggesting that the sole requirement of applicability of section 179(1) is that the tax dues of a private company have remained unpaid. To the later requirement of the same not attributable to any gross negligent, misfeasance or breach of duty on part of director in relation to the affairs of the company is totally lost sight of. The language used in sub section (1) of section 179 may be in the negative covenant casting primary duty on the director to establish such facts, nevertheless, it is one of the essential requirements. The statute, at best, may be seen as giving rise to rebutable presumption which is required to be rebutted by the concerned director. It does not, in any manner, provide for a deemingfiction, a natural and inevitable consequence or an irrebutable presumption. A director of a company would discharge his responsibility of establishing necessary facts only when he is put to notice that the authority proposes to pass order under section 179(1) of the Act.In the result, impugned orders under section 179(1) of the Act are set aside.
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