Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2019 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 31 - HC - Income TaxLiability of directors of private company u/s 179 - recovery of unpaid tax dues of a private company from its directors - attaching the petitioner's bank accounts for recoveries - HELD THAT:- Action of respondent No. 1 cannot be sustained. Section 179 of the Act undoubtedly authorizes the Department to recover unpaid tax dues of a private company from its directors, however, this is subject to certain legal requirements contained in the said provision. First requirement for application of sub-section (1) of Section 179, therefore, is that the tax dues in question could not be recovered from private company. Even if this requirement is satisfied, it is open for the concerned director to prove that such non-recovery cannot be attributed to any gross negligence, misfeasance or breach of duty on his part in relation to the affairs of the company. On all these counts, therefore, the petitioner had a right to oppose and resist the proposal of the Assessing Officer. It is not even averred that the dues of the company should not be recovered form the said Company and that therefore, the onus would be on the director to prove that the same could not be attributed to his gross neglect, misfeasance or breach of duty. The action of the AO to order recovery of the unpaid tax dues of the company from the petitioner, thus, was without the foundation of the necessary facts in show-cause notice. In the context of establishing that such recovery cannot be attributed to his gross neglect, misfeasance or breach of duty, the petitioner had made a detailed representation. The Assessing Officer passed the order without considering such representation. When this was pointed out to him, he passed a further order describing it as one of the 'Corrigendum'. This was also impermissible. Without recalling the earlier order, his action to dispose of the petitioner's objections would amount to nothing more than post-decisional consideration. Under these circumstances, both the orders dated 18.9.2018 and Corrigendum dated 8.3.2019 are set aside. The order of attaching the petitioner's bank accounts for such recoveries is also set aside.
|