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2023 (2) TMI 1073 - HC - Income TaxLiability of directors u/s 179 - recovery of the outstanding dues of the private limited company - petitioners liability to pay the outstanding tax in capacity of the Directors of the assessee company - Proof of gross negligent, misfeasance or breach of duty on part of the petitioner in relation to the affairs of the company - HELD THAT:- AO is required to make efforts for recovery of the outstanding dues from the assessee private limited company which has committed default in payment of the outstanding demand. The petitioners have prima facie shown that non recovery cannot be attributed to any gross negligence, misfeasance or breach of duty as Directors of the assessee company. In the impugned order, AO has failed to consider the fact that the petitioners have tendered their explanation and the petitioners have not remained negligent nor there is any misfeasance or breach of trust on part of the petitioners and only because the petitioners have been unable to deposit 20% of the demand raised in the assessment order, the petitioners cannot be said to be negligent and respondent no.1 cannot therefore, invoke jurisdiction under section 179 of the Act. This Court in case of Sadhna Ramchandra Jeswani [2018 (9) TMI 77 - GUJARAT HIGH COURT] notice that in showcause notice the Assessing Officer has not laid down sufficient foundation for invoking section 179 leave alone broadly pointing out he has not even alleged that non-recovery was on account of gross negligent, misfeasance or breach of duty on part of the petitioner in relation to the affairs of the company. His final conclusions in the impugned order are therefore based on the material at his command which was never shared with the petitioner. Petition succeeds and is accordingly allowed.
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