TMI Blog2016 (10) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the revisionist had failed to faithfully and dutifully discharge his duties and functions as a Director and that his conduct of the business of the Company was irresponsible. He had failed to obtain requisite forms as a result of which the dues of the company continued to mount. - This does not in the opinion of this Court satisfy the test of fraudulent conduct, so as to attract the principle of lifting of corporate veil While no recoveries for the dues of the assessee can be executed against the revisionist, it shall be open to the department to move against the assets, moveable or immoveable, of the assessee in accordance with law - revision allowed - decided in favor of revisionist. - Sales/Trade Tax Revision No. - 81 of 2006 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;lifting of corporate veil' for the purpose of recovering dues of the State is clearly permissible in the facts and circumstances of the case. On the other hand Sri Piyush Agrawal, learned counsel appearing for the revisionist has sought to draw the attention of the Court to the subsequent judgment rendered by a Division Bench of this Court in R.K. Chhadda and another Vs. State of U.P. and others 2014 NTN (55) 176. Before dealing with the rival submissions, however, it becomes apposite to extract the findings of the Tribunal on the strength of which the action against the assessee came to be upheld. The Tribunal in its order has noted as follows:- While it is true that the doctrine of 'lifting of corporate veil' ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s doctrine cannot be applied as a matter of course in a routine manner to recover the dues of a Company on the mere pretext that the dues are now not recoverable from the Company and, therefore, a resort has been made to recover the dues of the Company from the personal assets of the Directors. If such a course is permitted, it will lead to disastrous results and would completely destroy the juristic personality of the Company. The principle of lifting the corporate veil is to find out as to who was responsible for committing the fraud and diverting the assets of the Company. It is not necessary that recovery has to be made against the Director or a promoter shareholder. The purpose of lifting the veil is to find out the person, who was ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in the facts and circumstances of that case that the directors had successively defrauded the secured creditors as well as the department and that the fund of the company had been defalcated and statutory dues not paid. The findings in this respect stand noticed in paragraph 28 of the report and is in the following terms:- 28. In the present case from the material on record, there is no doubt that the petitioners and other directors persuaded the BIFR to allow them to run the sick industrial company with fresh infusion of funds from IFCI with two nominee directors of IFCI. The company started business in 1991. The application for eligibility certificate under Section 4-A was made with false declaration that the plant and machine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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