TMI Blog2020 (2) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no whisper of any steps having been taken against the Company for recovery of the outstanding amount. Even in the impugned order, no such details or information has been staled. Question is, whether such an order could be said to be sustainable in law. The answer has to be in the negative. At the same time, in the peculiar facts and circumstances of the case and more particularly, when it has been indicated before us by way of an additional affidavit-in-reply as regards the steps taken against the company for the recovery of the dues, we would like to give one chance to the department to undertake a fresh exercise so far as Section 179 of the Act, 1961, is concerned. If the Show-cause notice is silent including the impugned order, the void left behind in the two documents cannot be filled by way of an affidavit-in-reply. Ultimately, it is the subjective satisfaction of the authority concerned that is important and it should be reflected from the order itself based on some cogent materials. However, with a view to protect the interest of both, the writ applicant as well as Revenue, we are inclined to quash the impugned order and give one opportunity to the Revenue to initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the demand as mentioned is given as under:- No. A.Y. Demand (Lakhs) Nature of Demand (Tax/Interest /Penalty) 1 2011-12 7983.85 Tax + Interest 2 2012-13 782.36 Tax 3 2013-14 292.99 Tax 4 2014-15 15.14 Tax Total 9074.34 2. The said demand has not been paid till date. Despite being given a number of opportunities, the company did not make the payment of outstanding demand of ₹ 9074.34 lacs. 3. At the relevant point of time the directors of the assessee company were Smt. Sonal Nimish Patel and Smt. Ashita Nilesh Patel. Further, it is noticed from the records of the company that there are no recoverable assets in the name of assessee company. In such circumstances, proceedings un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, from all the angles, the assessee company falls within the ambit of Section 179 of the I.T.Act. Smt.Sonal Nimish Patel and Smt. Ashita Nilesh Patel, were the directors of the company for the period under consideration during which demand was raised an the default of non-payment of tax occurred. In response to the proceedings initiated u/s. 179(1) of the IT Ac, the directors failed to furnish any reply to the notice u/s. 179(1) of the I.T.Act. It is therefore, presumed that the directors have no objection for passing order u/s. 179 of the I.T.Act. In light of the discussion made in the foregoing paragraphs, since the demand is not recoverable from the assessee company, responsibility is fixed upon the then directors u/s. 179(1) of the IT Act and they will be treated as assessee in default in respect of tax, interest and penalty recoverable from the assessee company. 8. Considering the above facts, Smt.Sonal Nimish Patel and Smt. Ashita Nilesh Patel are held jointly and severally liable to make payment of outstanding demand of ₹ 9074.34 lakhs as well as any future demand which may arise in the case of Assessee Company, as provided under Section 179 of the IT Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, misfeasance or breach of duty on their part in relation to the affairs of the company. 6. According to Mr.Soparkar, just because the Department failed in recovering the dues towards the tax from the company, it could not have proceeded to seek such recovery from the properties of the writ-applicant. It is also the case of the writ-applicant that she had resigned as a Director of the Company long time back, and therefore, could not have been fastened with any liability. 7. Mr.Soparkar has invited the attention of this Court to the show-cause notice dated 02.09.2017. According to Mr.Soparkar, the show-cause notice is bereft of the material particulars as regards the steps said to have been taken by the Department for the purpose of recovering the tax from the company. It is submitted that it is obligatory on the part of the Department to demonstrate, by some material on record, that it had taken the necessary steps to recover the dues from the company, but such steps failed. 8. Mr.Soparkar would further submit that even the order passed by the Assistant Commissioner of Income Tax dated 11.12.2017 under Section 179 of the Act, 1961 does not disclose any such material. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther hearing, an additional affidavit-in-reply, duly affirmed by the Deputy Commissioner of Income Tax, Circle 4(1)(2), Ahmedabad, is being tendered to indicate the steps taken against the company for the recovery of the dues. A copy of the same has been furnished today to Mr.Soparkar, the learned counsel appearing for the writ-applicant. The additional affidavit-in-reply is ordered to be taken on record. 15. Over and above the same, there is an affidavit-in-reply on record dated 26.06.2019. 16. Mr.Bhatt would submit that there is quite a sizable amount in the bank account of the writ-applicant maintained with the HDFC Bank Limited. As the Department has not been able to recover anything from the Company, the only hope for the Department is now to recover some of the dues by attaching the bank accounts of the Directors. 17. In such circumstances, referred to above, the learned counsel Mr.Bhatt prays that there being no merit in the writ-application, the same be rejected. 18. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether the respondent has commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for such dues, it is necessary for the Revenue to establish that such recovery cannot be made against the company and then alone it can reach to the directors who were responsible for the conduct of the business during the previous year in relation to which liability exists. 21. There is no escape from the fact that the perusal of the Notice under Section 179 of the Act, 1961, reveals that the same is totally silent as regards the satisfaction of the condition precedent for taking action under Section 179 of the Act, 1961, viz. that the tax dues cannot be recovered from the Company. In the show-cause notice, there is no whisper of any steps having been taken against the Company for recovery of the outstanding amount. Even in the impugned order, no such details or information has been staled. 22. In such circumstances, referred to above, the question is, whether such an order could be said to be sustainable in law. The answer has to be in the negative. At the same time, in the peculiar facts and circumstances of the case and more particularly, when it has been indicated before us by way of an additional affidavit-in-reply as regards the steps taken against the company for ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
