TMI Blog2022 (9) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... ssful. The measures taken by the Department to recover the dues that have admittedly been unsuccessful. Moreover, the company is itself before the National Company Law Tribunal, which establishes that it does not presently, have the funds to settle the tax dues. The condition precedent under Section 179 stands complied in this case. Section 179(1), in itself, grants the Directors the liberty to prove that the non-recovery cannot be attributed to gross neglect, misfeasance or breach of duty on their part in relation to the affairs of the company. In the present case, the replies filed by the petitioners to the show cause notices prior to passing of the impugned orders merely contain a bald assumption to this effect. They have not, in my v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the company, two substantive additions being a) a sum of Rs.3.60 Crores that were received as share application from one Chandan Credits Ltd. on the ground that the aforesaid company was a paper concern and treating the share application as unexplained credit and b)a sum of Rs.4.62 crores (approx.) being investment in shares of SBQ steels as unexplained investment under Section 69 of the Act. (iv) The assessments have come to be confirmed confirming the aforesaid additions, adverse to the petitioners. The Assessing Authority, despite attempts, appears to have been unable to recover the demands from the company, and it is at that stage that the impugned orders had come to be passed under Section 179. 3. The provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 179 have not been satisfied, by drawing attention to the narration in the counter relating to the attempts made by the Department for recovery of tax due from the company itself. 6. Having heard learned counsel, my decision is as follows: The admitted facts in this case are that there are tax dues from the company. The counter filed by the Department sets out the following attempts made by the Department to recover the tax dues in relation to the respective assessment years. (i) Demands were unpaid within the statutory period of 30 days from service of notice under Section 156 of the Act. (ii) Notices under Section 221(1) dated 30.04.2019 was issued and duly served. (iii) The demands remained unpaid even after dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the company, it cannot be said that the impugned action under Section 179 is pre-mature. The action in the present case has, admittedly, been taken only after measures have been effected as against the company that have been proved to be an utter failure. 9. The above sequence of events would distinguish the facts in the present case from those of the case in Ram Prakash Singeshwar Rungta (supra). In that case, the decision of the Division Bench of the Gujarat High Court was in favour of the Directors, the Court being of the view that the condition precedent in Section 179 had not been satisfied. There is a finding at paragraph 13 of the judgment, where the Division Bench states as follows: 13. Examining the facts of the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. . 12. Thus the only condition set out under Section 179 is to the effect that attempts should be made by the Income Tax Department to recover the tax dues from the company and such attempts should have been unsuccessful. I have noted the measures taken by the Department to recover the dues that have admittedly been unsuccessful. Moreover, the company is itself before the National Company Law Tribunal, which establishes that it does not presently, have the funds to settle the tax dues. For the aforesaid reasons, I am of the view that the condition precedent under Section 179 stands complied in this case. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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