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Issues:
1. Liability of directors for tax arrears of a company. 2. Applicability of section 179 of the Income-tax Act. 3. Validity of orders passed by the Deputy Commissioner and Commissioner. 4. Claim of company being a public limited company. 5. Rectification of orders under section 154. Analysis: 1. Liability of Directors for Tax Arrears: The case involved directors of a company, Rajmohan Cashews (P.) Limited, being held liable for significant tax arrears for the years 1977-78 to 1982-83. The Deputy Commissioner passed an order declaring the directors jointly and severally liable for the tax arrears. The Commissioner concurred with this decision, emphasizing the duty of directors to ensure timely tax payments. The court upheld the decision, stating that the directors failed in their duty to pay taxes promptly, leading to substantial arrears. 2. Applicability of Section 179 of the Income-tax Act: The main contention was the application of section 179 of the Income-tax Act to hold directors liable for the company's tax debts. The appellants argued that since the company was a public limited company, section 179 was inapplicable. However, the court rejected this argument, emphasizing that the liability of directors for tax arrears is not contingent on the company's status as a private or public entity. The court upheld the authorities' decision to hold the directors liable under section 179. 3. Validity of Orders Passed by Authorities: The Deputy Commissioner and Commissioner's orders, namely exhibit P-13 and P-15, were challenged for being illegal and unreasonable. The court, after detailed analysis, found that the orders were justified based on the directors' failure to ensure tax payments, despite the company's financial activities and attempts to understate income. The court upheld the validity of the orders, noting the ample evidence supporting the decision. 4. Claim of Company Being a Public Limited Company: The appellants claimed that the company had become a public limited company, rendering the proceedings under section 179 invalid. However, the court found that this claim was not raised during the assessment or earlier proceedings, making it impermissible to challenge the subsequent orders on this basis. The court dismissed this argument, stating that the appellants failed to raise this claim at the appropriate stages. 5. Rectification of Orders under Section 154: The appellants sought rectification of the orders under section 154, alleging errors in the assessment. However, the court found no merit in the rectification plea, stating that the issues raised were debatable and complicated. The court upheld the rejection of the rectification request, emphasizing the validity of the orders passed by the authorities. In conclusion, the court dismissed the writ appeals, upholding the decision to hold the directors jointly and severally liable for the tax arrears of the company. The judgment emphasized the directors' duty to ensure timely tax payments and rejected challenges to the validity of the orders passed by the authorities.
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