2019 (11) TMI 602 - HC - Income Tax

Notice u/s 179(1) - there were no steps taken for recovery of the dues from the Company - HELD THAT - The petitioner did not ask for the details of the steps taken to recover the dues from the Company. The only defence was that the petitioner was not the director of the Company at the relevant time and it was also not the defence raised that the non recovery can not be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the Company. All these points were vaguely raised in the appeal before Commissioner, which the Commissioner has turned down. - Writ petition dismissed.

Summary

Issues:
1. Liability of a director under Section 179(1) of the Income Tax Act, 1961 for outstanding dues of a company.
2. Defense of not being a director at the relevant time.
3. Challenge to the orders of the Income Tax Officer and the Commissioner of Income Tax.

Analysis:

1. The judgment dealt with the issue of the petitioner's liability under Section 179(1) of the Income Tax Act for outstanding dues of a company. The petitioner, a director of the company, was informed of the outstanding tax dues and the joint liability to pay. The petitioner's defense was based on not being a director at the relevant time. However, the Income Tax Officer and the Appellate Authority found evidence of the petitioner's involvement in the company's affairs, including signing resolutions and efforts made to recover the dues before taking action under Section 179(1).

2. The petitioner's defense of not being a director during the relevant period was considered in the appeal before the Commissioner of Income Tax. It was noted that the defense did not address the lack of steps taken for recovery of dues from the company or any gross neglect, misfeasance, or breach of duty on the petitioner's part. The Commissioner rejected the vague points raised in the appeal, leading to a challenge in the petition.

3. The High Court, in its judgment, observed that the petitioner's defense did not specifically address the key aspects required to challenge the liability under Section 179(1). The Court found no reason to interfere with the orders of the lower authorities and dismissed the writ petition, upholding the joint and several liability of the petitioner along with the company for the outstanding tax dues.