2012 (10) TMI 429 - AT - Income Tax

Aggrieved party - right to appeal - CIT(A) dismissed the appeals by the directors as not maintainable - liability of directors u/s 179 - Held that - the apprehension of the assessees that they have been made liable to pay a portion of tax u/s 179 of the Act, is unwarranted and misconceived. As per the provisions of the Income-tax Act, no person can be made liable to pay any tax for himself or on behalf of any other entity for which he has been associated unless a specific order is passed in the matter. In the present case, no such order u/s 179 of the Act has been passed. - the appeals preferred by the assessees are dismissed as not maintainable .

Summary

Issues:
Appeal against CIT(A)'s order - Misdirection in assuming lack of aggrievement by assessees; Recovery of tax from present assessees; Maintainability of appeals based on presumption.

Analysis:
The judgment pertains to three appeals by former directors of a company against the CIT(A)'s order dated 10.12.2009 for the assessment year 2001-02. The appeals raised identical grounds challenging the assumption that the assessees were not aggrieved by the order passed under section 143(3) read with section 147 of the Income Tax Act in the case of the company and contending that they became aggrieved once tax due from the company was sought to be recovered from them. The assessees argued that they were not informed of the assessment, demand, or recovery proceedings against the company, leading to their grievance. They cited legal precedents to support their case.

The CIT(A) dismissed the appeals as 'not maintainable,' stating that the assessees did not have grounds to challenge the order passed in the company's case. The assessees then appealed to the ITAT. The tribunal analyzed the facts, including the demand raised against the company and the communication sent to the ex-directors regarding the pending appeal and demand payment. The tribunal highlighted the provisions of section 179 of the Act, which make directors jointly and severally liable for tax dues of a company under certain circumstances unless proven otherwise.

The tribunal found that no specific order under section 179 had been passed against the assessees, making them liable for the company's tax. The communication regarding demand payment did not establish their liability. The tribunal emphasized that without a specific order under section 179, the assessees could not be held liable for the company's tax. Additionally, the tribunal noted that the demand against the company was not enforceable due to a favorable decision in another appeal, eliminating the cause of action for the ex-directors to challenge the assessment orders.

Ultimately, the tribunal upheld the CIT(A)'s decision, ruling that the appeals were not maintainable as they were based on presumption and not specific orders. The tribunal differentiated the cited case laws from the present issue, emphasizing that the assessees' appeals lacked a legal basis and were rightly dismissed.