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TMI Blog2016 (9) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... order refers to certain crucial facts including as to the extent of share holding of the directors, the extent of control exercised by them regarding the affairs of the company and the extent of their representation on the board of directors. It would also be necessary to consider the Articles of Association of the company and any other agreements that may exist between the share-holders inter se. There are several other factors also which must be taken into consideration including as to whether the company was converted into a public limited company for the purpose of avoiding statutory liability benefiting the petitioners alone and/or conferring any other benefits upon the petitioners or any one or more of them alone. Lifting the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company ) was incorporated under the Companies Act, 1956 on 02.06.1988 as a private company limited by shares. With effect from 22.09.1992, the company became a public company under Section 43 of the Companies Act. 3. The company, admittedly, did not file its return of income for the Assessment Year 2013-14 within the period stipulated, namely, 30.11.2013. Respondent No.2 accordingly issued a notice under Section 221(1) read with Section 140A(3) requiring the company to show cause why penalty ought not to be imposed on it. Ultimately, by an order dated 10.12.2015, respondent No.2 imposed a penalty of about 23.77 crores. Several notices under Section 142(1) were issued, the first dated 03.12.2013 and the last dated 18.11.2015 for filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that section 179 applies only to private limited companies. The only reasoning in the entire impugned order is as follows:- 4. Further, since the company has neither furnished its return of income for AY 2013-14 nor paid its self assessment tax of ₹ 105,04,96,130/-, there is apparent gross neglect or misfeasance or breach of duty on part of directors in relation to affairs of company. 7. Section 179 of the Income Tax Act reads as under:- 179. Liability of directors of private company in liquidation .- (1) Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel appearing on behalf of respondent No.2, on the other hand, submitted that the company is, in fact, a glorified partnership and that it is a fit case where the corporate veil ought to be lifted. He submitted that even in income tax cases it is permissible to lift the corporate veil. 10. We will assume, as submitted by Mr. Putney, that the corporate veil can in a given case, be lifted even for the purposes of the Income Tax Act. Ms. Riya Bansal, however, contended that there is no question of lifting the corporate veil, but even assuming that the corporate veil is liable to be lifted, there are several issues of fact and of law which ought to be considered before doing so. She submitted, for instance, that even as per the order the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same in any detail. 12. The impugned order is, therefore, set aside and the matter is remanded to respondent No.2 for taking a fresh decision in accordance with law. It will be open to respondent No.2 to issue a fresh show cause notice or to furnish further particulars in respect of the same show cause notice. It is also open to respondent No.2 to base its claim on any other cause of action including by way of a tracing action. All the contentions of the parties are kept open. 13. In the circumstances, the impugned order is quashed and set aside. Respondent No.2 shall pass a fresh order after affording the petitioners an opportunity of being heard and filing further replies to any further or supplementary notices that may be issued. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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