9911796707
TMI Blog2005 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... r respective parties. This petition challenges the order made by the respondent under section 179 of the Income-tax Act, 1961 ("the Act") on January 3, 2005. The petitioner, a Hindu undivided family, has filed this petition through its karta, who was a director of M/s. Sirs Engineering P. Ltd. ("company") up to February 25,1996. According to the respondent, a total sum of Rs. 1,31,10,454, which comprised of tax plus interest plus penalty, was due and recoverable from the company and the said demand pertains to the assessment years 1996-97 to 2001-02. The respondent issued notice on March 22, 2004, and called upon the petitioner to explain why the petitioner should not be held jointly and severally liable for payment of outstanding dues of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany and hence, according to him, the petitioner was not liable even for the assessment year 1996-97. It was further submitted that the respondent had failed to establish that the outstanding dues could not be recovered from the company and in the absence of fulfilment of the said condition, the respondent cannot be permitted to proceed to effect recovery against the petitioner. In support of the aforesaid proposition reliance has been placed on the decision of this court in the case of Bhagwandas J. Patel v. Deputy CIT [1999] 238 ITR 127. In this context Mr. Shah also invited attention to various averments made in the affidavit-in-reply dated March 9, 2005, filed by the respondent. Mr. K.M. Parikh, learned standing counsel appearing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such dues, it is necessary for the Revenue to establish that such recovery cannot be made against the company and then and then alone it can reach the directors who were responsible for the conduct of business during the previous year in relation to which liability exists." In the said decision this court has further gone on to observe from the facts on record that: "Neither in the order nor in the affidavit any such assertion has been made that in spite of making efforts against the company, it is not possible to recover the amount from the company by reaching its assets." The aforesaid ratio may be applied to the facts of the case. In paragraph No. 2 of the impugned order it is stated that: "This demand could not be recovered from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res the Revenue to establish that such recovery cannot be made against the company and then and then alone would it be permissible for the Revenue to initiate action against the director or directors responsible for conducting the affairs of the company during the relevant accounting period. Hence, the prerequisite condition stipulated by section 179 of the Act remains unfulfilled in the context of the facts available on record by virtue of the impugned order as well as the affidavit-in-reply. It is also necessary to take note of the fact that once the respondent had, in the impugned order, accepted that the petitioner was liable only qua the demand relatable to the assessment year 1996-97, it was necessary for the respondent to satisfy hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not record any reasons. Hence, the said decision rendered by a learned single judge, which is contrary to the exposition of law made by this court cannot be accepted to be laying down a correct proposition of law. This court, is in respectful disagreement with the views expressed in the said decision. In the present case, it is not necessary to decide as to whether the phrase "jointly and severally" is applicable qua the company and its directors or is applicable qua the directors inter se and hence, the said issue is left open. Suffice it to state that section 179 of the Act, on a plain reading, prima facie indicates the latter interpretation, i.e., qua the directors inter se. In the circumstances, the impugned order dated January 3, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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