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TMI Blog2002 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAVA LALA. JUDGMENT Amitava Lala J.-Both the matters were analogously placed. In both the matters notices under section 179 of the Income-tax Act, 1961, have been challenged. The aforesaid notices dated March 6, 2002, were made requiring reason as to why the taxes should not be realised personally from them giving a date of hearing. Therefore, in effect, the petitioners challenged the show cause notice under the writ jurisdiction of the court. Under the normal circumstances the writ court does not interfere with the show cause. But the element of interference is available hereunder. The petitioner (in each writ petition) contended that he was a non-executive director of respondent No. 4-company inducted in the capacity of a chartere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company in liquidation. He cited a judgment in K. V. Reddy v. Asst. CIT [1998] 232 ITR 306 (AP) to establish that the liability of the director is not a liability co-extensive with the liability of the company unlike a principal debtor and surety. On the other hand, Mr. Shome, learned senior counsel appearing for the authority, cited a judgment in Darshan Kumar v. CIT [1996] 222 ITR 608 (P H) and contended that a bare reading of the provision under section 179 of the Act shows that every person who was a director of the private company at any time during the relevant previous year of assessment shall be jointly and severally liable for the payment of tax found due against the company for the previous year. He further cited a decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the first instance the authority should have proceeded against the company and if all attempts to make recovery from the company failed then only the respondents can proceed against the petitioners. It appears that the assets of the company had been disposed of under section 29 of the State Financial Corporations Act and possession has been handed over to the purchaser. However in the judgment of the Andhra Pradesh High Court in K. V. Reddy [1998] 232 ITR 306 the court held that the notice to initiate the proceeding under section 179 of the Act is without jurisdiction and without authority of law because there is no finding by the Assessing Officer of the Income-tax that the amount cannot be recovered from the company. Even in the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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