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TMI Blog2018 (4) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed against the Directors of a delinquent Private Limited Company under Section 179(1) of the Act will only arise when the Revenue is unable to recover the tax dues from the delinquent Private Limited Company. The show cause notice issued to the Directors of the Private Limited Company must indicate briefly the steps taken to recover the tax dues from the delinquent Private Limited Company and the failure to recover the same. In the above view, the impugned orders under Section 179(1) of the Act is quashed and set aside. - Writ Petition No. 291 of 2018 - - - Dated:- 5-4-2018 - M.S. SANKLECHA, SANDEEP K. SHINDE, JJ. Mr. Jignesh R. Shah, a/w. Ms. Teja Thanekar, Advocate for the petitioner. Mr. Akhileshwar Sharma, Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 179(1) of the Act can only arise when the tax dues of the delinquent Private Limited Company cannot be recovered from it. It is submitted that the issue as raised herein stands concluded in favour of the petitioner by the decision of this Court in Madhavi Kerkar V/s. Assistant Commissioner of Income-Tax (Writ Petition No. 567 of 2016) rendered on 5th January, 2018 . 5. However, Mr. Sharma, the Learned Counsel appearing for the Revenue in support of the impugned order submits that the above decision in Madhavi Kerkar (supra) will not apply to the present facts. In support, he submits :- (a) the petitioner is not a professional/paid Director of the delinquent Company but is a Director who holds 76% of the shareholding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh not stated in the show cause notice are found in the impugned order or in any event in the affidavit-in-reply dated 14th February, 2018. Thus, is sufficient compliance with Section 179 of the Act. It is the petitioner's case in the petition that, an amount of ₹ 49.81 crores are loans advanced to companies/associates of its Director, Mr. Praful Setna. The attempts at recovery if made known in the show cause notice, would have given an opportunity to the petitioner to bring the above facts to the notice of the Assessing Officer who could have recovered from them before proceeding with the notice. Therefore, the giving of particulars of efforts made and failure to recover the tax dues for the delinquent Private Limited Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same and the Petitioner raises the objection of jurisdiction on the above account, then the Petitioner must be informed of the basis of the Assessing Officer exercising jurisdiction and the notice' / directors response, if any, should be considered in the order passed under Section 179 (1) of the Act. In this case the show cause notice dated 16th December 2015 under Section 179 (1) of the Act does not indicate or give any particulars in respect of the steps taken by the Income Tax Department to recover the tax dues of the defaulting Private Limited Company and its failure. The Petitioner in response dated 29th December 2015 to the above notice, questioned the jurisdiction of the Revenue to issue the notice under Section 179 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars of the failed efforts to recover the tax dues from the delinquent Private Limited Company. Thus, the issue stands covered in favour of the petitioner by the order of this Court in Madhavi Kerkar (supra). In the above circumstances, the impugned order dated 26th December, 2017 is quashed and set aside. 7. However, it is made clear that the Assessing Officer is at liberty to pass a fresh order after issuing appropriate notice to the petitioner which must indicate briefly the steps taken by the Department to recover the tax dues from the delinquent private limited company and its failure to recover the same. Needless to state, the Assessing Officer would hear the petitioner on its objection and pass a fresh order in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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