9911796707
TMI Blog1990 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... giving effect to or taking any steps in pursuance of the notices issued. The petitioner-company is alleged to have gone into voluntary liquidation by a resolution dated December 6, 1976, appointing Shri H. L. Bhagotra as Its liquidator. A notice in terms of section 178 of the Act was given to the respondent within 30 days of the resolution. It is submitted that, under sub-section (2) of section 178 of the Act, it was mandatory for the respondent to notify to the liquidator within three months from the date on which he received the notice of appointment of the liquidator if, after making such enquiries, he was of the opinion that provision was to be made for any tax which was due or was likely thereafter to become payable by the company. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was filed with the respondent on January 7, 1977. It is alleged that, subsequent to the completion of the assessment of the petitioner-company, it was found that certain income chargeable to tax for the assessment years 1974-75, 1975-76 and 1976-77 had escaped assessment for the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for those years which necessitated the issuance of the notice under section 148 of the Act. The notices are alleged to have been properly and validly issued which do not violate any of the petitioners' fundamental, statutory or legal rights. The averment of the petitioners that they had fully and truly disclosed all material facts in their returns has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notified and, until he so sets aside such amount, shall not part with any of the assets of the company or the properties in his hands. If the liquidator fails to give the notice or parts with any of the assets of the company or the properties in his hands in contravention of the provisions of that sub-section, he shall be personally liable for the payment of the tax which the company would be liable to pay. Under section 179 of the Act, it is provided that where any tax due from a private company or from any other company cannot be recovered, then any person who was the director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that non rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose. If person appointed as a liquidator violates the provisions of section 178 of the Act, he is personally liable to satisfy the tax liability under section 179 of the Act. Section 178 of the Act does not confer any absolute immunity either upon the assessee or upon the income-tax authorities. Failure to serve a notice within the time specified under sub-section (1) of section 178 of the Act makes the official liquidator personally responsible for the tax liability and inaction on the part of the respondent as required under sub-section (2) of section 178 of the Act absolves the liquidator of his personal liability. The liability under such circumstances may shift to the directors of the company in liquidation under section 179 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not on the ground of "reason to suspect". The belief contemplated under the Act is the belief of a prudent man. In other words, the belief must be bona fide and not mala fide. The mere fact that the information collected by the income-tax authorities was not sufficient to issue the notice cannot be made a basis for quashing the proceedings. It is equally true that a general belief and doubt based upon general information not related to a particular assessment case, cannot empower initiation of proceedings under sections 147 and 148 of the Act. This court cannot determine the adequacy of the material upon the basis of which the notice was issued but if there is no material justifying the issuance of the notice, the proceedings have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he belief, if not against the public interest or the security of the State or protected under any statute, should be conveyed to the assessee in the notice served under section 148 of the Act. In the instant case, the notices issued bearing annexures F, G and H do not disclose any basis for the belief of the Income-tax Officer justifying the issuance of the notices. The notices appear to have been issued mechanically. The record of the income-tax authorities shown to me by their counsel only shows a note of the Income-tax Officer that the petitioner herein had allegedly escaped liability, without there being any basis or supporting evidence for such a belief. It is true that this court cannot see the adequacy of the record on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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