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TMI Blog2023 (6) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... e what steps were taken to trace the assets of the company. Moreover, the order dated 7th May 2018 passed u/s 179 of the Act does not satisfy any of the ingredients required to be met. Before passing an order under Section 179 of the Act, the Assessing Officer should have made out a case as required under Section 179(1) of the Act that the tax dues from the company cannot be recovered. Only after the first requirement is satisfied would the onus shift on any Director to prove that non recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. The order impugned passed by respondent no. 1 u/s 264 of the Act is a very brief order in the sense that the only gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Rita (the deceased), who was a Director of Bhavya Infrastructure India Private Limited (the company) during the Assessment Year 2012- 2013. The other two legal heirs are married daughters of the deceased and petitioner no. 1. 4. The company had filed its return of income for Assessment Year 2012-2013 on 29th September 2012 declaring an income of Rs. 62,47,290/-. The return of income was processed under Section 143(1) of the Act and was selected for scrutiny assessment and accordingly, notice under Section 143(2) of the Act was issued. An assessment order under Section 143(3) of the Act came to be passed on 30th March 2015 by which several additions were made, i.e., a sum of Rs. 18,37,21,188/- under Section 68 of the Act for unexplained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64 of the Act also is a very brief order in the sense that the only ground on which the application under Section 264 of the Act came to be rejected is contained in paragraph 4.2 of the impugned order. Respondent no. 1, without considering any of the submissions made by petitioners, has simply rejected the application under Section 264 of the Act noting that notice of the death of the deceased was not brought to the Assessing Officer by anybody and before the order under Section 179 of the Act was signed by the Assessing Officer and, therefore, as on the date of the passing of the order, there was nothing invalid. 7. In our view, not only this order dated 9th March 2020 but also the order passed on 7th May 2018 under Section 179 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no evidence annexed to show that even such a letter was prepared or the letter was sent by speed post or a query was sent to the Post Master to find out the status of the delivery of the said letter. In the circumstances, we will have to proceed on the basis that no letter or notice was sent to the deceased before the order dated 7th May 2018 came to be passed. There is also nothing to indicate what steps were taken to trace the assets of the company. Moreover, the order dated 7th May 2018 passed under Section 179 of the Act does not satisfy any of the ingredients required to be met. 9. We should also note that the company is under Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) and the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce etc. is to be viewed in the context of non recovery of tax dues of the company and not with respect to general functioning of the company. Once the Director after being given an opportunity places material on record to establish that non recovery cannot be attributed to gross negligence, misfeasance or breach of duty on his part, the Tax Recovery Officer is required to apply his mind and come to definite findings. 11. Without going into the merits on the correctness of the assessment order passed or whether the time was ripe to issue notice under Section 179 of the Act, we hereby quash and set aside the order dated 9th March 2020 passed under Section 264 of the Act, so also the order dated 7th May 2018 passed under Section 179 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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