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TMI Blog2023 (9) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... al hearing today. 2. This petition under Article 226 of the Constitution of India challenges the order dated 27.03.2019 under Section 179 of the Income Tax Act, 1961 against the petitioner holding him in his capacity as a Director responsible for the outstanding demand against the company - Banyan & Berry Alloys Limited. 3. Facts in brief would indicate that the petitioner a resident of New Delhi, was a Director of the company - Banyan & Berry Alloys Limited till 15.01.2009 on which date he resigned from the directorship due to ill-health. It is the case of the petitioner an intimation was sent to the company and since the company did not inform the Registrar of Companies he also took up the matter with the Registrar of Companies. 3.1 Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, in light of the decision in the case of Ashita Nilesh Patel vs. Assistant Commissioner of Income Tax [[2020] 115 taxmann.com 37], a show-cause notice itself was bad. He would further submit that no element of gross neglect, misfeasance or breach of duty of the petitioner was made out in the said impugned order. 5. Mr. Varun Patel, learned Senior Standing Counsel appearing with Mr. Dev Patel, learned advocate for the revenue would submit that it is apparent from the reasons recorded in the order that the only reason given by the petitioner for not being liable under the provisions of the Act was that he was aged 76 years and not able to personally attend Ahmedabad office and therefore had tendered his resignation. Regarding provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regards the steps said to have been taken by the department for the purpose of recovering tax from the company. According to Mr. Soparkar, it was obligatory on the part of the department to demonstrate by some material on record that it had taken necessary steps to recover dues from the company but such steps have failed. 7. Paras 18 to 23 of the decision of this court in the case of Ashita Nilesh Patel (supra) reads as under: "18. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether the respondent has committed any error in passing the impugned order. 19. Section 179 of the Act, 1961 reads thus: "Liability of dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein that subsection (1) of Section 179 of the Act, 1961 provides for the joint and several liability of the directors of a private company, wherein the tax dues from such company in respect of any income of any previous year cannot be recovered. The first requirement, therefore, to attract such liability of the director of a private limited company is that the tax cannot be recovered from the company itself. Such requirement is held to be a prerequisite and necessary condition to be fulfilled before action under Section 179 of the Act can be taken. In the context of Section 179 of the Act, 1961, this Court held that before recovery in respect of the dues from a private company can be initiated against the directors, to make them jointl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by way of an affidavit-in-reply. Ultimately, it is the subjective satisfaction of the authority concerned that is important and it should be reflected from the order itself based on some cogent materials. However, with a view to protect the interest of both, the writ applicant as well as Revenue, we are inclined to quash the impugned order and give one opportunity to the Revenue to initiate the proceedings afresh by issuance of fresh show cause notice with all necessary details so that the writ applicant can meet with the case of the Revenue. We are inclined to adopt such measure keeping in mind the statement made by the learned counsel Mr. Soparkar that till the fresh proceedings are not completed, his client will not operate the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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