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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 ..... e been taken by the department for the purpose of recovering the tax from the company. Only on the ground of the show-cause notice being defective as the same is totally silent as regards the satisfaction of the condition precedent for taking action under Section 179 of the Act, the order passed by the respondent no. 1 is quashed and set aside. It shall be open for the respondent to issue fresh show cause notice for the purpose of proceeding against the petitioner u/s 179 of the Act, if thought fit. All the contentions of the respective parties, as raised in this petition are kept open. Petition is accordingly allowed. - HONOURABLE MR. JUSTICE BIREN VAISHNAV AND HONOURABLE MR. JUSTICE BHARGAV D. KARIA Appearance: For The P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the company concerned. 3.2 It is the case of the petitioner that a show-cause notice was issued to the petitioner to show cause as to why he should not be treated jointly and severally liable for payment of tax and in a reply filed on 14.07.2017, the petitioner had raised objections. By the impugned order, the petitioner has been held liable. 4. Mr. B.S. Soparkar, learned advocate appearing for the petitioner would submit that the petitioner had resigned from the directorship on and from 15.01.2009. In accordance with the provisions governing the resignation of a Director under the Companies Act, Section 302(2) casts a legal obligation on the company to inform the Registrar of Companies by filling Form No. 32 giving particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the authority recorded that the primary reason for failure to collect the demand was on account of total closure of business operations and therefore the petitioner was unable to prove in any manner whatsoever why the non-recovery cannot be attributed to gross negligence, misfeasance or breach of duty in conducting the affairs of the company. 6. Considering the submissions made by the learned advocates appearing for the respective parties, it is borne out from the record that multiple submissions have been made by learned advocate Mr. Soparkar for the petitioner challenging the legality and validity of the order under Section 179 of the Act. However, only in light of the decision in the case of Ashita Nilesh Patel (supra), a case is ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company cannot be recovered, then, every person who was a 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 the nonrecovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. (2) Where a private company is converted into a public company and the tax assessed in respect of any income of any previous year during which such company was a private company cannot be recovered, then, nothing contained in sub-section (1) shall apply to any person who was a director of such private company in relation to any tax due in respect of any income of such priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o escape from the fact that the perusal of the Notice under Section 179 of the Act, 1961, reveals that the same is totally silent as regards the satisfaction of the condition precedent for taking action under Section 179 of the Act, 1961, viz. that the tax dues cannot be recovered from the Company. In the show cause notice, there is no whisper of any steps having been taken against the Company for recovery of the outstanding amount. Even in the impugned order, no such details or information has been stated. 22. In such circumstances, referred to above, the question is, whether such an order could be said to be sustainable in law. The answer has to be in the negative. At the same time, in the peculiar facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961. We would like to give a time bound program so that the proceedings may not go on for an indefinite period. We are also issuing such direction because of the statement being made that the writ applicant will not operate the bank account till the fresh proceedings are initiated and completed. In such circumstances, we grant two months' time from the date of receipt of the writ of this order to the Department to initiate fresh proceedings and pass appropriate orders in accordance with law. Till the final order is passed, the writ applicant shall not operate the bank account concerned. 8. Perusal of the impugned order in the present petition would indicate that nothing had come on record and it is undisputed that the show-c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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