Jurisdiction to commence proceedings against director for recovery of tax dues of delinquent company

Jaison S. Panakkal Vs Pr. CIT (Bombay High Court)

Jurisdiction to commence proceedings against the Director of a delinquent company for a recovery of the tax dues of the delinquent company, would require the notice to the Directors/ former Directors, itself, indicating what steps had been taken to recover the dues from the delinquent company and the failure thereof. It is only when the above exercise has been done and is indicated in the show cause notice that the Assessing Officer and can claim to have satisfied the condition precedent for commencing proceedings under Section 179(1) of the Act. Impugned order was quashed and set aside.

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

This Petition under Article 226 of the Constitution of India, challenges the order dated 15^th February, 2018 passed by under Section 179(1) of the Income Tax Act, 1961 (the Act), by Respondent No.2­ Assessing Officer. By the impugned order dated 15^th February, 2018, the Petitioner is directed to pay the tax dues of Rs.38.34 Crores of M/s. Damasy Retail Jewellery Pvt. Ltd., in respect of Assessment Year 2008-09 to 2010-11. Petitioner is a former Director of M/s. Damasy Retail Jewellery Pvt. Ltd., having been a director during the period 29^th December, 2007 to 11^th November, 2009.

2 It is the case of the Petitioner that the impugned order dated 15^th February, 2018 was not preceded by service of any show cause notice upon him. Consequently, Petitioner had no opportunity to put­forth his case before passing of the impugned order. Thus, in breach of natural justice.

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