Rajeev Behl Vs PCIT (Delhi High Court)
Sub-section (1) of Section 179 cast burden upon the director to prove that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part. The burden being on the director, the respondent ought to have established the requirements of the sub-section to escape the liability, and the respondent has failed to do so. The question as to whether the respondent discharged the burden is a pure question of fact and could not have been entertained in writ petition filed under Article 226 of the Constitution of India when the finding was recorded by the Commissioner of Incometax against the respondent on this count. Apart from this consideration, it is clear that the non-recovery can well be attributed to the breach of duty on the part of the respondent. The respondent loved to continue as a director of a defunct private company and while holding the office of director it was the bounden duty of the respondent to ensure that the tax amount is paid. The respondent having failed in his duty, cannot escape the liability prescribed under Section 179 of the Act. The contention that the company had no income and suffered losses does not impress us as the assessments for the relevant years were complete and final and it is not open for the director to challenge those assessments in a proceeding under Section 179 of the Act.
Consequently, this Court is of the opinion that private parties cannot apportion Income Tax liability by private agreement as the petitioner has sought to do in the present case.
