Case Law Details
Devendra Babulal Jain Vs ITO (Gujarat High Court)
Gujarat High Court held that provisions of section 179 of the Income Tax Act cannot be invoked simply because the directors of the private limited company have failed to deposit 20% of the demand raised in the assessment order to get stay from the appellate authority.
Facts- The petitioners have challenged the order dated 26.10.2017 passed by respondent no.1 under section 179 of the Income Tax Act, 1961 fastening the liability upon the petitioners to pay the outstanding dues of M/s. Nakoda Syn-tex Private Limited as the petitioners are the Directors of the said company for the assessment year 2014-2015. The petitioners have also challenged order dated 29.01.2018 passed under Rule 48 of the Second Schedule to the Act attaching the residential property of the petitioners and notice of demand dated 11.01.2018 under section 222 of the Act as a consequence of order dated 26.10.2017.
Conclusion- On perusal of the above provisions, it is clear that the Assessing Officer is required to make efforts for recovery of the outstanding dues from the assessee private limited company which has committed default in payment of the outstanding demand. The petitioners have prima facie shown that non recovery cannot be attributed to any gross negligence, misfeasance or breach of duty as Directors of the assessee company. In the impugned order, the Assessing Officer has failed to consider the fact that the petitioners have tendered their explanation and contended that the petitioners have challenged the order of assessment before the appellate authority and the petitioners have not remained negligent nor there is any misfeasance or beach of trust on part of the petitioners and only because the petitioners have been unable to deposit 20% of the demand raised in the assessment order to get stay from the appellate authority, the petitioners cannot be said to be negligent and respondent no.1 cannot therefore, invoke jurisdiction under section 179 of the Act.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
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