By AJAY R. SINGH Advocate
Section 179(1): Liability
of director – Private company – show cause notice issued u/s. 179(1) did not indicate or give any particulars in respect of steps taken
by department to recover tax dues from defaulting private company – Order set
aside.
The Assessing Officer vide order
dated 15/2/2018 passed u/s. 179(1) of the Act, held that the Petitioner was
liable to pay the tax dues of Rs.38.34 crores of M/s. Damasy Retail Jewellery
Pvt. Ltd. The Petitioner was a former Director of M/s. Damasy Retail Jewellery
Pvt. Ltd., having been a director during the period 29th December,
2007 to 11th November, 2009.
It was the case of the assessee
that the impugned order was not preceded by service of any show cause notice
upon him. Consequently, Petitioner had no opportunity to put forth his case
before passing of the impugned order.
The Revenue contended that the show
cause notice dated 26th July, 2017 was attempted to be served by
Registered Post. However, same was received back with the postal remark “not
known”.
The Petitioner contended that the
show cause notice dated 26th July, 2017 does not make any mentioning
of the Revenue’s attempt to recover the tax dues of M/s. Damasy Retail
Jewellery Pvt. Ltd. from it and the result thereof. In this circumstances, it is
submitted that the impugned proceedings, are completely, without jurisdiction.
The Hon’ble Court relied on the
decision in case of Madhavi Kerkar
vs. Asst CIT (Writ Petition No.567 of 2016) dt 5th January, 2018 and
Mehul Jadavji Shah vs. Deputy CIT (Writ Petition No. 291 of 2018) dt : 5th
April, 2018, wherein the High Court held that the 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. The show cause notice
should indicate to have satisfied the condition precedent for commencing
proceedings u/s. 179(1) of the Act.
As
the condition precedent for commencing proceedings u/s. 179(1) of the Act were
not satisfied the impugned order dated 15th February, 2018 was
quashed and set aside.
