Law:

Section:

Section 179 of the Income-tax Act, 1961 - Company-in-liquidation - Liabilities of directors - Though assessee-directors of company-in-liquidation filed reply to notices issued by Income-tax Recovery Officer, Assessing Officer did not consider same while passing order under section 179 - Whether since it is necessary that case put up by director of a private limited company be taken into consideration by Assessing Officer before making an order adverse to such person, Assessing Officer was to be directed to consider reply submitted by assessees and thereafter pass necessary order in that matter following principles of natural justice - Held, yes HELD It is necessary that the case put up by the director of a private ltd. company be taken into consideration by the Assessing Officer before making an order adverse to such person. No doubt, the directors will be jointly and severally liable for the payment of tax. However, if he proves that recovery cannot be attributed to the gross negligence, misfeasance or breach of duty on his part in relation to the affairs of the company, the question may be different. From the record placed, it appeared that reply to notice under section 179 was filed. However, in the order it was mentioned that the directors had not filed any reply to those notices till date. [Para 3] Under those circumstances, the Assessing Officer was directed to consider the reply submitted by the assessees. Thereafter, following the principles of natural justice, he should pass necessary orders in the matter. [Para 4] Manoj Swarup and Anubhav Kumar for the Petitioner. R.D. Jolly and Ajay Jha for the Respondent. JUDGMENT 1. Against notices issued by the Income-tax Recovery Officer, Range XVIII, and the order made by the Assessing Officer under section 179 of the Income-tax Act, 1961, the petitioners have filed this petition. 2. At the outset, it may be stated that in view of the different notices and separate causes of action, two petitions ought to have been filed. Registry is directed to give separate number in respect of petitioner No. 2 of this petition and may call upon the counsel to pay Court fee, if required to be paid. 3. Section 179 refers to…

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