Directors Not Negligent; Wrong Invocation Of Section 179 IT Act: Gujarat High Court
1 year, 11 months ago

Directors Not Negligent; Wrong Invocation Of Section 179 IT Act: Gujarat High Court

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The Gujarat High Court has ruled that the Directors of the assessee company cannot be held negligent merely because they failed to deposit before the Assessing Officer 20% of the demand raised, so as to seek stay of demand during the pendency of an appeal before the CIT. Thus, the Court held that jurisdiction under Section 179 of the Income Tax Act, 1961, holding the Directors of the assessee company liable to pay the company's outstanding tax dues, could not have been invoked by the Income Tax Authorities. Rejecting the stay application filed by the Company, the Income Tax Officer passed an order under Section 179 of the Income Tax Act, fastening liability upon the petitioners to pay the outstanding dues of the Company. Thus, the department argued that as per the provisions of Section 179 of the Income Tax Act, the petitioners being the Directors of the assessee company were liable to pay the outstanding tax. Referring to Section 179 of the Income Tax Act, the bench noted 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.

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