SANJAY GHAI Vs. ASSTT. CIT AND ORS.

JUDGEMENT

(1.) THESE writ petitions challenge the orders dated 3 -11 -2011 and 2 -7 -2012 passed by the first respondent under sections 179/154 of the Income Tax Act (the 'Act') respectively. The facts, to the extent necessary for the deciding the petitions, are that the petitioner is an individual and was a director of M/s. Sarvodaya Realtors Pvt. Ltd. (the 'Company'), which has its registered office at New Delhi. The only other director of the company was late Shri D.K. Ghai, the petitioners father. While the petitioner was assessed by DCIT Circle -1, Dehradun, the company was assessed with the first Respondent. By letter dated 15.3.2010, the petitioner was informed by DCIT Circle -1, Dehradun that he was entitled to tax refund of Rs. 38,92,957 and Rs. 15,00,276 in respect of A.Y. 1999 -2000 and 2003 -2004. However, at the same time, he was intimated that the first Respondent had computed the outstanding tax liability of the company at Rs. 28,71,84,883, and proposed that the refund payable to the petitioner, be set off with the tax liability of the company. The writ Petitioner wrote a letter to the ACIT, Dehradun, on 23rd March, 2010, and inspected the record in Delhi; he claims that at this stage, he became aware of the Income tax liabilities of the company, and the order made against him on 14th November, 2007, under Section 179 of the Act. The petitioner felt aggrieved by the order and the move to recover the arrears of the company's taxes and related liabilities, from him. He preferred a writ petition before this Court. That petition was disposed of in the following terms:

(2.) AFTER the conclusion of the proceedings before the first Respondent, he made the impugned order dated 3 -11 -2011 holding the petitioner liable for the outstanding dues of Rs. 27,93,05,184 of the company. It was held that the petitioner had not proved how he, the lone surviving director of the company, should not be treated as the assessee in default, and the whole amount should not be recovered from him in accordance with the provisions of Section 179(1) of the Act; furthermore, it was held that he was unable to show that the non -recovery of taxes cannot be attributed to gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.

(3.) THE petitioner contends that the outstanding dues of the company were in the form of interest and penalties. He contended that 'tax due' under Section 179 does not include within its ambit interest and penalty. It is submitted that the language of the provision is clear, and has to be construed in its terms; the Act makes a clear distinction between taxes, penalties and interest, which are distinct liabilities. Learned counsel relied on the definition of 'tax' under Section 2(43) of the Act. Further, reliance was placed on the decision of the Bombay High Court in Dinesh T. Tailor v. Tax Recovery Officer : (2010) 35 (I) ITCL 39 (Bom -HC): (2010) 326 ITR 85 (Bom), H. Ebrahim & Ors. v. Dy. CIT & Anr. : (2011) 37 (I) ITCL 255 (Karn -HC): (2011) 332 ITR 122 (Karn), Harshad Shantilal Mehta v. Custodian : (1998) 231 ITR 871 (SC) and Pratibha Processors v. Union of India, : (1996) 11 SCC 101.