SANDEEP A MEHTA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE Special Civil Applications preferred under Article 226/227 of the Constitution of India seek quashment of the orders dated 31.10.2011 and 14.11.2011 respectively in Special Civil Application No. 10686 of 2013 and Special Civil Application No. 10688 of 2013 passed by respondent No.1 Income Tax Officer under section 179 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") directing the petitioners to pay amount of tax, interest and penalty as also for seeking direction in the nature of certiorari, quashing the respective orders passed under section 264 of the Act by the Commissioner of Income Tax, respondent No.2 herein. Brief facts necessary for understanding the controversy recorded from Special Civil Application No. 10686 of 2013 are as follows: -

(2.) IT is the say of the petitioners that they were appointed as the Directors of the Company only on 29.12.2005. The Company filed annual return before the ROC. Convincingly, the date of appointment was also produced before the authorities. It was also their say that they were never shareholders at the time of conversion of the Company from the Private Limited Company to a Public Limited Company (from 5.6.1995 till 30.9.2006). It is only on 27.3.2006 that they became the shareholders. It is also averred that respondent No.2 incorrectly observed that the share holding of the Company for the Assessment Years 2005 -06 is 65.20%, whereas in fact the record indicates that the petitioners acquired shares of the Company only on 27.3.2006. It is further averred that in respect of the share holding of Masat Text. and Twist Pvt. Limited, the petitioners had no shareholding in the Company.

(3.) ON issuance of the notice respondents appeared through learned Senior Counsel Mr. Bhatt, who filed affidavit -in -reply,inter alia, contending that both the petitioners are Directors of the Company. It is contended that the Company had not paid the outstanding demands. The petitions filed by both the Directors on 16.8.2011 on behalf of the Company also was rejected with the direction to the Company to pay entire outstanding dues with the applicable interest under section 20(2) of the Act. Although the notice under section 226(3) of the Act was issued, it was informed by the Bank authorities that the Bank accounts of the assessees were either closed or had become dormant. It is further contended that summons under section 31 of the Act was issued so as to find out the assets and the financial position of the assessee Company and both the Directors were duly served on 4.8.2011. Hearing was fixed on 17.8.2011. However, they chose not to attend on a specified date vide their letter dated 16.8.2011. It was urged that there was no deliberate intention attributed for committing any mistake nor was there any case of wrong filing of return of income. The Company preferred the appeal before CIT(Appeals) and the Tribunal and the Directors had admitted that the Company does not have any assets or sufficient funds to make the payment.