UNION OF INDIA Vs. PRAVEEN D DESAI

JUDGEMENT

(1.) THE principal point involved in this appeal preferred against the judgment dated February 1, 1984, delivered by the learned single judge in Writ Petition No. 982 of 1980 (Praveen D. Desai vs. ITO (1984) 41 CTR (Bom) 368 : (1984) 149 ITR 187) stands concluded in view of our decision dated November 11, 1987, in Appeal No. 909 of 1983 (Union of India vs. Manik Dattatreya Lotlikar (1988) 67 CTR (Bom) 37 : (1988) 172 ITR 1). In view of that decision, Mr. Jetly, learned counsel appearing on behalf of the appellants, the IT Department, submitted that this appeal also must succeed.

(2.) MR . Dwarkadas, learned counsel appearing for the respondent assessee, submitted that though the principal question about the liability of the director of a private company for discharging liabilities of the company under S. 179(1) of the IT Act, 1961 (hereinafter " the Act "), is not open for agitation in view of our earlier decision, the order passed under S. 179 by the ITO on April 12, 1979, cannot be sustained. Learned counsel urged that the ITO has held the respondent personally responsible for payment of the arrears of tax amounting to Rs. 2,74,508. The break up of this amount is set out in the order itself and includes the tax arrears of Rs. 54,434 in respect of the asst. year 1961 62. Mr. Dwarkadas is right in saying that this amount of tax due for the asst. yr. 1961 62 cannot be included while determining the liability of the respondent director. Mr. Dwarkadas also pointed out that the tax of Rs. 1,41,471 found to be in arrears by the ITO for the asst. year 1962 63 is not correct, because the assessment order was set aside by the Tribunal and the matter is remitted for fresh assessment. Mr. Dwarkadas submitted that in respect of the asst. yr. 1967 68, the company had suffered losses and there was no liability for payment of tax and, therefore, the ITO was in error in holding that there was a liability of an amount of Rs. 7,495. In our judgment, it is not possible to investigate the accuracy of the claim of arrears of tax subsequent to the asst. year 1962 63 in the present proceedings and, therefore, it is necessary to direct the ITO to reascertain the amount of arrears of tax of the company from the asst. year 1962 63 onwards after hearing the objections of the respondent assessee. Mr. Dwarkadas assures that the respondent would file objections before the concerned ITO within a period of four weeks from today. In case such objections are filed, then the ITO will consider and examine the same and then reascertain the arrears of tax due from the company. In case the respondent fails to file any objections, then it is open to the ITO to refix the amount in the light of the judgment delivered by us in Appeal No. 909 of 1983 [(1988) 172 ITR 1].

(3.) ACCORDINGLY , the appeal is allowed and the judgment dated February 1, 1984, delivered by the learned single judge in Writ Petition No. 982 of 1980 [Praveen D. Desai vs. ITO (supra)] is set aside and the order dated April 12, 1979, passed by the ITO under S. 179 of the IT Act, 1961, is upheld, but subject to the direction that the ITO would redetermine the amount of arrears of tax due from the company after hearing objections to be filed by the respondent within four weeks from today and bearing in mind that the respondent would not be liable for arrears of tax due for the asst. year 1961 62. The Department is also directed to enforce the order personally against the respondent only in case the amount of arrears of tax cannot be realised in the proposed auction to be held on December 21, 1987, or on any adjourned date thereafter.