A notice issued under section 179(1) of the Income Tax Act, 1961, to directors of a private company for payment of tax found due against the company is valid only if there is a finding by the Assessing Officer that the amount cannot be recovered from the company.

( 1 ) THE Court: Both the matters were analogously placed. In both the matters notices under section 179 of the Income Tax Act, 1961 have been challenged. The aforesaid notices dated 6th March, 2002 were made requiring reason as to why the taxes should not be realised personally from them giving a date of hearing. Therefore, in effect, the petitioners challenged the show-cause notice under writ jurisdiction of the Court. Under normal circumstances writ Court does not interfere with the show cause. But element of interference is available hereunder.

( 2 ) THE petitioner (in each writ petition) contended that he was a non-executive Director of the respondent No. 4 Company inducted in the capacity of a Chartered Accountant. They were never involved in administering the day-to-day business of the respondent-Company. In early 1993 the Board of Directors was reconstituted in view of the change of management of the company. The petitioners resigned from the directorship. At the time of resignation, the fiscal position of the respondent company was quite strong and healthy. Prior to the resignation Income Tax Return was duly filed by the company and tax dues were paid. The Return was duly processed under section 143 (1) (a) of the Income Tax Act. After the resignation the petitioners had no contact or communication with the new management of the company. On 9th March, 1998 the petitioners were surprised to receive a letter from the office of the Assistant Commissioner of Income Tax, Company circle, under section 272a of the Act requiring attendance of the petitioners. The petitioners intimated that they had left the company. Thereafter, the impugned notice was received by them under section 179 of the Act. The petitioners contended that in such short period of time they are not in a position to give reply. However, various statements are made as against the show cause notice by way of averments in the writ petitions which are likely to be the reply to the show-cause of the authority.

( 3 ) MR. Mallick, learned senior counsel appearing for the petitioners, has drawn my attention to section 179 of the Act. It appears to me that it is made in respect of liability of the directors of the private company in liquidation. He cited a judgment reported in (1998) 232 ITR 306 (K. V. Reddy and Another v. Assistant Commissioner of Income Tax and Another) to establish that the liability of the Director is not a liability co-extensive with the liability of the company unlike a principal debtor and surety.

( 4 ) ON the other hand, Mr. Shome, learned senior counsel appearing for the authority cited a judgment reported in (1996) 222 ITR 608 (Darshan Kumar vs. Commissioner of Income Tax and Others) and contended that bare reading of the provision under section179 of the Act shows that every person who was Director of the private company at any time during the relevant previous year of assessment shall be jointly and severally liable for the payment of tax found due against the company for the previous year.

( 5 ) HE further cited a decision reported in (1995) 215 ITR 9 (M. R. Sudararaman v. Commissioner of Income Tax and Another) where under a single Bench of Madras High Court also held that Director/s shall be jointly and severally liable for payment of tax.

( 6 ) HE also cited a judgment reported in (1998) 229 ITR 570 (Roop Chandra Sharma v. Deputy Commissioner of Income Tax (Assessment) to reiterate his submission by showing the relevant portion of such judgment where even it has been held that liability is co-extensive with the company and a Director is liable only in respect of the arrears of tax of the assessment year when he was functioning as a Director.

( 7 ) ACCORDING to me, for the purpose of invocation of writ jurisdiction there should be some materials for which it will appear that a judicial review is necessary being the action is bad from the face of it. In the instant case, a notice has been issued to the petitione