The central legal point established in the judgment is the requirement for the competent officer to formulate grounds and give notice before lifting the corporate veil and taking coercive steps under section 179 of the Income Tax Act, 1961.

JAYANT PATEL, J.

1. The facts of the case appears to be that on 25.1.2015, a company in the name and style of Hirak Biotech Limited (hereinafter referred to as “the company”) was incorporated. Initially, there were three Directors. Thereafter, the Directors were added. The petitioner also remained as Director of the company for some time. On 11.10.2013, a show cause notice was issued under section 179 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) calling upon the petitioner to show cause as to why the outstanding tax dues of the company should not be recovered from the petitioner in capacity as the Director of the company. The petitioner submitted reply on 17.10.2013 and as per the petitioner, another show cause notice was issued dated 4.9.2014 calling upon the petitioner to pay the dues, failing which, coercive steps were to be taken. The petitioner replied to the show cause notice and as per the petitioner, when the present proceeding was going on before the officer concerned, the present petition was filed. As per the petitioner, this Court on 16th September, 2014, had entertained the petition and had granted interim stay so far as coercive actions are concerned. It appears that pending the petition, the petitioner received copy of order dated 19.11.2013 already passed by the officer concerned. The petitioner contends that though the order is dated 19.11.2013, it was never served to him and pending the petition since the order is received by him, the petition was amended challenging the said order dated 19.11.2013. It is under these circumstances, the present matter comes up for final disposal before this Court.

2. We have heard learned counsel Mr. Soparkar appearing for the petitioner and Mr. Manish Bhatt, learned counsel for the respondent.

3. As such, it is undisputed position that the company is a limited company and therefore, can be termed as public limited since it is not a private limited company. The language of section 179 provides for taking action for recovery of the outstanding tax of the private limited company from the Directors if the revenue finds that in spite of sincere attempts, it is not possible to recover the outstanding tax amount from the private limited company.

4. However, Mr. Manish Bhatt, learned counsel appearing for the revenue by relying upon the decision of this Court in case of Pravinbhai M. Kheni Vs. Assistant Commissioner of Income Tax reported at 2013 (353) ITR 855 (Gujarat), contended that it is not that no action can be taken against the Directors of the public limited company by lifting the corporate veil. He submitted that if the conditions are satisfied for lifting of the corporate veil as observed in the aforesaid decision of this Court, such is permissible. Therefore, he submitted that the order may not be quashed on such ground, but Mr. Bhatt could not point out to this Court as to whether at any point of time, the petitioner was put to notice on the aspects of lifting of the corporate veil and thereby to treat the Director of the public limited company at par with the Directors of the private limited company as provided under section 179 of the Act.

5. Mr. Soparkar, learned counsel appearing for the petitioner contended that the basic ingredients for lifting of the corporate veil could not be said as satisfied and in the impugned order, there is not a whisper about the lifting of such corporate veil and in his submission, the facts stated in the Affidavit-in-reply cannot be considered for supplementing the order for which there is complete silence.

6. We may record that in the above referred decision of this Court in case of Pravinbhai M. Kheni (supra), while considering the case under section 179 of the Act itself, this Court at page 23 had concluded thus:

“1) The respondent authorities did establish that it was not possible to recover the tax dues from the company.

2) The petitioner neither pleaded nor succeeded in establishing that such non recove