JUDGMENT :

Akil Kureshi, J.

The petitioner has challenged an order dated February 27, 2012, as at exhibit S to the petition passed by the Assistant Commissioner of Income-tax, Anand, under section 179 of the Income-tax Act, 1961 ("the Act" for short).

2. The facts may be noted at the outset :

2.1 The petitioner was one of the two directors of one Agni Briquette P. Ltd. (hereinafter to be referred to as "the said company"). For the assessment year 1997-98, the said company filed its return of income declaring nil income. Such return was taken in scrutiny by the Assessing Officer. The Assessing Officer framed assessment on February 18, 2000, holding that the said company had income of Rs.26,55,117 from undisclosed sources. He also issued a notice for imposing penalty under section 271(1)(c) of the Act.

2.2 The company challenged the order of the Assessing Officer before the Appellate Commissioner. The Commissioner, however, dismissed the appeal whereupon the assessee approached the Income-tax Appellate Tribunal ("the Tribunal" for short). The Tribunal dismissed the assessee's appeal on February 23, 2007, on the ground that the notice of hearing of the appeal when sent to the company, the same was returned with a postal remark "left".

2.3 On December 4, 2002, the Income-tax Officer, Anand, issued a tax demand on the company stating that upon verification of records it was observed that an amount of Rs.26,55,117 and penalty of Rs.11,41,702 was payable by the company.

2.4 On August 1, 2001, the Tax Recovery Officer issued a prohibitory order stating that in view of the warrant of attachment issued on January 19, 2001, the machinery lying in the factory premises of the company shall not be sold or transferred or removed from the place of the factory without the permission of the Tax Recovery Officer of the Income-tax Department.

2.5 On October 8, 2010, the Assistant Commissioner of Income-tax wrote a letter to the company stating that the arrears of amounts demanded are still outstanding for the assessment year 1997-98 which included unpaid tax of Rs.20,77,896 and penalty of Rs.11,41,701, i.e., total of Rs.32,19,597. He called upon the company to immediately make payment of such outstanding amount with interest under section 220 of the Act.

2.6 In response to such notice, the petitioner as a director of the company addressed a letter dated November 8, 2010, in which it was stated that the Assessing Officer had framed the assessment which was completely incorrect. The assessee had already filed appeal before the Tribunal.

2.7 There is further correspondence between the company and the Income-tax Department which is not of much interest to us, except to record that on August 29, 2011, the Tax Recovery Officer even attached personal property of the petitioner, namely, his share in an immovable property situated at survey No. 990/4 at Gujarat Saw Mill Compound, Anand.

2.8 On February 14, 2012, the Assistant Commissioner of Income-tax issued a notice to the petitioner pointing out that as per the records of the assessment year 1997-98, an amount of Rs.20,77,896 and Rs.11,41,701 has remained unpaid by the company. Such demand is outstanding since long. No efforts are made to make payments for such demands. It was pointed out that the petitioner was a director during the previous year relevant to the assessment year in which the demand related. He was called upon to state why he should not be personally held liable for payment of demands of the company with interest as per the provisions of section 179 of the Act.

2.9 The petitioner filed a detailed reply dated February 21, 2012, in response to such notice. He contended that the Tax Department had issued a prohibitory order against the sale of the company's assets as far back as in August, 2001. The Department, therefore, could have taken necessary action for recovery of the dues. If proper care had been taken, dues of GSFC (in whose favour the company had created a first charge over its immovable pro