The liability of company directors under Section 179 of the Income-tax Act is not appealable, and the issuance of a demand notice under Section 156 is crucial for initiating the recovery process.

D.S.Tewatia, J.

1. These two writ petitions (CWP Nos. 553 of 1980 and 556 of 1979) involve common questions of facts and law and are, therefore, proposed to be decided by a common judgment.

2. For the purposes of facts, wherever reference becomes necessary, the same would be from CWP No. 553 of 1980. The two petitioners in the two writ petitions, Hardip Singh and Basant Singh, are father and son, respectively, and they were directors of Sandhu Bus Service (Pvt.) Ltd. By virtue of the provisions of Section 179 of the Income-tax Act, 1961 (for short "the Act"), the liability of the company for the assessment years 1955-56 to 1962-63 was fastened upon them by the Income-tax Officer. They challenged the order of the Income-tax Officer in this court. The High Court sustained the order of the Income-tax Officer and the judgment of this court was then challenged in the Supreme Court. Their Lordships of the Supreme Court sustained the judgment of this court, vide judgment in S. Hardip Singh v. ITO [1979] 118 ITR 57. The Income-tax Officer thereafter issued recovery certificate in respect of the amount due. The petitioners have challenged the said recovery certificate on two grounds :

(i) that no recovery certificate under Section 222 of the Income-tax Act could be issued unless a demand notice under Section 156 of the Act has been served upon the petitioners, and

(ii) that only the tax liability of the assessee-company for the assessment year 1962-63 amounting to Rs. 12,731 could be recovered from the petitioners because the provision of Section 179 of the Act was prospective in character and not retrospective.

3. So far as the second contention is concerned, it is too late in the day to raise it because so far as the quantum of the tax liability and the period are concerned, they stand determined between the parties by the apex court itself in S. Hardip Singhs case [1979] 118 ITR 57. The Income-tax Officer in that case had held the petitioners liable for all the aforesaid assessment years. This order had been sustained right up to the Supreme Court, as already observed.

4. Now, coming to the first contention, it may be mentioned that the primary purpose of serving a demand notice upon the assessee under Section 156 of the Act is to initiate the process of recovery of the amount of tax found due from the assessee. Unless a demand notice is served upon the assessee under Section 156, things would not move, in that the assessment order passed either under Section 143 or 144 of the Act is made appealable by the provisions of Section 246. Time within which the appeal is to be filed is provided by Section 249 of the Act which provides that an appeal against the order of the Income-tax Officer passed under Section 143 or 144 should be filed within thirty days from the date of the service of the demand notice under Section 156 of the Act. If, for instance, the Income-tax Officer, for whatever reasons, fails to serve the demand notice upon the assessee, then the assessee can wait to file the appeal with the result that the tax liability assessed by the Income-tax Officer would remain in abeyance. That is why, the issuance of a demand notice under Section 156 assumes such a mandatory importance. Yet another reason that necessitates the issuance of a demand notice under Section 156 is that an assessee cannot be declared a defaulting assessee in terms of Section 220(4) of the Act unless a demand notice is served upon him under Section 156, and unless a demand notice is served on a defaulting assessee, the coercive process of recovering the tax liability from him by issuing a tax recovery certificate under Section 222 cannot be resorted to.

5. So far as the order that is passed under Section 179 of the Act is concerned, the same is not appealable. Therefore, the first underlying necessity of issuance of the notice under Section 156 is not there. So far as the second underlying necessity of issuance of the notice under Section 156 is conce