IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 5^TH DAY OF JANUARY, 2026

BEFORE

THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

WRIT PETITION NO. 45503 OF 2018 (T-IT)

BETWEEN:

1. THUMPUDI SRIKANTH BHAGAVAT

AGED 51 YEARS

S/O TKK BHAGAVAT

R/ # 4072, 30^TH CROSS,

BANASHANKARI 2^ND STAGE,

BENGALURU - 560 070

… PETITIONER

(BY SRI. S.S. NAGANAND, SENIOR ADVOCATE FOR

SMT. SUMANA NAGANAND., ADVOCATE)

AND: Digitally

signed by 1. UNION OF INDIA

PRAKASH N

MINISTRY OF FINANCE

Location:

HIGH COURT DEPARTMENT OF REVENUE,

OF

KARNATAKA GOVERNMENT OF INDIA,

NORTH BLOCK,

NEW DELHI - 110 001

THROUGH THE SECRETARY

2. THE DEPUTY COMMISSIONER OF INCOME TAX

CIRCLE - 1(2), PUNE 2^ND FLOOR, A WING,

ROOM NO.204,

PMT COMMERCIAL COMPLEX,

SHANKAR SETH ROAD, SWARGATE PUNE - 411 037 … RESPONDENTS (BY SRI. Y.V. RAVI RAJ, ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER DATED 29.08.2018 (ANNEXURE-A) PASSED BY THE 2^ND RESPONDENT AND ETC.

THIS PETITION COMING ON FOR HEARING THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

ORAL ORDER

The present petition has been filed by the petitioner who was non-executive Director of subsidiary company viz., M/s.DSK Southern Projects Pvt. Ltd., challenging the validity of order dated 29.08.2018 passed by the second respondent whereby the order was passed under Section 179 of the Income Tax Act, 1961 ("the Act", for short).

2. The facts that are made out are that M/s.DS Kulkarni Developers Ltd., was in default to the Department of tax and interest upon assessment for the Assessment Year 2016-17.

3. It is further made out that notice under Section

226 (3) of the Income Tax Act, 1961 was issued to the company requesting to pay the Income Tax Department, any amount due from the Company held on account of assessee M/s.DS Kulkarni Developers Ltd. The order was passed directing the petitioner to pay outstanding taxes immediately, failing which coercive steps will be taken. Thus, it is becomes clear that insofar as tax due from M/s.DS Kulkarni Developers Ltd., proceedings under Section 179 were initiated against the Director of M/s.DSK Southern Projects.

4. Without entering into the merits, a perusal of Section

179 would be of relevance. Section 179 of the Income Tax Act, 1961 reads as follows:

179. Liability of directors of private company —

(1) Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), [where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company] cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.

(2) Where a private company is converted into a public company and the tax assessed in respect of any income of any previous year during which such company was a private company cannot be recovered, then, nothing contained in sub-section (1) shall apply to any person who was a director of such private company in relation to any tax due in respect of any income of such private company assessable for any assessment year commencing before the 1st day of April, 1962.]

[Explanation.—For the purposes of this section, the expression “tax due” includes penalty, interest or any other sum payable under the Act.]

5. It is the contention of learned Senior Counsel appearing on behalf of the petitioner that before Section 179 is invoked, it is necessary that there has to be an affirmative finding that tax dues "cannot be recovered" and only upon such contingency having occurred, proceedings could be initiated under Section 179 against every person who was the Director of the company at any time during the