THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE DR. JUSTICE G.RADHA RANI WRIT PETITION No.29787 OF 2024 ORDER: (per Hon’ble Sri Justice Sujoy Paul)

Sri Swaroop M.V., learned counsel represents on behalf of M/s.Mytri Indukuru, learned counsel for the petitioner and Sri Murali Krishna, learned Senior Standing Counsel for Income Tax Department, appears for respondent Nos.2 and 3.

2. With the consent, finally heard.

3. This petition filed under Article 226 of the Constitution of India takes exception to the order dated 26.05.2022 and the consequential attachment order, dated 17.10.2024, whereby invoking Section 179 of the Income Tax Act, 1961 (for short ‘the Act’), the petitioner-widow of the former Director is saddled with the liability.

4. Learned counsel for the petitioner submits that only upon receiving the said attachment order, the petitioner came to know about the original order dated 26.05.2022. Before issuing the order, dated 26.05.2022, the petitioner was never put to notice. He placed reliance on a recent judgment of this Court in Sri Subba Rao Pavuluri v. Assistant Commissioner of Income Tax, [W.P.No.8369 of 2023, dated 01.10.2024] and urged that in the manner section 179 of the Act is worded, this Court opined that the petitioner must be put to notice to enable her to take necessary defence and prove that she is not liable to shoulder the burden.

5. Learned Senior Standing Counsel for Income Tax Department supported the impugned order, but, on a specific query from the Bench could not apprise the Court that before issuance of the impugned order, dated 26.05.2022, the petitioner was put to notice in the proceeding under Section 179 of the Act. This Court in Sri Subba Rao (supra) held as under:-

“8. Before dealing with rival contentions, it is apposite to reproduce Sub-section 1 of Section 179 of the Act, which reads thus:

“Section 179: Liability of directors of private company in liquidation:-

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.

(Emphasis Supplied)

9. On a specific query from the Bench, learned Senior Standing Counsel fairly admitted that before passing the impugned order dated 07.03.2023, the petitioner was not put to notice. It is seen that the counter is drafted in an artistic manner still it is clear that all the notices issued were issued to the Company and not to the Director. Thus, pivotal question before us is, whether in a case of this nature, where impugned order is passed against the Director, whether Director was required to be put to notice.

10. As noticed above, learned Senior Standing Counsel submits that there was no need of providing opportunity. We are unable to persuade ourselves with this line of argument of learned Senior Standing Counsel, in view of the language employed in Section 179 of the Act. A plain reading of which shows that such tax can be fastened or directed to be shouldered by the Director, unless, he proves that non- recovery cannot be attributable to any gross neglect, misfeasance or beach of duty on his part in relation to the affairs of the company.

11. We find substantial force in the argument of learned counsel for the petitioner that the petitioner could have proved the aforesaid ingredients and discharge reverse burden on him only when he was put to notice and given an opportunity to prove it. Thus, in the manner sub-Section 1 of Section 179 of the Act is framed, the principl