Mrs. Nowhera Shaik V. The Union of India and 3others

WP/42952/2022

AI Insights

In this writ petition, Mrs. Nowhera Shaik, the director of M/s. Heera Foodex Private Limited, challenged the action of the Income Tax Department under Section 179 of the Income Tax Act, 1961, which held her liable for the tax arrears of her company amounting to approximately Rs. 378 crores. The petitioner argued that the revision authority (respondent No.3) did not fix a date for hearing her appeals, which she claimed was illegal and arbitrary, violating her rights under Articles 14, 19(1)(g), and 21 of the Constitution. The court found that a reasonable opportunity of hearing was necessary before imposing such a substantial liability and directed respondent No.3 to consider the review petition after hearing the petitioner.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 730374 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 12-12-2022
• Assessment Year: misc
• Other Referred Cases: Kapra Mazdoor Ekta Union v. Management of M/s. Birla Cotton Spinning and Weaving Mills Ltd. [2005 AIR (Supreme Court) 1782]
• Laws Referred To: Article 226 of the Constitution of India, Section 179 of the Income Tax Act, 1961, Section 220(2) of the Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: GADI KUMAR; K MAMATHA
• Assessee Lawyers: M REDDY
• Keywords: Director's Liability; Income Tax Arrears; Review petition; Tax Recovery; Writ of Mandamus
• Section: 220(2); 226; 179

Judgement Text

"r-iririr,*.*idi*Hii [ 32es ] IN THE HIGH COURT FOR THE STATE OF TELA.NGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY ,THE TWELFTH DAY OF DECEMBER TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE SRI JUSTICE C.V. BHASKAR REDDY WRIT PETITION NO: 42952 OF 2022 Between: Mrs. Nowhera Shaik, Director lvI/s. Heera Foodex Private Limited, H. No. 12-6- 2126811I2,3,4 Vivek Nagar, Kukatpally, Hyderabad - 500072 .,.PETITIONER AND 1. The Union of lndia, Ministry of Finance, Income Tax Department 2. The Commissioner of lncome Tax Appeals, sth Floor, Signature Towers, Kondapur, Hyderabad - 500084. 3. The Deputy Commissioner of lncome Tax, Circle, 2(1 ), Room No 514, 5th Floor, Signature Towers, Kondapur, Hyderabad - 500084. 4. Tax Recovery Officer, TRO PCIT 2, Sth Floor, Signature Towers, Kondapur, Hyderabad - 500084. ...RESPONDENTS Petition under Article 226 o'f the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ, order or direction, more particularly, one in the nature of Writ of Mandamus declaring the action of the respondent No.3 i.e Revision Authority in not fixing the date of hearing for deciding the appeals filed by writ petitioner as illegal, arbitrary, violative of Articles 14, 19(1Xg) and 2't of the Constitution of lndia,l 950. lA NO: 1 OF 2022 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to / rr iiriy-a.t-ii+t!i, -t---:i-ii.ri.+ii'.r-:-- . i -i- ,n+n-i+ direct the Responc its No.4 in not to take steps to reco,/er the dues from personal assets of lirectors of the company towards recover/ probeedings vide DIN and Order No -ITBA/CON//F/1712022-2311045777163(1) dated 'l 1-10-2022 pending the disposu I of the above Writ Petition. Counsel for the Pet tioner: SRl. M GOVIND REDDY Counsel for the Rer pondent No.1: GADI PRAVEEN KUMAFI (i)y. SOLICITOR GENERAL OF INDI/,) Counsel for the Re: pondent No.2: M./S. K. MAMATHA, SC =CrR INCOME TAX The Court made the following: ORDER I I THE HON'BLE THE CHI IUSTICE UTIAL BIILryAN AND THE HON'BLE SRI TUSTI CE C.V.BI]ASKAR RIIDDY W.P.No.42952 of 2022 RDER. (Per tbe Hon.'bh the Cbief Jwrte Uljal Bkgan) F{eard lvfr. M.Govind Reddn leamed counsel for the petitioneq lvlr. G.Praveen Kumar, leamed Depury Solicitor General of India for respondent No.l; and lv{s. K.lMamata Choudary leamed Senior Standing C.ounsel, Income Tax Depanment for respondents No.2, 3 and 4. 2. By filing this petition under Article 226 of the C-onstitution of India, petitioner seeks a direction to respondent No.3 to consider the review petition filed bythe petitioner against the order dated 2t.09.2022 passed by the said respondent under Section 179 of the Income Tax Acq 1961 (briefly'the Act' hereinafter). 3. A perusal of the order dated 2t.09.2022 would go to show that there is income tax affears against lt4/s.FIeera Foodex Private Limited to the tune of Rs.378 crores (approximatel/ for various assessment years. Despite several opponunities and recovery measures, the assessee failed to pay the tax arears. Therefore, I 2 letter dated 1 .A7.2022 was issued through mail ,rs vr,:ll as through speed post tr, the petitioner being the Director,>f th,e assessee companyto s lowcause as to whyshe should not b,: helcl liable for pa).ment of lrx arrears of the assessee company undt:r Section 179(1) oi the ct. The order recor& that the petitic nr:r cid not file any reply. He rce, a view was taken that petitioner h,r,j no objection to treat her as Liable for pal,rnent of tax arrears ()f the assessee conrpanl,undlr Section 179(l) of the Act. Accordingly, it has been held that pet tioner being the Director of assess,'.' company is jointly and sev erally liable for payment of tax arears ol the assessee company amcurlting to Rs.3Z8 crores (approximarcL/. She has been directed to pay the same along with interest ueder Section 220Q) of the ., ct till the date of pal,rnent. In the t-,venr of failure, it has been menl ioned that petitioner would be urated in default and recovery proceedings would be initiate j t,r recover the tax arrearc. 4. Petitione r filed a petition for review of thc afc:resaid order darcd2l.09.2a 12 before respondent No.3 on |l.lo.2at.:2. X/rth the a; art assessee ., grievance that no decision was taken on the said review petition, 5. On29.11.2022, we had passed the following order: Petitioner seeks a direction to the 3d respondent to corsider her application for review of order dated 21.09.2022 passed under Section 179 of the Income Tax Acq 1961 @riefly referred to hereinafter as the 'Act). -filhen we queried leamed counsel for the petitioner as to whether Sec tion 179 of the Act or any other provision of the Act provides for review, Ieamed counsel has drawn our attention to a judgment of the Supreme C-oun in Kapra Mazoor Ekta Union v. Management of M/s. Birla Cotton Spinning and Weaving Mills Ltd. [2005 AIR (Supreme Court) 17821 more pafticularlyrc para20 thereof and submia that procedural review is inlerent in a quasi judicial authority. iv[s. Mamata C]roudary leamed Standing Coursel, Income Tax Department to obtain instructions. Lkr on 12.12.2022 under the same caption. 6. In the hearing today, leamed Senior Standing Counsel, Income Tax Deparrment submim that letter dated 13.07.2022 was the related writ petition came to be filed.bythe petitioner. I I I issued to the petitioner through e-mail as well as tlrrough speed post and we s served upan l1er. Notwithstanc,ir:g the same, petitioner did not appear before respondent Nr.3. 7. Howev'r, the same is disputed by learned r:o.nsel for the petitioner, u4 o submits that petitioner did not reccive any such letter. 8. Be that as it may, without entering into the above aspect, we are of the vie' u that before fastening liabiJiry on the [)irector of the assessee coml)any i.e., the petitioner, a reasonable o l)portuniry of hearing is re< luired to be granted to her, more s o because the amount invol',ed is quite substantial. It wili only b,c in the aid of justice if a n asonable opportunity of hearing is grunted to the petitioner. It s in that context, we are inclined to ac,:e:t the plea of leamed couns:l for the petitioner that the review pet.ition filed by the petitioner may be considered by respondent N>..; alter giving an opponunif .of hearing to the petitioner. ::4:: 5 9. That being the position, we direct respondent No.3 to give an opportuniry to the petitioner to make submissions regarding her liabiliry to pay the tax arrears of the assessee company i.e., Ws. FIeera Foodex Private Limited and thereafter pass appropriate order in accordance with law 10. Petitioner shail appear before respondent No.3 ot 07,07.2023 at 11:00 a.m. whereafter respondent No.l shall proceed with the matter. It. [e clariff that order dated 2t.09.2022 would be subject to the outcome of the fresh consideration byrespondent No.3. 12. Writ Petition is accordinglydisposed of. No costs. As a sequel, miscellaneous petitions, pending if any, stand disposed of. //TRUE COPY' SD/.N. SRIHARI ASSISTANT REGISTRAR SECTION OF CER To, 1. The Union of lndia, Ministry of Finance, lncome Tax Department 2. The Commissioner of lncome Tax Appeals, 5th Floor,Signature Towers, Kondapur, Hyderabad - 500084. I I I 3. The Deputy Commissioner of lncome Tax, Circle, 2(1), Floom r,lo 514, 5th Floor, Signatu e Towers, Kondapur, Hyderabad - 500084. 4. Tax Recovery Cfficer, TRO PCIT 2, 5th Floor, Signature Ttrwers, Kondapur, Hyderabad - 5 )0084. 5. One CC to Sr. Iv1 Govind Reddy, Advocate [OPUC] 6. One to K. Marratha, SC for lncome Tax, [OPUC] 7. One CC to Sri. Gadi Praveen Kumar (Dy. Solicitor General of lndia) [OPUC] 8. Two CD Copie; TJ BB Yf2 I I I t HIGH COURI' DATED: 1211212022 ORDER WP.No.42952 of 2022 DIPOSING TIIE WRIT PETITION WITHOUT C()STS S.TA I€ 1 I ! C ( d 1$ lril 2[a ir- t -.(. ,r c)i -- . ., @ o'1\"t ge_---..- 'el'l* ,). ,( "