V.M.THOMAS V. INCOME TAX OFFICER

WP(C)/22062/2009

AI Insights

The case involves a writ petition filed by V.M. Thomas, Davis Thomas, and Manuel Thomas, who are directors of a private limited company, challenging the actions taken by the Income Tax Department under Section 179(1) of the Income Tax Act. This section allows the department to recover dues from directors of a company if the company fails to pay its tax liabilities. The petitioners argued that the assessments for the years 1992-93 and 1993-94, which were the basis for the recovery actions, were not final as one was under appeal at the Income Tax Appellate Tribunal and the other was still pending before the Assessing Authority. The court, after hearing the submissions, agreed that no further action should be taken under Section 179(1) until the assessments are finalized.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 755130 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 26-09-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: E K NANDAKUMAR; ANIL NAIR; K MATHAI; P THOMAS
• Keywords: Assessment; Directors' Liability; Income Tax; Recovery; Writ petition
• Section: 179(1)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN WEDNESDAY,THE 26TH DAY OF SEPTEMBER 2018 / 4TH ASWINA, 1940 WP(C).No. 22062 of 2009 PETITIONERS: 1 V.M.THOMAS AGED 78 YEARS VASANTHA AVENUE, MRC NAGAR, CHENNAI 600 028. 2 DAVIS THOMAS, 27 OLD NO.14 VASANTHA AVENUE, MRC NAGAR, CHENNAI 600 028. 3 MANUEL THOMAS, 27 OLD NO.14 VASANTHA AVENUE, MRC NAGAR, CHENNAI 600 028. BY ADVS. SRI.E.K.NANDAKUMAR SRI.ANIL D. NAIR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS RESPONDENTS: 1 INCOME TAX OFFICER,WARD1(1) ERNAKULAM 18. 2 COMMISSIONER OF INCOME TAX, KOCHI-18. OTHER PRESENT: SC-SRI. JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26.09.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 22062 of 2009 2 J U D G M E N T The petitioners, who claim to be the Directors of a Private Limited Company, has filed this writ petition impugning steps taken by the Income Tax Department against them under Section 179(1) of the Income Tax Act, to recover certain amounts that are allegedly due from the company under assessments for the years 1992-93 and 1993-94. 2. The crux of the petitioners' case is that they are not liable to be proceeded under Section 179(1) and also that the assessments have not yet become final, since one of them is under challenge before the Income Tax Appellate Tribunal and the other is still pending before the Assessing Authority consequent to remand. 3. I asked Sri.Jose Joseph, the Learned standing counsel for the Income Tax Department that if the assessments are still not final, how the Department would be justified in ordering recovery of amounts from the Directors. The Learned standing counsel very fairly conceded that if, as alleged by the petitioners, one of WP(C).No. 22062 of 2009 3 the assessments is still not final, then no further steps under Section 179(1) will be pursued and he says that the present action has been only to hold the Directors responsible under the provisions of that Section and not to recover it. However, as regards the year 1992- 1993, the Learned standing counsel says that there is no stay obtained by the petitioners from the Tribunal and therefore there is nothing that stops the Department from proceeding against them. 4. Going by the afore submissions, I am certain of the view that until and unless the assessments are complete and the amounts under it becomes recoverable, any further action under Section 179(1) against the petitioners cannot be permitted. 5. In such view of the matter, I close this writ petition recording the submissions made on behalf of the Income Tax Department that no further action will be taken against the petitioners, as far as the pending assessment for the year 1992-1993 is concerned, until such time as the assessment is concluded in terms of law. WP(C).No. 22062 of 2009 4 As regards the year 1992-1993 is concerned, even though the learned Standing Counsel says that no stay has been obtained by the petitioner from the Tribunal, I am of the view that since the Tribunal is seized of the matter, it would only be fairness that further action against the petitioners be defered. 6. Needless to say that the petitioners would be at liberty to invoke all remedies as may be available to them under the Act, if steps are taken under Section 179(1) against them after conclusion of the assessment and appeal. This writ petition is thus ordered. Sd/- DEVAN RAMACHANDRAN rp-26.9 JUDGE WP(C).No. 22062 of 2009 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ORDER ISSUED BY THE 1ST RESPONDENT TO THE 1ST PETITIONER DATED 26/12/2006 FOR THE YEAR 1992-93 & 1993-94 EXHIBIT P2 TRUE COPY OF THE ORDER ISSUED BY THE 1ST RESPONDENT TO THE 2ND PETITIONER DATED 26/12/2006 FOR THE YEAR 1992-93 & 1993-94 EXHIBIT P3 TRUE COPY OF THE ORDER ISSUED BY THE 1ST RESPONDENT TO THE 3RD PETITIONER DATED 26/12/2006 FOR THE YEAR 1992-93 & 1993-94 EXHIBIT P4 TRUE COPY OF THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL FOR THE ASSESSMENT YEAR 1993-94 DATED 11/1/2008 ISSUED TO M/S METRO STOCKS AND SHARES PVT. LTD. EXHIBIT P5 TRUE COPY OF THE APPEAL FILED BY THE PETITIONER'S BEFORE THE TRIBUNAL FOR THE YEAR 1992-93 DATED 5/6/2008 EXHIBIT P6 TRUE COPY OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX FOR THE YEAR 1992-93 & 1993-94 TO THE 1ST PETITIONER DATED 4/2/2008 EXHIBIT P7 TRUE COPY OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX FOR THE YEAR 1992-93 AND 1993-94 TO THE 2ND PETITIONER DATED 4/2/2008 EXHIBIT P8 TRUE COPY OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX FOR THE YEAR 1992-93 & 1993-94 TO THE 3RD PETITIONER DATED 4/2/2008 "