JUDGMENT
1. Against notices issued by the Income-tax Recovery Officer, Range xviii, and the order made by the AO under Section 179 of the IT Act, 1961, the petitioners have filed this petition.
2. At the outset, it may be stated that in view of the different notices and separate causes of action, two petitions ought to have been filed. Registry is directed to give separate number in respect of petitioner No. 2 of this petition and may call upon the counsel to pay Court fee, if required to be paid.
3. Section 179 refers to liability of directors of a private limited company under liquidation. However, it is also necessary that the case put up by the director of a private limited company be taken into consideration by the AO before making an order adverse to such person. No doubt, the directors will be jointly and personally liable for the payment of tax. However, if he proves that recovery cannot be attributed to gross negligence, misfeasance or breach of duty on his part in relation to the affairs of the company, the question may be different. We are not stating anything on the merits of the case, as from the record placed before us, it appears that reply to notice under Section 179 was filed. However, in the order, it is mentioned that the directors have not filed any reply to these notices till date.
4. Learned counsel for the Revenue pointed out to us that reply may not be there. Instructions given to the counsel for the Revenue is that no reply whatsoever has been filed by the assessed, as it is not available on the record. Thus, under these circumstances, we direct the AO to consider the reply submitted by the assessed, a copy of which is placed on record of this petition. Thereafter, following the principles of natural justice, he shall pass necessary orders in this matter. However, at the same time, with a view to protect the interest of the Revenue, we accept the contention of the counsel for the Revenue, and frankly speaking, the counsel for the petitioner has also agreed to call upon the petitioners to file an undertaking before the Court disclosing the properties belonging to the petitioners which shall not be disposed of till a decision is rendered by the AO. The AO shall decide the matter within four weeks from receipt of this order.
5. In view of what we have stated above, the order of the AO dt. 8th Jan., 2000, is quashed and set aside. The petition is disposed of accordingly.
6. With a view to expedite the proceedings, it is agreed between the parties that the petitioners shall appear before the AO on 5th Feb., 2004.