Sanjay Ghai vs Deputy Commissioner Of Income Tax ...
2011 Latest Caselaw 3187 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      W.P.(C) 7395/2010

       SANJAY GHAI                                   ..... Petitioner
                               Through   Dr. Rakesh Gupta, Mr. Ashwani
                                         Taneja, Ms. Rani Kiyala and Ms.
                                         Poonamf Ahuja, Advocates.
                      versus


       DEPUTY COMMISSIONER OF INCOME TAX AND ORS
                                       ..... Respondent
                   Through  Ms. Rashmi Chopra, Advocate.

       CORAM:
       HON'BLE THE CHIEF JUSTICE
       HON'BLE MR. JUSTICE SANJIV KHANNA

                                ORDER

% 07.07.2011

The petitioner, Sanjay Ghai impugns the order dated 14th

November, 2007 passed by the Assistant Commissioner of Income Tax,

Circle 7(1), New Delhi under Section 179 of the Income Tax Act, 1961

(Act, for short). He has also prayed for quashing of recovery proceedings

of outstanding demand and for stay of recovery of demand of

Rs. 28,71,84,883/-.

2. Income Tax Department in their counter affidavit have stated that

M/s Sarvodhya Realtors (P) Ltd. is liable to pay Rs.28,71,84,883/-

(Rs.23,45,31,280/- for assessment year 1998-1999, Rs.4,47,73,904/- for

assessment year 1999-2000 and 78,79,699 for assessment year 2000-

2001) and the petitioner is a director of the said company, which is a

private limited company. It is stated that notice dated 27 th September,

2007 under Section 179 (1) of the Act was served upon the petitioner in

his capacity as a director of M/s Sarvodhya Realtors (P) Ltd. at 81-D, Dila

Ram Bazar, Rajpur Road, Dehradun. The said notice was received by one

Abhay Singh on 11th October, 2007 at the said address as per the

information received from the Deputy Commissioner of Income Tax,

Circle-1, Dehradun by the Commissioner of Income Tax, Circle 7 (1), the

Assessing Officer of Sarvodhya Realtors (P) Ltd. As there was no

response or reply by the petitioner, after considering the facts of the case,

an order under Section 179 of the Act dated 14th November, 2007 was

passed against the petitioner for recovery of the said amount.

3. The case of the petitioner, on the other hand, is that he was not

aware of the proceedings under Section 179 of the Act and was never

served with the notice dated 27th September, 2007. He submits that he

became aware of the said proceedings and the order dated 14 th November,

2007, only when he received letter dated 15th March, 2010 from the

Additional Commissioner of Income Tax, Circle-1, Dehradun intimating

that refund of Rs.38,92,957/- for A.Y. 1999-2000 and Rs.15,00,276/- for

A.Y. 2003-2004 was due, but the said payment cannot be made because

of the outstanding recovery in view of the order dated 14th November,

2007 passed under Section 179 of the Act. Thereafter, the petitioner wrote

letter dated 23rd March, 2010 to the Additional Commissioner of Income

Tax, Circle-1, Dehradun and inspected the records in Delhi and came to

know about the said proceedings.

4. In the writ petition, a number of contentions have been raised

including whether or not Section 179 of the Act can be invoked and is

applicable to the present case, but the main and principal grievance raised

by the petitioner is that he was never served with show cause notice, heard

and as such there has been violation of the principles of natural justice.

5. We have examined the said contentions. We have also looked at the

quantum of demand and the legal issues raised by the petitioner. Keeping

in view the aspects and questions raised, we feel that it will be appropriate

and proper if the petitioner is given a hearing and a fresh order under

Section 179 of the Act is passed. There is a dispute regarding service of

notice dated 27th September, 2007. The respondent in the counter affidavit

has stated that Abhay Singh had informed that the petitioner was out of

station and intimation may be sent to him by writing to him another letter.

However the respondent did not communicate or correspond with the

petitioner thereafter. It may be noted that the notice was received by

Abhay Singh on 11th October, 2007 at 12.30 pm and hearing was fixed on

15th October, 2007 i.e. just four days later. Thereafter, no communication

was made by the respondent to the petitioner fixing the hearing or calling

for reply. On 14th November, 2007 order under Section 179 was passed. It

is not clear and there is no material/evidence whether the order under

Section 179 of the Act dated 14th November, 2007 was ever served on the

petitioner. No steps for recovery were undertaken even after passing of

the order. Keeping in view the aspects and questions raised, we feel that it

will be appropriate and proper if the petitioner is given a hearing and a

fresh order under Section 179 of the Act is passed.

6. Accordingly, the impugned order dated 14th November, 2007 is set

aside with a direction that the petitioner or his authorized representative

will appear before the Deputy Commissioner of Income Tax, Circle 7(1),

New Delhi on 29th August, 2011 at 2 p.m. He shall also file his reply to

the notice under Section 179 of the Act on the said date. If required and

necessary, the Assessing Officer can grant further opportunity of hearing

to the petitioner. However, the proceedings under Section 179 of the Act

will be disposed of within three months from the first date of hearing. Till

the disposal of the proceedings under Section 179 of the Act, the

petitioner shall not deal with, encumber or dispose of his immoveable

properties, details of which will be furnished and given to the Assessing

Officer on the first date. The refunds due to the petitioner will also not be

paid till the proceedings under Section 179 of the Act are disposed of and

will be subject to the outcome of the said proceedings. The writ is

accordingly disposed of. There will be not order as to costs.

SANJIV KHANNA, J.

CHIEF JUSTICE

JULY 07, 2011 NA