The Company filed its return of income and assessed with several additions and accordingly tax demand was raised against the Company.  The stay application filed by the Company was rejected.  The deceased assessee was one of the directors of the Company and an order u/s 179 was passed upon the deceased assessee raising tax demand from him.

The Hon’ble Court found that the AO passed the order u/s 179 upon the deceased assessee without first taking any step to trace out the assets of the Company or any evidence indicating no possibility of recovery of tax dues from Company, that the Company was under Corporate  Insolvency Resolution Process under IBC and order admitting petition u/s 7 of IBC was passed,  that the deceased assessee had not been given any opportunity to establish that non recovery could not be attributable to any of three directors on his part i.e. gross neglect or misfeasance or breach of duty.  Accordingly, the Hon’be Court held the impugned order passed for commencing proceedings u/s 179 upon the assessee was to be quashed and set aside.  [AY.  2012-13]