Allowing the petition the Court held that; the Act made no distinction between professional or paid directors and directors holding a large shareholding stake in the company. S.179(1) only gave jurisdiction to the AO to proceed against a company when the was unable to recover the dues of the company from it. It was not, therefore, open to the Assessing Officer to read conditions into S.. 179(1) and ignore the strict rule of interpretation of fiscal statutes which prohibited reading anything in the statute not expressed therein .That before the Assessing Officer assumed jurisdiction, efforts to recover the tax dues from the company should have failed and such efforts and failure of recovery ought to have been mentioned in the notice, howsoever briefly. (AY.2011-12)
Mehul Jadavji Shah v. DCIT ( 2018) 403 ITR 201 / 165 DTR 366/255 Taxman 126 / 302 CTR 344 (Bom) (HC)
S. 179 : Private company – Liability of directors – Before the Assessing Officer assumed jurisdiction, efforts to recover the tax dues from the company should have failed and such efforts and failure of recovery ought to have been mentioned in the notice, howsoever briefly. No distinction can be made between professional or paid directors and directors holding a large shareholding stake in the company.