Tax Recovery Must First Target Company: High Court Finds Existing Protection Sufficient and Dismisses Plea

Tax Recovery Must First Target Company: High Court Finds Existing Protection Sufficient and Dismisses Plea

The Bombay High Court, in a recent significant ruling, dismissed a writ petition filed by Madhavi Kerkar, finding no merit in it. The court says that the petitioner has already been granted enough protection in the present matter.

In the present case, the petitioner, Madhavi Kerkar, had filed a writ petition in the Bombay High Court, challenging an order passed under Section 179 of the Income Tax Act, 1961. According to the said order, the petitioner was liable for making payment of all outstanding dues of M/s. Vaidehi Akash Housing Private Limited. The tax demand pertaining to the Assessment Years 2006-07 to 2011-12. It was undisputed that she was working as a director of the company during the year under consideration.

Along with the aforesaid order, the petitioner had also challenged another order passed by the Principal Commissioner of Income Tax (PCIT) under Section 264, which was issued in response to her revision petition. She argued that the tax department should first recover the outstanding dues from the company before initiating recovery against her personally.

It was observed that the revisional authority had already taken the issue into consideration. The authority had directed the Assessing Officer (AO) and the Tax Recovery Officer to first make all possible efforts to recover the tax from the company. It further directed that recovery proceedings should not be initiated against the petitioner if the entire tax amount could not be recovered from the company.

The court noted that “this is adequate protection to the Petitioner, who submits that recovery proceedings should first be exhausted against the Company.” Accordingly, the court did not find any merit in the present writ petition; consequently, the case was dismissed. However, the Court did not impose any costs on either party.