Facts of the Case

The petitioner, Shri Pawan Jhalani, filed a writ petition challenging the order dated 01.05.2019 passed by the Assistant Commissioner of Income Tax under Section 179 of the Income Tax Act, 1961. The petitioner was a director of a company named North Delhi Bullion Traders Pvt. Ltd.

The petitioner sought quashing of the said order and also prayed for interim relief to stay recovery proceedings arising out of the impugned order.

It was brought to the notice of the Court that other directors of the same company had earlier approached the Court by filing similar writ petitions, which were withdrawn with liberty to file revision petitions under Section 264 of the Act.

Issues Involved

  1. Whether the writ petition challenging the order under Section 179 of the Income Tax Act is maintainable.
  2. Whether the petitioner should be granted liberty to avail an alternative statutory remedy under Section 264 of the Act.
  3. Whether delay in filing revision petition should be condoned in such circumstances.

Petitioner’s Arguments

  • The petitioner challenged the validity of the order dated 01.05.2019 passed under Section 179 of the Income Tax Act.
  • It was argued that recovery proceedings initiated pursuant to the said order should be stayed.
  • The petitioner relied on earlier cases of co-directors where liberty had been granted to file revision petitions under Section 264.

Respondent’s Arguments

  • The respondent (Revenue) did not oppose the submission made by the petitioner.
  • It was fairly conceded that the matter could be disposed of on similar lines as earlier cases involving other directors of the same company.

Court Order / Findings

  • The petitioner was granted liberty to file a revision petition under Section 264 of the Income Tax Act.
  • If such revision petition is filed within three weeks from receipt of the order, the authority shall decide it on merits.
  • The revision petition shall not be rejected on the ground of limitation.
  • The Court clarified that it had not examined the matter on merits and all rights and contentions of the parties were kept open.

Important Clarification

  • The Court expressly stated that it did not adjudicate the merits of the case.
  • The order is procedural in nature, focusing on availability of alternate remedy.
  • The petitioner retains full liberty to raise all legal grounds before the revisional authority.

Sections Involved

  • Section 179 of the Income Tax Act, 1961 (Liability of Directors of Private Company)
  • Section 264 of the Income Tax Act, 1961 (Revision of Orders)

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS16122022CW64882019_182727.pdf

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