In the case of Geeta P. Kamat v. PCIT, the petitioner, who served as a director in a company, received a show cause notice demanding the recovery of tax dues on behalf of the company. The petitioner argued that she should not be held liable since there was no evidence of gross negligence, malfeasance, or breach of duty on her part concerning the company’s affairs. However, the Assessing Officer disagreed and concluded that the petitioner had not proven her lack of active involvement in the management of the company during the relevant assessment years. As a result, the Assessing Officer issued a notice to the petitioner for the recovery of the company’s tax demand.
During the proceedings, the petitioner presented sufficient evidence to support her claim that she had a limited role as a director, emphasizing the lack of financial control and decision-making powers she possessed within the company. The petitioner’s stance was that she did not hold a substantial position in the management hierarchy. Importantly, the Assessing Officer failed to identify any specific incidents, decisions, or actions that could be deemed as gross negligence, breach of duty, or malfeasance on the part of the petitioner, which could have resulted in the non-recovery of the company’s tax dues.
Therefore, it was determined that the petitioner had successfully discharged the burden of proof imposed upon her under Section 179. Consequently, the issuance of the notice to the petitioner for the recovery of the company’s tax dues was deemed unjustifiable and unsustainable. The court held that the notice should be set aside, ruling in favor of the assessee.
It is worth noting that the assessment years in question were 2008-09 and 2009-10. The court’s decision highlighted the petitioner’s ability to present evidence suggesting her limited involvement and lack of responsibility in the company’s affairs, as well as the absence of any significant actions or decisions that could be considered as acts of gross neglect, breach of duty, or malfeasance leading to the non-recovery of the company’s tax dues.
In conclusion, Geeta P. Kamat successfully argued that she should not be held personally liable for the recovery of tax dues on behalf of the company. The court found that she had adequately demonstrated her limited role as a director and the absence of any actions amounting to gross negligence, breach of duty, or malfeasance. As a result, the notice issued against her for the recovery of the company’s tax dues was deemed unsustainable and set aside.
