Personal property of directors of I-T defaulting firms may be auctioned

Rajkot Income Tax Department for the first time invoked Section 179 to recover tax dues.

Rajkot: Sending strong signals to directors of defaulting private limited companies, for the first time in the history of Income Tax Department, the Rajkot I-T department has made use of Section 179 of the Income Tax Act and seized auctioned personal property of three directors of a private limited company on Wednesday after the company failed to pay around Rs 55 lakh.

The Section imposes liabilities on every director of a private company for recovery of tax dues, should the same is not recoverable from the company.

The entire operation was carried out by the tax recovery officer Taher Shk Saifuddin Tinwala under the supervision of Chief I-T Commissioner Ravindrakumar Patel and Principal Commissioner Nirajkumar. Tinwala claims, “This is for the first time in entire India that this section was used for auction and recovery.”

Speaking to First India about the entire operation, Tinwala said,” A demand of Rs 55 lakh was outstanding from Rudra Technocast Private Limited based in Shaper since 2013-14. We made continuous efforts for three years for the recovery but failed. By making use of Section 179, the directors of the company can be made liable for the payment of the demand from the company. Till now no actions were taken for auctions using this section. The section says that if the company becomes bankrupt or goes into liquidation, it is the personal liability of the directors to pay on behalf of the company.”

By the virtue of this section, Tinwala exercised powers and attached the personal assets of directors Naresh Patel, Bhavesh Patel and Manish Patel, which included a Hero Honda motorcycle and one Activa scooter, besides gold and silver ornaments. The items were auctioned on Wednesday giving recovery of Rs 1.05 lakh.

“This was the first phase of initiation of harsh action were movable properties were attached. We have further given 30 days time period to pay the demand.

In the second stage, immoveable properties of the directors, including houses and land will be done,” said Tinwala, who conducted all the three auctions in a single day.

According to available information, there are around 250 private limited defaulting companies in Saurashtra and Kutch. “ This is a strong message to the directors of the defaulting private limited companies”, Nirajkumar said.