Section 179 vicarious liability is limited to unpaid tax dues and cannot be extended to interest or penalty.

Section 179 of the Income-tax Act confines a director's vicarious liability to the company's unpaid "tax due" and does not extend to interest or penalty. The Gujarat HC read the statutory scheme, which separately refers to tax, interest and penalty in recovery provisions, and followed earlier binding precedent to hold that a director may be proceeded against only for the company's tax liability. Recovery of interest and penalty from the director was therefore impermissible, and the impugned recovery action was set aside.

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Issues: Whether, in proceedings under Section 179 of the Income-tax Act, 1961, the Revenue could recover interest and penalty arising from the company's assessment from its director.

Analysis: Section 179 uses the expression "tax due", whereas the Act separately refers to tax, interest and penalty in other recovery and demand provisions. The Court relied on the statutory scheme and the earlier binding decision to hold that the director's vicarious liability under Section 179 is confined to the company's unpaid tax dues and cannot be extended to interest or penalty. The director may be treated as an assessee only to the extent of the company's tax liability, not for interest or penalty liabilities imposed on the company.

Conclusion: Recovery of interest and penalty from the petitioner under Section 179 was held impermissible and the impugned recovery action was set aside.

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