Section 179 director liability requires winding up, not mere striking off of a defunct private company.

Section 179 of the Income-tax Act creates a separate liability on directors only where the private company has been wound up after the commencement of the 1961 Act. Construing the provision strictly, the court treated "wound up" in its ordinary company-law sense and held that a company merely struck off the register as defunct, without winding-up proceedings, does not satisfy that condition. The directors could not therefore be fastened with personal liability under the section, and the notices issued against them were unsustainable.

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Issues: Whether section 179 of the Income-tax Act, 1961 applies to a private company that had merely been struck off the register under section 560(5) of the Companies Act, 1956 and had not been wound up after the commencement of the 1961 Act.

Analysis: Section 179 creates a new liability on directors and operates notwithstanding the Companies Act. Its application depends upon the condition that the private company must have been wound up after the commencement of the Income-tax Act, 1961. The expression "wound up" was construed in its ordinary company-law sense, because the section refers not only to winding up but also to tax assessed before, during, or after liquidation. Since the provision imposes a liability in a taxing statute, it was held to require strict construction. A company merely struck off as defunct, without winding-up proceedings, does not satisfy the statutory condition.

Conclusion: Section 179 was held inapplicable to the petitioners, because the company had not been wound up after the commencement of the Income-tax Act, 1961. The notices raising personal liability on the directors were therefore unsustainable.

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