TaxTMI 
TaxTMI 
2013 (6) TMI 125
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....over the control of the management of the company and other Directors of the company, who happen to be his brothers and their family members, would be absolved of all the existing and future liabilities of the company. With these internal arrangement between the family members who were Directors of the said company, we are not concerned. 2.2 For the assessment year 1988-89, there was an outstanding demand of Rs. 2.47 lac (rounded off) and for the assessment year 1989-90 an outstanding demand of Rs. 4.38 lac (rounded off) was pending against the said company. Both these demands pertain to penalty levied by the department against the company under section 271(1)(c) of the Act. It is not in dispute that such penalty is confirmed against the company up to the Supreme Court. What is however not in dispute is that such demands relate to a penalty and such penalty was ordered against the said company. 2.3 To recover such dues of the company, the respondent herein issued two separate notices, both dated 13.02.2013; copies of which are produced at Annexure A collectively to this petition stating inter alia that : &....
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.... recoverable from the director of a private company is "tax due". The Apex Court in case of Harshad Mehta (supra) interpreted such term "tax due" and commented that : "The first question on which the arguments have been advanced, relates to the meaning of the phrase "tax due" used in Section 11(2)(a). Block's Law Dictionary at page 499 defines the word 'due', inter alia, as, "owing; payable; justly owed...Owed or owing as distinguished from payable. A debt is often said to be due from a person where he is the party owing it, or primarily bound to pay, whether the time for payment has or has not arrived... The word 'due' always imports a fixed and settled obligation or liability, but with reference to the time for its payment there is considerable ambiguity in the use of the term, the precise signification being determined in each case from the context." (underlining ours) Jowitt's Dictionary of English Law Vol. I, 2nd Edn. at page 669 defines 'due' as, "anything owing, that which one contracts to pay or perform to another... As applied to a sum of money, 'due' means either that it is owing or that it is payable; in other words, it may mean that the debt ....
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....ment of "such tax", which cannot be recovered from the company. The expression "tax due" and, for that matter the expression "such tax" must mean tax as defined for the purposes of the Act by Section 2(43). "Tax due" will not comprehend within its ambit a penalty. 8. The provisions of the Act make a clear distinction between the imposition of a tax on the one hand and a penalty on the other. Section 2(43) defines the expression "tax" in relation to an assessment year commencing on 1 April, 1965 and any subsequent assessment year to mean inter alia income tax chargeable under the provisions of the Act. Section 2(43) is as follows : "2. In this Act, unless the context otherwise requires... (43) "tax" in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income tax chargeable under the provisions of this Act, and in relation to any other assessment year income tax and supertax chargeable under the provisions of this Act prior to the aforesaid date and in relation to the assessment year commencing on the 1st day of April, 2006, and any subs....
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....that of the company. His obligation to pay the tax for the assessment year 1963-64 is obvious and is undisputed. That makes him an assessee within Section 2(7) of the Act. That being the position, we do not see how he could escape liability for interest under Section 220(2) despite the distinction between tax and interest emphasised by counsel for the petitioner. The contention is, therefore, futile." 13. Decision of Kerala High Court in case of Alex Cherian (supra) cited by the Revenue however, stands on a different footing. In the said decision the question whether under section 179(1) of the Act the tax dues would include even the interest and penalty did not come up for consideration. Similarly in the decision of Punjab and Haryana High Court in case of S. Hardip Singh Sandhu (supra), such a question did not arise. 14. From the above discussion, it can be seen that the Apex Court in case of Harshad Mehta (supra) had an occasion to interpret the term 'tax due'. It was noticed that the Act uses the terms the tax, interest and penalty differently. Ratio of the decision of the Apex Court in case of Harshad Mehta (supra) was ap....
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....passed under the Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. Section 156 reads as under : "156. Where any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under the Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable : (Provided that where any sum is determined to be payable by the assessee under sub-section (1) of section 143, the intimation under the sub-section shall be deemed to be a notice of demand for the purposes of this section.)" 18. When we compare the language used in section 179(1) of the Act with that of section 156, it emerges that in section 179, the term used is 'tax due' where as in section 156 which is a recovery provision refers to a notice of demand which would specify the sum payable. The sum payable may as provided in the section itself include tax, interest, penalty fine or any other sum which is payable in consequence of any order under the Act. Section 220 of the Act pertains to "when tax payable....