TaxTMI 
TaxTMI 
1971 (10) TMI 26
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....1955, the Registrar of Companies, Hyderabad, issued a notification under section 560(5) of the Companies Act, 1956, striking off the company from the register. This company had been assessed to income-tax under the Income-tax Act, 1922, for the assessment years 1953-54 to 1957-58 and a sum of Rs. 31,172.24 was found due by the company towards income-tax. On March 5, 1970, the Income-tax Officer, Ward-I, Vijayawada, issued notices to the petitioners stating that they were personally liable to pay the tax due by the company under section 179 of the Income-tax Act, 1961. It is these notices which are sought to be quashed in these writ petitions. Three contentions were raised by the petitioners in these writ petitions : (1) Section 179 of the ....
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....r the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. " The basic condition that is necessary for the application of the aforesaid section 179 is that a private company should have been wound up after the commencement of the 1961 Act. It is only when this condition is fulfilled that the other provisions of section 179 are attracted. The question for consideration, therefore, is whether section 179 is applicable to a case where the company has not been wound up at all and there is nothing to show that it was wound up after the commencement of this Act. The petitioners in ground No. 5 taken in W. P. No. 4....
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....Companies Act, 1956, without its being wound up. The learned counsel for the department urges that the expression " wound up " has to be given a liberal meaning and in the context it only means a company which has ceased to function or which has been dissolved. It is to be remembered that section 179 has been introduced to create a liability which did not exist under the 1922 Act ; and, further, that section creates a liability which is contrary to the provisions of the Companies Act. It is very clear from the section itself as it starts with saying " notwithstanding anything contained in the Companies Act, 1956 ". As the section creates a new liability and is in a taxing statute, it has to be strictly interpreted unless a liberal interpre....