1997 (5) TMI 42

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.... assessment order dated March 1, 1994 (annexure "4"), which is appealable. He confines his arguments only for quashing the impugned notices (annexures "9" and "11"). The petitioner was, admittedly, a director in the company, Gauri Steel Alloys Private Limited up to January 1, 1993. The proceedings relate to the assessment year 1992-93. The submission of counsel for the petitioner is that the company is itself a juristic entity and, therefore, the respondent can proceed against the assets of the company and the respondent has no legal right to proceed against the assets of the petitioner who was merely a director in the company. Section 179 of the Income-tax Act, 1961 (briefly, "the Act"), clearly provides that notwithstanding anyth....

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....the directors of a private limited company in liquidation would be liable jointly and severally with the company for payment of arrears of tax. There was no corresponding provision in the Indian Income-tax Act, 1922. Section 179 imposes a vicarious liability on the directors of a private limited company, even though a private limited company is a separate entity. The liability is co-extensive with the company and a director is liable only in respect of arrears of tax of the assessment year when he was functioning as a director. Section 179 was amended with effect from October 1, 1975. The object of the amendment was to extend the liability for taxes due from a private company to the directors thereof, even though such company may not be in ....