Law:

Section:

section 179 of the income-tax act, 1961-private company in liquidation-liability of directors-whether amendment made by taxation laws (amendment) act, 1975 with effect from 1-10-1975 was retrospective in operation so that tax arrears of company for assessment years prior to amendment would be recoverable from director-held, on facts, no Facts The petitioner was a director of a private limited company B. For the assessment years 1964-65 and 1965-66, the company was assessed under section 144 and the tax liability determined was not paid by the company. The ITO passed on 17-9-1976 an order under section 179, as amended with effect from 1-10-1975, holding, inter alia, the petitioner jointly and severally liable for the said arrears. The petitioner's revision petition was turned down on 2-8-1978. On writ: Held There is nothing in section 179, as amended by the Taxation Laws (Amendment) Act, 1975, with effect from 1-10-1975, which makes its operation retrospective. In the instant case, the tax sought to be collected pertained to a period much prior to the coming into force of the amended section. The petitioner's contention that he could not be saddled with such tax liability under section 179 was well founded and must be sustained. The petition was, accordingly, made absolute. Case review Ratanlall Murarka v. ITO [1981] 130 ITR 797 (Ker.) relied upon. Case referred to Ratanlall Murarka v. ITO [1981] 130 ITR 797 (Ker.). JUDGMENT 1. The petitioner is a director of a private limited company called Bhimjee & Co. (P.) Ltd. For the years 1964-65 and 1965-66, the company was assessed upon a best judgment basis under the provisions of section 144 of the Income-tax Act, 1961 ('the Act'). For the year 1964-65, the tax was determined to be Rs. 2,300 and interest in the sum of Rs. 1,169 was made payable. For the year 1965-66, Rs. 4,200 was determined to be the tax and interest in the sum of Rs. 2,045 was made payable. The company did not pay the tax. On 17-9-1976, pursuant to a show cause notice to the company's directors under section 179 of the Act, the ITO passed an order holding, inter alia, the petitioner jointly and severally liable for the arrears of tax. The…

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