Law:

Section:

Section 179, read with rule 2 of Part I to Second schedule of the Income-tax Act, 1961 - Company in liquidation - Liabilities of directors - Assessment years 1959-60 and 1960-61 - Petitioner was one of directors of defaulting company in liquidation - Respondent department attached personal properties of petitioner for recovery of penalty levied on aforesaid company for non-payment of tax due - Whether since there was no proof that petitioner had not been grossly negligent or had not been guilty of misfeasance or breach of duty, liability to pay penalty clearly attached to petitioner and certificate of recovery proceeding was properly issued - Held, yes - Whether rule 2 of Part I to Second Schedule is in pari materia with rule 22 of order XXI of the Code of Civil Procedure and petitioner who was clearly aware of recovery proceedings and in fact participated in them by making a request to first respondent, for reasons stated by him, not to proceed with recovery, could not later raise objection that proceedings were bad for want of notice - Held, yes FACTS The petitioner, who was an erstwhile director of the assessee-company prayed for a rule forbidding the respondents from attaching his personal properties for recovery of penalty levied on the company for non-payment of tax due. It was submitted that he had not been negligent or guilty of misfeasance or breach of duty in relation to the affairs of the company and, therefore, he could not be personally proceeded against for recovery of the penalty. The petitioner added that he had been given no opportunity to show that he was not liable under section 179. HELD It was not disputed that during the accounting years the petitioner was one of the directors. If that be so, section 179 makes every person, who was a director of the private company at any time during the relevant previous years, jointly and severally liable for payment of tax and this liability attaches notwithstanding anything contained in the Companies Act, 1956. Nowhere before filing the writ petition had the petitioner stated that he was not negligent or was not guilty of misfeasance or breach of duty in relation to the affairs of the company. Quite…

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