Tax liability of a company in liquidation [Section 178] under Assessment of Companies :

This has been discussed later in this chapter under the heading ‘Liability in Spec ial Cases‘. The tax implications of liquidation in the context of taxation of capital gains and in the matter of dividends have been explained in the respective chapters.

•  Liability of directors of private companies in liquidation: Section 179 provides that where any tax due from a private company in respect of any income

of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company cannot be recovered, then, every person who was a director of the company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax, penalty, interest or any other sum of money assessed on the company and remaining unpaid unless he proves to the satisfaction of the Assessing Officer, that the non-recovery of the amounts cannot be attributed to any gross neglect or misfeasance of duty on his part in relation to the affairs of the company.