By the Court.—By means of the present writ petition the petitioner is challenging the order dated 20.2.2002, passed by the Assistant Commissioner of Income Tax, Saharanpur, under Section 179 of the Income Tax Act (called the ‘Act’ for short) by which the petitioner has been held liable to pay income tax dues of the company, M/s. P.S. Paper & Board Mills (P) Ltd., Saharanpur, for the assessment year 1990-91 being the Director of the said company.

2. Heard learned counsel for the petitioner and Sri Ashok Kumar, learned Standing Counsel.

3. Learned counsel for the petitioner submitted that the company has substantial assets and dues can be recovered from such assets, but without recording any finding that the amount cannot be recovered from the assets of the company the order under Section 179 of the Act has been passed. He further submitted that the respondent can only proceed to pass such order under Section 179 of the Act when the respondent fails to recover the amount from the assets of the company and to make out a case that the recovery is attributed to the gross neglect, misfeasance or breach of duty on the part of the petitioner in relation to the affairs of the company. In the impugned order neither any finding has been recorded that the amount cannot be recovered from the assets of the company nor any finding has been recorded that the recovery is attributed to any gross neglect, misfeasance or breach of duty on the part of the petitioner in relation to the affairs of the company and, therefore, the order is liable to be set aside. In support of the contention he relied upon the Division Bench decision of the Gujarat High Court in the case of Amit Suresh Bhatnagar v. Income Tax Officer, (2009) 221 CTR (Guj) 70 and another decision of the Gujarat High Court in the case of Bhagwandas J. Patel v. Deputy Commissioner of Income-Tax, 138 ITR 127.

4. Sri Ashok Kumar, learned Standing Counsel, submitted that in the counter affidavit, filed by respondent No. 1, it is stated in paras 5 and 6 that the respondent has tried to recover the amount but the same could not be recovered because the assets of the company has been attached by the State Bank of India, Saharanpur, and the suit against the company claiming recovery of the outstanding dues is pending and, therefore, the Assistant Commissioner has rightly proceeded to pass the order under Section 179 of the Act.

5. Section 179 of the Act reads as follows :

“179(1) Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), 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 private company at any time during the relevant previous year shall be jointly and severally liable for 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.

(2) Where a private company is converted into a public company and the tax assessed in respect of any income of any previous year during which such company was a private company cannot be recovered, then, nothing contained in sub-Section (1) shall apply to any person who was a director of such private company in relation to any tax due in respect of any income of such private company assessable for any assessment year commencing before the 1st day of April, 1962.”

6. We have considered the rival submissions and perused the impugned order. The primary duty to pay the outstanding dues is on the company. The company is a separate legal entity and is an artificial juristic person. In normal course the dues of the company cannot be recovered from the Director of the company. In the case of M/s. Meekin Transmission Ltd. v. State of U.P. and others, 2008 NTN (36) 107 a Division Ben