Judgment :- (This writ petition is filed under Articles 226 and 227 of the Constitution of India with a prayer to quash the order passed by the respondent issued under Section 179 of the Income Tax Act, 1961. Deputy Commissioner of Income Tax dated 05.10.2006 vide Annexure ‘A’.) The petitioners are before this Court for the second time. The genesis of the petitioners’ case can be summarized as follows: The first petitioner is the Managing Director and petitioners 2 to 4 are the Directors of a Private Limited Company under the name and style of H.E. Distilleries Private Limited. The company was incorporated in the year 1990 and commenced its operation from the year 1991. It appears, the Company, right from day one has been incurring loss and never really took off. The officers of the respondents on 18.01.2001 armed with a warrant of authorization, conducted a search in the premises of the company. During the course of the said search operation several documents were seized by the department. It appears, a statement of the fourth petitioner was also recorded who is a Director of the company during the course of the said search proceedings. Pursuant to the said search, an order of assessment was passed by the Assessing Officer determining a total amount of Rs.2,42,47, 658/- as undisclosed income and the net tax payable on it to be Rs.1,70,21,856/-. The assessment order was passed on 31.01.2003, copy of which is produced along with papers. The case of the petitioners is that the company, as on the date of the assessment had paid tax to the tune of Rs.39,24,185/-and in addition, it had paid a sum of Rs.24,22,078/-. On the score of computation of income tax, the petitioner was before Commissioner of Income Tax (Appeals) in ITA No.415/DCIT-CC-2(2)/CIT(A)-VI/2003-04 dated 30.10.2004. The said reference is still pending adjudication. However, we are not really concerned with the assessment of tax or the computation thereof. In the present proceedings, we are concerned about the proceedings initiated against the petitioners under Section 179 of the Income Tax Act (for short, ‘the act’). Indeed, all the petitioners are the Directors of the Company. If the Company is not in a position to meet the demands of payment of income tax, the Directors are personally liable to satisfy the said claim. Hence proceedings were initiated against the petitioners who are the Directors of the Company. Indeed, all the petitioners are the Directors of the Company. If the Company is not in a position to meet the demands of payment of income tax, the Directors are personally liable to satisfy the said claim. Hence proceedings were initiated against the petitioners who are the Directors of the Company. In the first instance, the reply given by the petitioners was not accepted and an order was passed on 17.11.2005 by the Assistant Commissioner of Income Tax. The said order was questioned by the petitioners before this Court in W.P.No.1559/06. This Court allowed the writ petition and remitted the matter to the original authority for fresh adjudication, inasmuch as, the impugned order disclosed that the tax cannot be recovered from the Company. After remand, fresh notices were issued to the petitioners and reply was filed. It appears, additional replies were also filed. The said replies did not find favour with the respondents. Hence, the impugned order is passed on 05.10.2006 which is questioned in this writ petition. 2. Mr. Shankar, learned counsel appearing for the petitioners was at great pains to convince the Court on two counts; one is that the Directors of the Company can be saddled with payment of tax only if it is found that the company is not in a position to meet the demand. He further submits that a reading of Section 179 of the Act does not indicate that the amount recoverable will include the tax, interest and also penalty, inasmuch as, what is sought to be recovered under the provisions is only the tax. He further submits that Section 179 of the Act is not at all applicable, inasmuch as, unless it is proved, non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on the part of the Directors in relation to the affairs of the Company. According to him, none of the three ingredients are satisfied before proceeding under Section 179 of the Act. In support of his contention he has relied on a few decisions of this court as well as the Apex Court. Another contention of Mr. Shankar is that none of the objections are considered. Hence, there is non-application of mind by the respondents. He further submits that the petitioners 2 and 3 are not whole-time Directors and they are liable to be absolved of the proceedings under Section 179 of the Act. 3. Another contention of Mr. Shankar is that none of the objections are considered. Hence, there is non-application of mind by the respondents. He further submits that the petitioners 2 and 3 are not whole-time Directors and they are liable to be absolved of the proceedings under Section 179 of the Act. 3. Mr. Aravind, learned counsel appearing for the revenue submits that after remand, the matter was reconsidered and several objections have been raised by the petitioner and answered by the authority. He further submits that right from the day the Company was incorporated i.e., in the year 1991 and thereafter till the search was made in the year 2001, the petitioners had not chosen to file returns at all. Thus, one part of Section 179 of the Act regarding gross negligence and misfeasance is proved. Insofar as the word ‘tax’ does not include penalty and interest, he would rely on a ruling of the Bombay High Court to indicate that the tax as contemplated under Section 179 of the Act would include the penalty as well as interest. Hence, he submits that the impugned order at Annexure-A does not warrant interference. 4. To appreciate the rival contentions of the petitioners as well as the respondents, it is necessary to look into the provisions of Section 179 of the Act. It is useful to extract the provisions of Section 179 of the Act: “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.” Section 179 of the Act would speak about the liability of Directors of the private company in liquidation. It would start with a non-obstante clause, inasmuch as, 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. 5. Indeed, we are not really concerned with Sub-Section (2) of Section 179 of the Act, inasmuch as, it would relate to a conversion of a private limited company into a public company. Indeed, before invoking Section 179 of the Act, the Directors of the Company are required to prove that they were not in a position to file the returns and the same cannot be attributed to any gross neglect, misfeasance or breach of duty on their part in relation to the affairs of the Company. Indeed, the burden is on the Directors of the Company to prove that the non-filling of returns cannot be attributed for any gross-neglect, misfeasance or breach of duty. Indeed, before invoking Section 179 of the Act it is not necessary that all the three ingredients are required to be satisfied. Indeed, it is sufficient if it is held that there is a gross neglect or misfeasance or breach of duty on the part of the Directors in relation to the affairs of the Company. The Directors of the Company are liable to satisfy the claim in their capacity as Directors. Indeed, it is to be noticed that in the case on hand, there are as many as three claimants for the amount due to the statutory authority. The Directors of the Company are liable to satisfy the claim in their capacity as Directors. Indeed, it is to be noticed that in the case on hand, there are as many as three claimants for the amount due to the statutory authority. Indeed, the Bank has advanced credit facility and the same is not discharged. Thus, in this background, one will have to see whether gross neglect, misfeasance or breach of duty can be attributed to the petitioners. In this regard, the reply filed by the petitioners has been considered by the respondents. It is not in dispute that the company was incorporated in the year 1990 and started production in the year 1991. It is trite that the company has not filed returns of income from the inception of the Company till the date of search under Section 132 of the Act conducted on 18.01.2001. This would be 10 years. Indeed, in the present circumstances and having regard to the large sums of money due to the statutory authorities, the petitioners cannot be heard to say that there is no gross negligence, misfeasance or breach of duty on their part. In this regard, it is to be noticed that in the first instance, sub-section (1) of Section 179 of the Act casts a burden upon the Director to prove that non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part. 6. Blank’s Dictionary defines “Gross-Negligence” as Lack of diligence and care. A conscious voluntary act or omission in reckless disregard of legal duty. Failure to observe a duty imposed by law will amount to negligence. If a lawful act is performed in a wrongful manner it would amount to misfeasance. More broadly, a transgression or trespass of law. Law Lexicon defines “breach of duty” as violation of legal obligation. The words “breach of duty” are wide enough to comprehend the cause of action for negligence. 7. The burden being on the Directors, they ought to have established the requirements of the sub-section (1) to escape the liability and the petitioners have failed to do so. The question as to whether the petitioners have discharged the burden is a pure question of fact and cannot be examined in a writ petition under Article 226 of the Constitution of India. The question as to whether the petitioners have discharged the burden is a pure question of fact and cannot be examined in a writ petition under Article 226 of the Constitution of India. As observed earlier, the Company is not in a position to meet the obligation of payment of tax due to the statutory authorities which would necessarily mean that the Company is not in a position to pay the tax/amount to the statutory authority. Hence at this point of time, the petitioners cannot be heard to say that the Company does not have assets and by sale of the said assets, the tax due could be recovered from the assets of the Company. Indeed, this contention was also urged before the competent authority indicating that 90,000 sq.ft. of land and several buildings were available. In fact, that has been rightly rejected by the respondent, inasmuch as, the company had availed various types of loan from the Bank of India and also have not paid the tax due to the Commercial Tax Department. It is not in dispute that the Bank of India as well as the Commercial Tax Department have initiated recovery proceedings. There is an inter se dispute between the Commercial tax department of the State as well as the Bank of India which is not really germane for the disposal of the present proceedings, but however, suffice it to make an observation that the said amount is due. To my mind, the petitioners have failed to discharge the burden cast on them that the said non-payment of dues cannot be attributed to gross negligence, misfeasance and breach of duty. Indeed, every citizen of the country is required to file his tax returns whether taxable or not. It is no doubt true that a contention is sought to be urged by Mr. Shankar, learned counsel for the petitioner that if an assessee does not have taxable income he is not required to file his income. However, the said contention cannot be accepted, inasmuch as, the Company has slept over for almost more than a decade and they cannot be heard to say that since the company did not make any profits they are not obliged to file returns. This itself is sufficient to hold that there is a gross neglect on the part of the Directors of the Company. This itself is sufficient to hold that there is a gross neglect on the part of the Directors of the Company. Hence, I am of the view that all the ingredients of Section 179 of the Act are satisfied. 8. Re-whether the tax includes penalty and interest: To appreciate, it is necessary for us to look into the definition of tax under Section 2(43) which would read a under: “tax” in relation to the assessment year commencing on the 1st day of April, 1965 and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date” This is required to be read with Section 156 of the Act which would refer to the notice of demand. 9. The main thrust of Mr. Shankar’s contention is that the tax as envisaged under Section 179 of the Act does not include penalty and interest and with reference to Section 156 of the Act he would contend that a notice of demand would not contain tax, interest, penalty or any other sum. According to him, the said notice under Section 159 of the Act would contemplate different connotations and different demands. Hence, he submits that the tax would not include interest, penalty, fine or any other sum. 10. To counter this Mr. Aravind, learned counsel appearing for the Revenue with reference to Section 222 of the Act submits that when an assessee is in default or is deemed to be in default in making payment of tax, the Tax Recovery Office may draw up under his signature a statement in the prescribed form, which would include the tax, penalty as well as interest. 11. Apparently, Section 179 of the Act would contemplate payment of any due from a private company in respect of any income derived by a company. 12. Whether the Nomenclature ‘tax’ would include the other two components namely the penalty as well as interest, fell for consideration before this Court in the case of Soma Sundarams (Private) Ltd, vs. Commissioner of Income Tax, Karnataka reported in (1979) 116 ITR 620. Indeed in the said case Section 2(43) of the Income Tax Act fell for consideration before a Division Bench of this Court. Indeed in the said case Section 2(43) of the Income Tax Act fell for consideration before a Division Bench of this Court. It had an occasion to examine whether interest, penalty and fine, which are payable under the provisions of the Act can be termed as income tax, this Court decidedly stated that the component ‘income tax’ does not include payment of penalty as well as interest. Indeed Section 179 of the Act indicated that the Directors would be liable to pay the tax due in case, where the company is unable to satisfy the demands and gross negligence, misfeasance and breach of duty are attracted. Thus, what is contemplated under Section 179 of the Act is the Tax component and not the penalty and interest. Indeed Section 126 of the Act would relate to notice of demand, which clearly indicates that the entire sum due to the Revenue is classified into three different components i.e., tax, interest, penalty or any other sum, which would not necessarily come under Section 179 of the Act. Indeed this reference would be only to the Directors of the Company. With reference to Section 222 of the Act the assessee undoubtedly is liable to pay the tax, interest and penalty. But however, the same cannot be said about the Directors of the Company. Indeed whether tax would include penalty and interest fell for consideration before the Apex Court in the case of Prathibha Processors and Others vs. Union of India and Others reported in (1996)11 SCC 101 . Indeed the said decision was rendered under the Customs Act but however, the words and phrases “interest”, “tax” and “penalty” fell for consideration and the Apex Court has observed thus: “In fiscal statutes, the import of the words- ‘tax’, ‘interest’. ‘penalty’, etc. are well known. They are different concepts. Tax is the amount payable as a result of the charging provision. It is a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law. Penalty is ordinarily levied on an assessee for some contumacious conduct or for a deliberae violation of the provisions of the particular statute. Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. Penalty is ordinarily levied on an assessee for some contumacious conduct or for a deliberae violation of the provisions of the particular statute. Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. The levy of interest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date. Essentially it is compensatory and different from penalty – which is penal in character.” Having regard to the decisions referred to above in relation to the import of words ‘tax’ ‘interest’ and ‘penalty’ which would operate in different concepts. I am of the view that the said contention of Mr. Shankar is required to be accepted, inasmuch as, the phrase ‘tax’ as contemplated under Section 179 of the Act does not include penalty and interest insofar as the Directors of the Company are concerned. It is made clear that this interpretation of phrase ‘tax would not be’ is under Section 179 of the Act and does not encompass the assessee. Indeed the Assessee as contemplated under Section 222 of the Act is liable to pay all the three components i.e., ‘tax’, ‘interest’ and ‘penalty’ and any other sum due or recoverable from him. No other contention is urged. Consequently, following order is passed: (1) Petition stands rejected and the order of the respondents stands confirmed. (2) Petitioners as directors of the company are not liable to pay the interest and penalty. (3) Assesses company is liable to pay all the three components under Section 222 of the Act as observed.