JUDGMENT SONIA GOKANI, J. 1. In the present petition, the challenge is made by the petitioner to the order dated November 03, 2004 of the Revenue passed under section 179 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) in the following factual background : 1.1 M/s. Blue Information Technology Ltd. is a Public Limited Company vide certificate of incorporation dated May 25, 1992. On June 12, 1996 the company came out with a public issue and the petitioner was the director of the said Company till he resigned on June 09, 1997. It is averred in the petition that the petitioner was an ordinary Director, not connected with the day-to-day activities of the company nor was he an executive Director. 1.2 The company was assessed for the assessment year 1995-96, 1996-97 and 1997-98 and the substantial tax demands were raised against the company. 1.3 A notice dated October 14, 2001 was issued under section 221(1) of the Act for nonpayment of dues of the company to the tune of Rs.297 lakh. The petitioner replied to the same inter alia stating that he was no longer associated with the company since many years and he cannot be held liable for any tax demand raised against the company. The order is passed holding that the petitioner was a director of the company and was managing the affairs of the company in his capacity as a director. Keeping in mind all the circumstances, it came to be deduced that the demands were raised due to gross neglect, misfeasance or breach of duty by the directors and as the said amount could not be recovered from the company, the directors are to be held responsible and are liable for recovery. It is further held that M/s. Blue Information Technology Ltd. is a private limited company and by virtue of being the director during the said period for which the tax demand was raised, the director would be responsible and the petitioner, accordingly, was held liable for payment of such demands. The petitioner also challenged the very issuance of notice on the ground that the action under section 179 of the Act is not available to the respondent-Revenue and when non-recovery cannot be attributed to the gross neglect or misfeasance of the petitioner, such order passed under section 179 of the Act deserves to be quashed. The petitioner also challenged the very issuance of notice on the ground that the action under section 179 of the Act is not available to the respondent-Revenue and when non-recovery cannot be attributed to the gross neglect or misfeasance of the petitioner, such order passed under section 179 of the Act deserves to be quashed. 1.4 The petitioner was protected by way of an interim relief granted on March 07, 2005 and simultaneously, the Rule was issued. 1.5 In response to the same, an affidavit in reply is filed inter alia contending that section 179 of the Act imposes vicarious liability on the director of the private limited company. The petitioner was the director of the Company and was managing the affairs. It is further held that the definition of the phrase “private company” is not available under the Act. However, from the Indian Companies Act, the true intent of such words shall have to be gathered. It is further contended that the primary reason for failure to collect demand is on account of the fact that there is no asset in the name of the company. It was for the directors to ensure the payment of Government dues, which were to arise during the course of operation, to be duly paid and this outstanding demand is essentially on account of breach of duty by all the directors, including the present petitioner and, therefore, the action to initiate proceedings under section 179 of the Act may not be interfered with. 2. We have heard the learned counsel for the parties and also examined the material on record. At the outset, the law on the subject requires to be considered. 2. We have heard the learned counsel for the parties and also examined the material on record. At the outset, the law on the subject requires to be considered. It would be profitable to reproduce section 179 of the Act, which reads as under : “Liability of directors of private company in liquidation : 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 subsection (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.” 3. As contained in the said provision, where any tax is due from a private company in respect of any income from the said company or any other company in respect of any income of the company of the previous year during which year such company was a private company, if the Revenue is not in a position to recover, every person who was a director of the private company, during such relevant previous year would be jointly and severally liable for the payment of such tax, unless he proves that non-recovery could not be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. Subsection (2) of section 179 of the Act also provides the situation that where the private company converted into public company and the tax in respect of private company could not be recovered, nothing contained in subsection (1) would be applicable 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. 4. This Court in the case of Pravinbhai M. Kheni v. Assistant Commissioner of Income-tax, Central Circle 2 and others, reported in 353 ITR 585, had an occasion to deal with the liability of the directors of a public limited company, where the proceedings under section 179 were initiated against the petitioner-Director of such company. Pursuant to search proceedings against the public limited company, the tax liability determined was more than Rs.155 crore. The Revenue was of the opinion that such company was formed for taking over business of the partnership and the Directors had amassed huge wealth in the form of immovable property and disclosed the income had not been on members of the partnership and other had become Directors of the company. Such conclusion of the Revenue that the unaccounted income of the company had been mis-appropriately utilized by the directors and shareholders and company was only a conduit for creation of unaccounted money. The request is made for lifting the corporation veil and recover tax dues of public company. In such a situation, the proceedings were laid down under section 179 of the Act for lifting the corporate veil. It would be profitable to reproduce the relevant findings of this Court on this aspect as under : “15. From the above judicial pronouncements, it can be seen that concept of lifting or piercing the corporate veil as some times referred to as cracking the corporate shell, is applied by Courts sparingly and cautiously. It is however, recognised that boundaries of such principle have not yet been defined and areas where such principle may have to be applied may expand. Principally, the concept of corporate body being an independent entity enjoying existence independent of its directors, is a well known principle. Its assets are distinct and separate and distinct from those of its members. Its creditors cannot obtain satisfaction from the assets of its members. Principally, the concept of corporate body being an independent entity enjoying existence independent of its directors, is a well known principle. Its assets are distinct and separate and distinct from those of its members. Its creditors cannot obtain satisfaction from the assets of its members. However, with ever developing world and expanding economic complexities, the Courts have refused to limit the scope and parameters or areas where corporate veil may have to be lifted. 16. Howsoever cautiously, the concept of piercing of corporate veil is applied by the Courts in various situations. Two situations where such principle is consistently applied are, one where the statute itself so permits or provides for and second where due to glaring facts established on record it is found that a complex web has been created only with a view to defraud the revenue interest of the State. If it is found that incorporation of an entity is only to create a smoke screen to defraud the revenue and shield the individuals who behind the corporate veil are the real operators of the company and beneficiaries of the fraud, the Courts have not hesitated in ignoring the corporate status and striking at the real beneficiaries of such complex design. 17. Section 179 of the Act itself is a statutory creation of piercing of corporate veil. Ordinarily, directors of a company even that of a private company would not be answerable for the tax dues of the company. Under subsection (1) of section 179 of the Act, however, subject to satisfaction of certain conditions, the directors can be held jointly and severally liable to pay the dues of the company. 18. In the present case, however, the Revenue desired to apply the principle of lifting the corporate veil in case of a public company and seeking to resort to provisions contained in section 179 of the Act. In our view if the factors noted by the Assistant Commissioner are duly established, there is no reason why such double application of lifting the corporate veil one statutorily provided and other due to emergent need of the situation, cannot be applied. As noted above, the factors recounted by the Assistant Commissioner in the impugned order are glaring. The company had defaulted in tax for more than Rs.155 crores. Same was unearthed during search operations carried out by the Revenue Authority. As noted above, the factors recounted by the Assistant Commissioner in the impugned order are glaring. The company had defaulted in tax for more than Rs.155 crores. Same was unearthed during search operations carried out by the Revenue Authority. The attachment of the assets of the company could lead to recovery of not more than Rs. 5 crores from such huge outstanding dues. The company was formed for taking over business of the partnership. The members of the partnership firm and other family members of the same family became the directors of the company. Shares of the company were held by them and not by any members of the public. The directors had amassed huge wealth in the form of immovable property. The Assistant Commissioner therefore, was of the opinion that the company was only a conduit for creation of unaccounted money and appropriating in directors.” 5. The Courts have been, thus, categorical in these judgments that essentially under two conditions the piercing of corporate veil would be applied by the Courts one where the statute itself would permit and secondly, where the glaring facts from record emerge. In the case before this Court in Pravinbhai Kheni (supra), the Revenue had put forth sufficient material and when both the conditions of meeting with the emergent need of the situation were held to be duly satisfied, double application of lifting of veil was permitted by the Court. 6. This Court in the case of Special Civil Application No.10686 of 2013 with Special Civil Application No.10688 of 2013 in the case of Sandeep A. Mehta v. Income Tax Officer and another, decided on October 15, 2013, also had an occasion to refer to the decision in the case of Pravinbhai Kheni (supra). The facts somewhat similar to the present case were presented, wherein the petitioners were the directors of the Company, where the notice was issued to the Directors for recovery of demand under section 179 of the Act in their capacity as Directors. The Company admittedly was a public limited company since the year 1995 and the petitioners were appointed as directors of the Company in December, 2005. They were not even share holders at the time of conversion of the company from private limited company to public limited company. The request was also made by the Revenue to lift the corporate veil. The Company admittedly was a public limited company since the year 1995 and the petitioners were appointed as directors of the Company in December, 2005. They were not even share holders at the time of conversion of the company from private limited company to public limited company. The request was also made by the Revenue to lift the corporate veil. On duly considering the judicial pronouncements on the said aspect and on considering the material on record, the Court did not find any need to permit the said request of lifting the corporate veil by holding thus : 23. From the ratio discussed hereinabove, it needs to be examined whether any of the two situations specified in the said decision exist on the record. Firstly, whether the statute itself so permits or provides for lifting of veil and secondly, whether the facts are so glaringly emerging on record whereby it can be found that with a view to defeat the interest of the Revenue, attempt is made by creating complexity of the facts. In the instant case, therefore, in other words, what needs to be examined is whether with a view to defeat the interest of the State some of the real beneficiaries have created complex design and web and have chosen to hide behind the corporate veil. Section 179 of the Act itself is a creation of the statute whereby the corporate veil can be pierced and original Directors of the Private Limited Company could be held liable for the outstanding tax dues of the Company. The statute, however, has created a situation whereby they can be jointly and severally held liable. In the instant case, the facts are apparently clear whereby conversion of the Amadhi Investment Limited from a Private Limited Company to a Public Limited Company was in the year 1995. The petitioners were appointed as Directors of Amadhi Investment Limited on 29.12.2005. They were not even shareholders of the Company from 5.6.1995 till 30.9.2006. Therefore, there would not be any requirement of establishing that non recovery of the amount due to the Company could be attributed to any grossnegligence, misfeasance or breach of duty on the part of the petitioners in relation to the affairs of the Company. Therefore, the very action under section 179 against the petitioners would not lie. Therefore, there would not be any requirement of establishing that non recovery of the amount due to the Company could be attributed to any grossnegligence, misfeasance or breach of duty on the part of the petitioners in relation to the affairs of the Company. Therefore, the very action under section 179 against the petitioners would not lie. The petitioners since were not Directors of the Company until 28.12.2005, for the liability of the Company pertaining to the Assessment Year in question i.e. on 2005-06, they cannot be held liable under section 179 of the Act. 24. Thus, the statute permits the lifting of the corporate veil section 179 of the Act as one of the modes of the statutes permitting such piercing of the veil provided of course Directors of the Private Company behind the veil are the beneficiaries and who have created such a complex web for their personal interest so as to defraud the Revenue. 25. When the facts are eloquent enough in the instant case, where the petitioners were never concerned with the affairs of the Company until 28.12.2005 and the Company had already become Public Limited Company and by the time they became Directors, they were not even simple shareholders for the entire period till the year 2006, there does not arise any question of applying the ratio of decision of Pravinbhai M. Kheni vs. Assistant Commissioner of Income-Tax and others (supra) or for that matter upholding the action of the respondents of invoking the provisions of section 179 of the Act.” 7. In the present case, as we can notice, the company M/s. Blue Information Technology is a Public Limited Company. It was incorporated as a Public Limited Company vide certificate of incorporation dated May 25, 1992. It came out with a public issue in June, 1996. The petitioner-director of the said Company resigned on September 06, 1997. Admittedly, the dues are of the years 1995-96, 1996-97 and 1997-98. The notice was issued on October 14, 2001 under section 221(1) of the Act seeking to recover penalty for not having paid the dues of the company for the aforesaid years to the tune of Rs.297 lakh. It is not in dispute that the petitioner ceased to act as a director of the Company from September, 1997. 8. The notice was issued on October 14, 2001 under section 221(1) of the Act seeking to recover penalty for not having paid the dues of the company for the aforesaid years to the tune of Rs.297 lakh. It is not in dispute that the petitioner ceased to act as a director of the Company from September, 1997. 8. With regard to the outstanding dues of the company for the assessment years 1995-96, 1996-97 and 1997-98, the Company being a Public Limited Company from May 25, 1992 the certificate of incorporation having come, the very issuance of the notice cannot be sustained unless, of course, as provided in the case of Pravinbhai Kheni (supra) and followed thereafter, in the case of Sandeep A. Mehta (supra) there are glaring facts which would permit the lifting of the corporate veil. In the present case, as could be noticed, those foundational facts are completely missing. It is not even the case of the Revenue that such claim exist warranting lifting of veil. Except non-fulfillment of the obligation by the Company of the tax demands that had arisen as a result of the assessment of all these years, nothing comes on record for the Court to permit the piercing of corporate veil. The petitioner being the director of the public limited company, this provision is non-applicable. 9. Section 179 of the Act chooses to impose a vicarious liability on the director of a private company making his liability coextensive with the company in respect of arrears of tax of assessment year when he functions as a director. However, the income-tax authority in relation to the liability of the Company shall need to insist upon its recovery and when the Company is unable to discharge such liability and the attempts of the Tax Authorities to realise such tax dues do not materialise, director needs to be issued the notice of recovery. These provisions are made in respect of private companies and subsection (2) of section 179 of the Act makes it abundantly clear that in the case of a public company or public limited company, the very provision is not applicable. These provisions are made in respect of private companies and subsection (2) of section 179 of the Act makes it abundantly clear that in the case of a public company or public limited company, the very provision is not applicable. As noted above, in absence of any contrary facts which either require this Court to pierce the corporate veil or anything to indicate that the Company is other than a public company, the invocation of section 179 of the Act itself shall have to be held bad. It would be, of course, the onus of the petitioner to establish that non-recovery of the amount of tax due to the Company could not be attributed to any gross negligence, misfeasance or breach of duty on the part of the petitioner in relation to the affairs of the private Company, but, the very action against the petitioner under section 179 of the Act, when would not lie, the petition, therefore, deserves to be succeeded. 10. For the foregoing reasons, the present petition is allowed. The very action of the respondents of invocation of powers under section 179 of the Act qua the petitioner is bad in law and requires quashment and, therefore, the impugned order dated November 03, 2004 and all consequential orders arising therefrom are quashed and set aside. Rule is made absolute to the extent aforesaid. The petition stands disposed of accordingly with no order as to costs.