Section

  77. Liability for payment of tax in the case of private companies, firms and associations of persons.-

(1)   Notwithstanding anything contained in the Companies Act, 1913 (VII of 1913), where any tax payable by a private company (including a private company which is wound up or has gone into liquidation) in respect of any income year (whether ending before or after the date of commencement of the winding-up or liquidation proceedings) cannot be recovered, every person who is, or was at any time during the said income year, a director of the company and every share-holder owning not less than ten percent of its paid-up share capital at any time during the said income year shall be jointly and severally liable for the payment of such tax, and such person shall be entitled to recover the amount so paid by him from the company on whose behalf it is paid or any other director or share-holder of the company in proportion to the shares owned by him.

(2)   No proceedings under sub-section (1) shall be commenced except with the prior approval in writing of the Commissioner.

(3)   Where any tax payable by a partner of a firm or a member of an association of persons in respect of his share of income from the firm or the association, as the case may be, cannot be recovered from him, the Deputy Commissioner may notify the amount of such tax to the firm or association and thereupon, notwithstanding anything contained in any law for the time being in force, the tax shall be payable by the firm or the association, as the case may be, and such firm or association shall, for purposes of recovery of such tax, be treated as an assessee; and in the case of default in making the payment of such tax, the provisions of sections 91, 92, 93, 94 and 95 shall, so far as may be, apply accordingly.