Section 34 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015: recovery of tax dues in the case of a company in liquidation

Section 34 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Section 34 protects the revenue when a company that may owe tax under this Act is being wound up. It puts duties on the liquidator, a timetable on the Assessing Officer, a priority on the amount intimated and a personal liability on a liquidator who does not comply. It is read here from the Act as enacted and published in the Gazette of India on 27 May 2015.

A liquidator must inform the Assessing Officer within thirty days of becoming liquidator. The Assessing Officer must, within three months of receiving the information, intimate the amount sufficient to provide for tax arrears and amounts likely to become payable. The liquidator may not part with the company's assets until he is told, and must then set aside that amount. The amount is the first charge on the remaining assets after workmen's dues and certain secured debts. A liquidator who fails is personally liable.

Sub-section (1): the liquidator informs the Assessing Officer

Section 34(1) says the liquidator shall inform the Assessing Officer, who has jurisdiction to assess the undisclosed foreign income and asset of the company, of his appointment within a period of thirty days of his becoming the liquidator. The thirty days are as enacted. The Assessing Officer in question is the one with jurisdiction to assess the company under this Act, which section 6 decides; see our article on sections 6 and 7.

Sub-section (2): the Assessing Officer's intimation

Section 34(2) says the Assessing Officer shall, within a period of three months from the date on which he receives the information, intimate to the liquidator the amount which, in his opinion, would be sufficient to provide for any tax arrears or any amount which is likely to become payable thereafter, by the company under this Act.

Two points are worth noticing. The amount is fixed by the officer's opinion. And it covers both arrears and amounts "likely to become payable thereafter", so it can include tax not yet assessed.

Sub-section (3): hold the assets, then set aside

Section 34(3) says the liquidator:

• (a) shall not part with any of the assets of the company, or the properties, in his custody until he has been intimated by the Assessing Officer under sub-section (2); and
• (b) on being so intimated, shall set aside an amount equal to the amount intimated.

The section does not say what the liquidator may do if the Assessing Officer does not respond within the three months. It is silent on that, and this article adds nothing.

Sub-section (4): the first charge

Section 34(4) says that on receipt of the intimation, the amount so intimated shall, "notwithstanding anything in any other law for the time being in force", be the first charge on the assets of the company remaining after payment of the following dues:

• (a) workmen's dues; and
• (b) debts due to secured creditors to the extent such debts under clause (iii) of the proviso to sub-section (1) of section 325 of the Companies Act, 2013 are pari passu with such dues.

So the amount for tax ranks ahead of other claims on the remaining assets, but behind workmen's dues and those secured debts that rank equally with them. The Companies Act, 2013 is quoted as printed, and this article describes no other part of it.

If you advise a company that is being wound up, or you are a creditor or director of one, the order of payment is important; a legal consultation can help you read the intimation and the company's position.

Sub-section (5) and (6): personal liability

Section 34(5) says the liquidator shall be personally liable for the payment of the amount payable by the company, if he:

• (a) fails to inform in accordance with sub-section (1); or
• (b) fails to set aside the amount as required by sub-section (3).

Section 34(6) says the obligations and liabilities attached to the liquidator under the section shall attach to all the liquidators jointly and severally where there is more than one liquidator.

The risk is therefore personal. The liquidator who ignores the thirty-day duty or does not set aside the amount answers from his own pocket for the amount payable by the company. The section does not cap the personal liability.

Sub-section (7) and (8): overriding effect and meanings

Section 34(7) says the provisions of the section shall prevail over anything to the contrary contained in any other law for the time being in force. Section 34(8) provides:

• (a) "liquidator" in relation to a company being wound up, whether under the orders of a court or otherwise, shall include a receiver of the assets of the company; and
• (b) "workmen's dues" shall have the meaning assigned to it in section 325 of the Companies Act, 2013.

So a receiver of the company's assets is treated as a liquidator for this section, and the winding up may be by a court or otherwise.

Related provisions

When the company's tax cannot be recovered from it, other persons can become liable: a manager under section 35, and the participants of an unincorporated body under section 36. Those are covered in our article on sections 35 and 36. The general modes of recovery are in section 32.

An example

Bright Textiles Private Limited is ordered to be wound up and Mr Anil Shah is appointed liquidator on 1 June. He has thirty days to inform the Assessing Officer who has jurisdiction to assess the company. He informs him on 20 June. The Assessing Officer, within three months of that information, intimates an amount that in his opinion is sufficient for tax arrears and amounts likely to become payable. Until then, Mr Shah does not part with any asset. After the intimation, he sets aside that amount. In the final distribution, the amount intimated is the first charge on the remaining assets after workmen's dues and the secured debts that rank equally with them. Had he not informed the Assessing Officer, he would be personally liable for the amount payable by the company.

Need help with a company in liquidation?

For a liquidator, a director or a creditor, the timetable and priorities in section 34 can decide who bears a tax claim. Our legal consultation team can help you read the intimation, the company's records and the order of payment.

Key takeaways

• The liquidator must inform the Assessing Officer within thirty days of becoming liquidator, as enacted.
• The Assessing Officer must intimate the sufficient amount within three months of receiving the information.
• The liquidator must hold the assets until intimation and then set aside an equal amount.
• The amount is the first charge on remaining assets after workmen's dues and certain secured creditors' debts.
• A liquidator who fails to inform or to set aside is personally liable; several liquidators are jointly and severally liable.
• Later Finance Act amendments to section 34 must be checked before acting. The Companies Act, 2013 is quoted as printed; check current law. The Act cites no section of the Income-tax Act, 1961 here; the corresponding provision of the current income-tax law should be checked where income-tax law is relevant.

Read next

• Sections 35-36: liability of the manager and of participants
• Section 32: modes of recovery of tax dues
• Sections 30-31: recovery of tax dues by the Assessing Officer and the Tax Recovery Officer
• Black Money Act: undisclosed foreign income, an overview

Disclaimer: Based on the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 as enacted and published in the Gazette of India on 27 May 2015, and on the Rules of 2015 as notified on 2 July 2015, as consulted on 2 October 2026. Later Finance Act amendments, amendment rules and the current income-tax law should be checked. This article is general information, not legal advice; check the official text before acting.