AKANSHA KAPOOR @ AKANKSHA KAPOOR @ AKANKSHA BERRY vs. INCOME TAX OFFICE
What did the High Court hold?
The High Court held that the prosecution of the petitioner was fallacious and unsustainable. The Court noted that the entire basis for initiating proceedings against the petitioner, including the Show Cause Notice under Section 2(35) of the Income Tax Act, the order passed under the said section, the sanction order under Section 279(1), and the complaint itself, was premised on the petitioner being a Director of the accused company, M/s Granite Gate Properties Pvt. Ltd. This premise was crucial for treating her as the Principal Officer. However, the Senior Standing Counsel for the Income Tax Department admitted that the petitioner was never a Director of the accused company. Consequently, the Court found the prosecution to be based on a fundamentally flawed assumption. The petition was allowed, and the prosecution concerning the petitioner was quashed. The Court explicitly stated that this order was in the backdrop of the peculiar facts and circumstances and should not be taken as a precedent.
What were the facts?
The petitioner, Akansha Kapoor, sought to quash criminal proceedings initiated against her under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (formerly Section 482 Cr.P.C.). The proceedings stemmed from a complaint filed by the Income Tax Office for offences under Section 276B read with Sections 278B and 278E of the Income Tax Act, 1961, for the financial year 2016-2017, alleging failure to deposit TDS within the stipulated time. The petitioner was issued a Show Cause Notice under Section 2(35) of the Income Tax Act, averring she was a Director in the accused company, M/s Granite Gate Properties Pvt. Ltd. Despite her response, she was treated as the Principal Officer. The prosecution, including the sanction order under Section 279(1) and the complaint, were premised on her being a Director and thus a Principal Officer. However, the Senior Standing Counsel for the Income Tax Department admitted that the petitioner was never a Director of the accused company.
What were the issues?
1. Whether the prosecution of the petitioner, who was treated as a Principal Officer of the accused company based on the erroneous premise that she was a Director, is sustainable, particularly in light of the admission that she was never a Director? (Question of law and fact, turning on Sections 2(35), 276B, 278B, and 279(1) of the Income Tax Act, 1961). Assessee's Contention: The petitioner argued that her prosecution was fallacious and unsustainable as it was based on the incorrect assumption that she was a Director of the accused company, which led to her being wrongly identified as the Principal Officer. The entire basis of the Show Cause Notice, the order under Section 2(35), the sanction order under Section 279(1), and the complaint itself were flawed. Revenue's Contention: The Revenue, through its Senior Standing Counsel, admitted that the applicant was never a Director of the accused company. No further arguments were recorded for the Revenue.
Which sections of the Income-tax Act were involved?
2(35), 276B, 278B, 278E, 279(1)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
J U D G M E N T (oral)
The present has been filed under Section 528 of Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 (corresponding Section 482 Cr.P.C.) praying for invocation of inherent power of this Court and to quash the proceedings in Complaint Case No.8835/2019 titled Income Tax Office vs. M/s Granite Gate Properties Pvt. Ltd. and Ors. viz-a-viz the petitioner herein.
A complaint was filed for offences under Section 276B read with Sections 278B and 278E of Income Tax Act, 1961 for the financial year 2016-2017 alleging that the accused persons had not deposited the requisite TDS (Tax Deducted at Source) within the stipulated time.
The learned Trial Court, on the basis of the material placed before it, came to the conclusion that there is a prima facie case against the accused persons and have summoned them for abovesaid offences. CRL.M.C. 9184/2024 2
The petitioner herein was served Show Cause Notice under Section 2(35) of Income Tax Act a the specific averment that she was Director in the accused company. Show Cause Notice was though responded and the petitioner had sought some time, the concerned department, eventually, treated her as Principal Officer, being Director of the abovesaid company. It is clear from order dated 23.01.2018 passed under Section 2(35) of Income Tax Act by the concerned Assistant Commissioner of Income Tax. As per sanction order under Section 279(1) of Income Tax Act, she has been claimed to be Director of the accused company/Deductor company and in her such capacity only, she has been held as Principal Officer. To make things worse, when the complaint was filed, in complaint also, she, along with other accused, was projected as Director of the accused company and thereby branded as Principal Officer of the accused company.
Learned Senior Standing Counsel for the I.T. Department does admit that the applicant was never a Director of the accused company.
Show Cause Notice, order passed under Section 2(35) of Income Tax Act, sanction order under Section 279(1) of Income Tax Act and complaint, all are based on the premise that the petitioner herein was Director in the accused company and, therefore, she has been projected as Principal Officer.
Clearly, her prosecution, while being treating her as Director of the accused company, is fallacious and thus not sustainable.
Keeping in mind the peculiar facts and circumstances of the case, the present petition is allowed and the prosecution, so far as it relates to the petitioner herein, is hereby quashed.
Pending application also stands disposed of in aforesaid terms.
It is, however, made clear that the abovesaid order is in the backdrop of CRL.M.C. 9184/2024 3
peculiar facts of the case and shall not be taken as precedent.
(MANOJ JAIN) JUDGE SEPTEMBER 14, 2026/ss/js
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