RAKESH BHAILALBHAI GANDHI vs. INCOME TAX OFFICER 9 (2) (2) AND ANR

skt 903 WP-1034-2024.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION WRIT PETITION NO. 1034 OF 2024 Rakesh Bhailalbhai Gandhi … Petitioner Vs.

Mr. J.B. Mishra i/b M.S. Bhardwaj, for the Petitioner. Mr. Viraaj Y. Bhate i/b Mr. Yogeshwar S. Bhate, for Respondent No.

CORAM : MADHAV J. JAMDAR, J. DATE : 1st JULY, 2026. P.C.:- 1) In this Petition filed under Article 227 of the Constitution of India, the challenge is to the legality and validity of the order dated 7th March, 2019 passed by learned Additional Chief Metropolitan Magistrate, 38th Court, Ballard Pier, Mumbai below Exhibit 1 in C.C. No. 690/SW/2018 (“Impugned Order”) as also to the order dated 12th August, 2022 passed by the Learned Additional Sessions Judge, Greater Mumbai in Criminal Revision Application No. 1208 of 2019. 2) By the Impugned Order dated 7th March, 2019, the learned Additional Chief Metropolitan Magistrate, by observing that prima facie case is made out against the Accused Nos. 1 to 8 under Section 276CC r/w 278B of the Income Tax Act, 1961 (“the IT Act”) issued process against the skt 903 WP-1034-2024.doc Accused Nos. 1 to 5. The Petitioner is Accused No.4. 3) It is the main contention of Mr. Mishra, learned counsel appearing for the Petitioner that as per the case of the Income Tax Department, the Company-M/s. Brand Connect Communication (India) Pvt. Ltd., i.e., Accused No. 1, has not filed the income tax return for the Financial Year 2013-14. Learned Counsel submits that the said financial year ends on 31 st March, 2014 and the income tax return is to be filed before 30th September, 2014. To substantiate the said contention, Mr. Mishra has relied on Form 32 of the Companies Act [Pages 85 to 87-Exhibit D] and submitted that the Petitioner has resigned from the directorship of the said Company on 1st September, 2013 and his resignation has been accepted by the Board Resolution dated 30th December, 2013. He also relied on the Company Master Data report available on the website of the Company Registrar. He, therefore, submitted that the Petitioner is not responsible for the said offence as before the end of Financial Year, i.e., 31st March, 2014, and before the due date for filing the income tax return, i.e. 30th September, 2014, he has resigned from the directorship of the Accused No. 1-Company with effect from 30th December, 2013. 4) On the other hand, Mr. Viraaj Bhate, learned counsel appearing for the Respondent No. 1 submits that the learned Additional Sessions Judge has correctly observed that whether the Petitioner has resigned from the skt 903 WP-1034-2024.doc directorship of the Company will be decided on the basis of the evidence which has been laid. He further submits that there are various Circulars issued by the Ministry of Finance regarding guidelines of compounding of offences under the IT Act, and therefore, the Petitioner can apply for compounding of offences by complying with the requirements as per the said Circulars. He more particularly, relied on the Circular dated 17th October, 2024 and particularly clause No. 11 of the said circular. 5) Before considering the rival contentions, it is necessary to set out certain factual aspects. The complaint bearing C.C. No. 690/SW/2018 initiated by the Income Tax Department in the Court of Additional Chief Metropolitan Magistrate, Ballard Pier at Mumbai specifically in paragraph No. 3 states that Accused No. 1, i.e., M/s. Brand Connect Communication (India) Pvt. Ltd. has not filed its Return of Income for A.Y. 2014-15 as per the provisions of Section 139(1) of the Income-Tax Act, 1961 and also failed to file belated return u/s. 139(4) of the Income Tax Act, 1961. It is further stated that as the return of income was required to be filed as per Section 139(1) of the IT Act within the prescribed limit and failure of the same resulted into commission of offence under Section 276CC of the IT Act, which provides for punishment by imprisonment for a term of 3 months to 2 years and with fine. 6) Various averments are also set out in the said complaint and it is skt 903 WP-1034-2024.doc stated that the accused has been willfully evaded its tax liability and failed to furnish the return of income as required u/s. 139(1) of the IT Act and /or offence punishable u/s. 276CC r/w 278B and 278E of the IT Act. Thus, perusal of the complaint clearly shows that the entire emphasis on the non- filing of the return of income within the stipulated time as per Section 139(1) of the IT Act and which is an offence u/s. 276CC of the IT Act. The allegations are pertaining to the Assessment Year 2014-15, i.e., Financial Year 2013-14. 7) Perusal of the record further shows that Form 32 [Pages 85 to 87- Exhibit D] which has been annexed to the Petition, shows that resignation letter of the Petitioner is dated 1st October, 2013 and the same has been uploaded on the website of the Company Registrar. The said Form 32 which has been uploaded on the website of the Company Registrar shows that the said resignation has been accepted by the Board of Directors by its resolution No. 5 dated 30th December, 2013. The Form 32 also shows that the Petitioner has been ceased to be director of the Company i.e. of the Accused No. 1 with effect from 30th December, 2013. 8) The Petitioner has also produced on record the Company Master Data report available on the website of the Company Registrar wherein the Petitioner’s name is mentioned as former director and it has been specifically stated that he is ceased to be the director with effect from 30 th skt 903 WP-1034-2024.doc December, 2013. Thus, it is very clear that the period during which the offence is alleged to have been committed, i.e., between 31st March, 2014 and 30th September, 2014, the Petitioner was not the director the Accused No. 1-Company. Thus, following the parameters and the guidelines set out to be the director of the Accused No. 1-Company even before the cause of action has taken place. Thus, there is no offence committed by the Petitioner. 10) Accordingly, the following order is passed : i. The order dated 7th March, 2019 passed by the learned Additional Chief Metropolitan Magistrate, 38th Court, Ballard Pier, Mumbai below Exhibit 1 in C.C. No. 690/SW/2018 (“Impugned Order”) is quashed and set aside only qua the Petitioner, i.e., Accused No. 4. ii. In view of above, order dated 12th August, 2022 passed by 1992 Supp (1) SCC 335 skt 903 WP-1034-2024.doc the Learned Additional Sessions Judge, Greater Mumbai in Criminal Revision Application No. 1208 of 2019 is also quashed and set aside only qua the Petitioner, i.e., Accused No. 4. iii. It is specifically clarified that the process issued by the learned Additional Chief Metropolitan Magistrate, 38th Court, Ballard Pier, Mumbai below Exhibit 1 in C.C. No. 690/SW/2018 is set aside only qua the Petitioner, i.e., Accused No. 4. iv. As far as Accused Nos. 1, 2, 3 and 5, the said criminal case bearing C.C. No. 690/SW/2018 shall continue. v. As the case is of the year 2018, learned Trial Court is requested to dispose of the said proceedings expeditiously. 11) The Writ Petition is disposed of in the aforesaid terms.

(MADHAV J. JAMDAR, J.)