ARMIN PARDIWALA vs. INCOME TAX DEPARTMENT AND ANR.

WP/977/2022HC BombayHCBM01011600202207 August 2025Author: HON'BLE SHRI JUSTICE JITENDRA SHANTILAL JAIN3 pages

AI SummaryRemanded

What did the High Court hold?

The High Court held that the complaints filed against the petitioner were not maintainable. The court found that the averments in the complaints, stating that the petitioner was a director responsible for the company's affairs and conduct, were bald and did not satisfy the requirements of Sections 276B read with Section 278B of the Income Tax Act, 1961. The court reasoned that there must be specific averments detailing how the petitioner was in charge and engaged in the day-to-day affairs of the company. The petitioner's status as a practicing Solicitor, who by virtue of the Advocates Act cannot be engaged in the day-to-day affairs of a company, and his position as an Independent Non-Executive Director, were crucial factors. The court followed the principles laid down in S.M.S. Pharmaceutical Limited Vs. Neeta Bhalla & Anr. and Homi Phiroz Ranina & Ors. Vs. State of Maharashtra & Ors., which held that mere reproduction of statutory wording is insufficient. Consequently, the criminal cases against the petitioner were quashed and set aside.

What were the facts?

The petitioner, Armin Pardiwala, a Non-Executive Independent Director of a company, challenged four criminal complaints filed against him under the Income Tax Act, 1961. The complaints, initiated by the Income Tax Department, alleged offenses under Sections 276B and 278B of the Act. The core of the prosecution's case was that the company had deducted tax at source but failed to deposit it with the treasury. The petitioner argued that the complaints lacked specific averments detailing his role in the day-to-day affairs and conduct of the company's business, beyond a general statement that he was a director responsible for its affairs. He also highlighted his status as a practicing Solicitor, which, by virtue of the Advocates Act, would preclude him from being involved in the daily operations of the company.

What were the issues?

1. Whether the complaints filed under Sections 276B and 278B of the Income Tax Act, 1961, against the petitioner, a Non-Executive Independent Director, are maintainable without specific averments detailing his involvement in the day-to-day affairs and conduct of the company's business? (Question of law and fact) Assessee's Contentions: - The petitioner argued that the complaints contained only bald averments that he was a director responsible for the company's affairs, which is insufficient to establish his liability under Sections 276B and 278B. - He contended that as a practicing Solicitor and an Independent Non-Executive Director, he could not be engaged in the day-to-day affairs of the company, and the Advocates Act would prevent such involvement. - Reliance was placed on the Supreme Court's decision in S.M.S. Pharmaceutical Limited Vs. Neeta Bhalla & Anr. and the Bombay High Court's decision in Homi Phiroz Ranina & Ors. Vs. State of Maharashtra & Ors. Revenue's Contentions: - The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 276B, Section 278B

AI-generated summary — verify with the full judgment below

WP-977.22.DOCX ppn IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION WRIT PETITION NO. 977 OF 2022 WITH WRIT PETITION NO. 980 OF 2022 WITH WRIT PETITION NO. 978 OF 2022 WITH WRIT PETITION NO. 979 OF 2022 Armin Pardiwala … Petitioner Versus Income Tax Department & Anr. … Respondents ____________________________________________________ Mr Karan Kadam a/w Mr. A. A. Kapadia i/by Sujit Lahoti & Associates for the Petitioner. Ms Ateeba Hasan i/by Mr. Suresh Kumar for the respondents. Mr Shrikant Yadav, APP for the State. ______________________________________________________ CORAM : Jitendra Jain, J. DATED : 7 August 2025 PC:-

This group of 4 petitions filed by the same petitioner challenges 4 different complaints filed before the learned Magistrate for offence under the Income-tax Act. Since the facts are more or less similar in all these 4 petitions, I take lead petition as Criminal Writ Petition No.977 of 2022. 2. The petitioner challenges the prosecution launched against him by the respondents by filing Criminal Case No.1872 of 2018 before the the learned Chief Metropolitan Magistrate, Ballard Pier, Mumbai under Sections 276B and 278B of the Income Tax Act, 1961. PRACHI PRANESH NANDIWADEKAR PRANESH NANDIWADEKAR Date: 2025.08.08 16:43:57 +0530

WP-977.22.DOCX

The petitioner is a Non-Executive Independent Director of the company in Criminal Case No.1872/SW/2018. The charges against the company are that the company has deducted tax at source but has not paid the same with the treasury. There is no dispute that the petitioner is a practicing Solicitor and an Independent Non-Executive Director of the company. In the complaint, there is no specific averments to the effect and how the petitioner is responsible and is in-charge of day-to-day affairs and conduct of the business of the company except a bald averment that the accused is a Director and responsible and in-charge of the affairs and conduct of the company.

In my view, such a bald averment would not satisfy the requirement of Sections 276B read with Section 278B of the Act. There has to be a specific averment as to how the petitioner is in- charge and engaged in day-to-day affairs of the company. In the instant case, the petitioner is a practicing Solicitor and by virtue of the Advocates Act, he cannot be engaged in day-to-day affairs or running of the business of the company. The fact that he is an Independent Non-Executive Independent Director has also not been disputed. Therefore, no case is made out in the complaint for launching the prosecution against the petitioner.

In this regard, the Hon’ble Supreme Court in the case of S.M.S. Pharmaceutical Limited Vs. Neeta Bhalla & Anr.1 while dealing with of Sections 138 and 141 of the Negotiable Instruments Act, 1881 where the provisions are pari materia to the provisions of the Income Tax Act with which I am concerned, have observed that mere averments by reproducing wording of the section would not satisfy the requirement of person being in- 1 (2005) 8 SCC 89 7.WP-977.22.DOCX charge or responsible for the conduct of the business of the company. This Court in the case of Homi Phiroz Ranina & Ors. Vs. State of Maharashtra & Ors.2 was posed with a very similar situation which is before me today and the Court after analysing the provisions of the Income-tax Act on very similar facts have quashed the complaint.

Respectfully following the above decisions, Criminal Case No.1872/SW/2018, insofar as the present petitioner is concerned, is quashed and set aside. WRIT PETITION NO. 980 OF 2022 WITH WRIT PETITION NO. 978 OF 2022 WITH WRIT PETITION NO. 979 OF 2022

For the reason stated in Writ Petition No.977 of 2022, Criminal Case Nos.1873, 1875 and 1876/SW/2018, insofar as the present petitioner is concerned, are quashed and set aside.

All these petitions are accordingly disposed of. (Jitendra Jain, J) 2 2003 (3) Mh.L.J. 34

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