Delhi High Court Quashes Tds Prosecution Against Petitioner Wrongly Treated As Director And Principal Officer

The Case

AKANSHA KAPOOR @ AKANKSHA KAPOOR @ AKANKSHA BERRY Vs INCOME TAX OFFICE
Case No.: CRL.M.C./9184/2024
Decided on: 09/14/2026
CNR: DLHC010844502024 ·
High Court of Delhi

The Legal Issue

Whether the prosecution of the petitioner for offences under Section 276B read with Sections 278B and 278E of the Income Tax Act, 1961, in which she was treated as a Director of the accused company and thereby as its Principal Officer, is sustainable when she was never a Director of the accused company. The Court was called upon to invoke its inherent power under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 (corresponding to Section 482 Cr.P.C.) to quash the proceedings in Complaint Case No.8835/2019 titled Income Tax Office vs. M/s Granite Gate Properties Pvt. Ltd. and Ors. insofar as it relates to the petitioner.

Facts of the Case

A complaint was filed for offences under Section 276B read with Sections 278B and 278E of the Income Tax Act, 1961 for the financial year 2016-2017 alleging that the accused persons had not deposited the requisite TDS within the stipulated time. The learned Trial Court, on the basis of the material placed before it, found a prima facie case against the accused persons and summoned them for the abovesaid offences. The petitioner was served a Show Cause Notice under Section 2(35) of the Income Tax Act with the specific averment that she was a Director in the accused company; though she responded and sought time, the department eventually treated her as Principal Officer, being Director of the abovesaid company, as reflected in order dated 23.01.2018 passed under Section 2(35) of the Income Tax Act by the concerned Assistant Commissioner of Income Tax. As per the sanction order under Section 279(1) of the Income Tax Act, she was claimed to be Director of the accused company/Deductor company and in that capacity held as Principal Officer. In the 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.

Summary of the Decision

The Court noted that the Show Cause Notice, the order passed under Section 2(35) of the Income Tax Act, the sanction order under Section 279(1) of the Income Tax Act and the complaint are all based on the premise that the petitioner herein was a Director in the accused company and, therefore, she has been projected as Principal Officer. It recorded the admission of the learned Senior Standing Counsel for the I.T. Department that the applicant was never a Director of the accused company. The Court held that clearly, her prosecution, while being treated 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 was allowed and the prosecution, so far as it relates to the petitioner herein, was hereby quashed. The pending application also stood disposed of in aforesaid terms. It was, however, made clear that the abovesaid order is in the backdrop of peculiar facts of the case and shall not be taken as precedent.

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