TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 665
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....e Bharatiya Nagarik Suraksha Sanhita, 2023 ["BNSS"]/(Section 482 of Cr.P.C.) seeking quashing of Complaint Case No. 3067/2020 titled as "ITO v. Nilesh Agarwal" and Complaint Case No. 3068/2020 "ITO v. Rakesh Agarwal", as well as the summoning orders dated 06.06.2024 passed by the Ld. ACMM (Special Acts), Central District, Tis Hazari Courts, New Delhi ["trial court"]. 2. Since the issues involved are common and arise out of identical facts, both petitions are being decided together by this common judgment. FACTUAL BACKGROUND 3. The allegations of the prosecution are that M/s SNR Buildwell Pvt. Ltd. ["the Company"] failed to discharge tax liabilities for the Assessment Years 2014-15, 2015-16 and 2016-17 leading the Income Tax Departm....
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.... liabilities of the company, and the petitioners have been arraigned solely in their capacity as Directors. Reliance was placed on Section 278B of the Income Tax Act, 1961, which specifically provides that "where an offence under the Act has been committed by a Company, the Company as well as every person in charge of, and responsible to the Company for the conduct of its business shall be deemed to be guilty". In such circumstances, prosecution of the Directors alone is impermissible in law. 4.1 Placing reliance on Aneeta Hada v. Godfather Travels & Tours (2012) 5 SCC 661, it was argued that arraignment of the company is a condition precedent for imposing vicarious liability upon its officers and is a sine qua non for maintaining prosec....
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.... petitioners, as Directors of the company, deliberately transferred the company asset to frustrate recovery. Prosecution and sanction were granted against them specifically in their capacity as Directors, and the Trial Court rightly took cognizance. 5.1 The principal objection raised by the petitioners that the company was not arrayed as an accused was described as a mere technical defect. It is contended that such omission does not vitiate the complaint and is curable by way of amendment. It was urged that the petitioners cannot be permitted to take undue advantage of a procedural lapse. In support, reliance was placed on Bansal Milk Chilling Centre v. Rana Milk Food Pvt. Ltd. (2025 SCC OnLine SC 1509), S.R. Kumar v. S. Sunaad Raghuram ....
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....s, jurisprudence under Section 141 of NI Act is directly applicable. 8. The Hon'ble Supreme Court in Aneeta Hada v. Godfather Travels & Tours (supra) laid down that for maintaining prosecution against Directors under a vicarious liability provision, arraigning of the Company is imperative. It was held that the company being a juristic person has to be impleaded as an accused, and without it, the directors cannot be prosecuted. The Court clarified that commission of the offence by the company is the foundation, and only thereafter can liability extend to its Directors. This principle has been reiterated in Sharad Kumar Sanghi (supra), wherein proceedings against a Director were quashed for want of the company as an accused and in Sushil S....
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....ad the company is therefore not a mere technical irregularity but goes to the root of jurisdiction. 12. The reliance of the respondent on UP Pollution Control Board v. Modi Distillery (supra) is misplaced and it cannot override the categorical law laid down in Aneeta Hada (supra) and subsequent decisions. Similarly, the judgments in Bansal Milk (supra) and S.R. Kumar (supra) do not dilute the mandatory requirement of impleading the company-when the act alleged is by the Company, its officers cannot be prosecuted in isolation. Thus, in absence of the Company being made an accused, the prosecution is contrary to Section 278B and the law declared in Aneeta Hada (supra). 13. Thus, on both settled law and the facts of this case, the contin....