Assistant Director of Income Tax Vs Tirumala Tirupati Constructions India. (P) & Anr. (Supreme Court of India)
In Criminal Petition No. 2684 of 2022, the Telangana High Court (order dated 06.09.2023) examined the validity of prosecution launched under Sections 276C(1) and 278B of the Income-tax Act, 1961 against the assessee for alleged tax evasion relating to undervaluation of land sales and non-filing of returns. The core challenge was that sanction under Section 279(1) was accorded to the Deputy Director of Income Tax, whereas the criminal complaint in C.C. No. 263 of 2017 was instituted by the Assistant Director of Income Tax, who was neither the sanction-holder nor expressly authorised.
The High Court held that sanction for prosecution is not a mere formality but a jurisdictional precondition, and such sanction is authority-specific. Once sanction is granted to a particular officer, only that officer can lawfully initiate prosecution. Initiation of prosecution by a different and lower-ranked officer was held to be a fundamental jurisdictional defect, rendering the proceedings void ab initio, and accordingly, the entire prosecution was quashed.
The Revenue challenged the said decision before the Supreme Court in SLP (Crl.) No. 7435 of 2024. By order dated 09.12.2025, the Supreme Court disposed of the SLP in view of a subsequent settlement arrived at between the Revenue and the assessee under the statutory settlement mechanism. While doing so, the Court clarified that the legal issue relating to the competence of the Deputy Director vis-à-vis the Assistant Director to initiate prosecution is left open, to be examined in an appropriate case in accordance with law.
