Kailash Assudani v. Commissioner Or Income Tax, Aayakr Bhawan & Others_

HIGH COURT OF MADHYA PRADESH JABALPURWRIT PETITION NO. 10280 of 2017 Kailash Assudani. Vs.Commissioner or Income Tax, Aayakr Bhawan & others For Petitioner : Mr. Pratyush Tripathi, Advocate For Respondent : Mr. Sanjay Lal, Advocate. Order posted for: 03.08.2017. (SUJOY PAUL) JUDGE HIGH COURT OF MADHYA PRADESH, PRINCIPAL SEAT ATJABALPUR (Order) 0 3 .08.2017 This petition filed under Article 226 of the Constitution of India isdirected against the order dated 29.06.2017 (Annexure-P/1), whereby theInitiating Officer/Assistant Commissioner of Income Tax (BenamiProhibition), Bhopal prohibited and restrained the M/s. Kailesh Associatesfrom transferring or changing the instant property in any manner till passingof necessary order by adjudicating authority under the Prohibition of BenamiProperty Transaction Act, 1988 (hereinafter called as “the PBPT Act”). 2.Mr. Pratyush Tripathi, learned counsel for the petitioner submits that theInitiating Officer under the PBPT Act issued show cause notice to thepetitioner under Section 24(1) of the said Act. In reply to this notice dated31.03.2017 (Annexure-P/5), the petitioner filed his reply on 07.04.2016 (Annexure-P/6). The petitioner also received summons issued under Section19 (1) of the said Act (Page No.17). The petitioner appeared before theauthority and desired certain documents. The petitioner also filed an affidavitbefore the Initiating Officer. The Initiating Officer passed the impugned orderdated 29.06.2017 and prohibited and restrained M/s. Kailesh Associates(proprietor Mr. Kailesh Assudani) from transferring or changing the abovementioned property till passing of necessary order by the adjudicatingauthority under Section 26 (3) of the PBPT Act. Criticizing this order, learnedcounsel for the petitioner submits that the principles of natural justice were notfollowed by the Initiating Officer. He placed reliance on 1993 (1) SCC 78,[C.B. Gautam vs. Union of India & others]. 3.Per-contra, Mr. Sanjay Lal, learned counsel for the respondents submitsthat the PBPT Act is recently amended by Gazette Notification(Extraordinary) dated 11.08.2016. The Initiating Officer has taken actionstrictly in accordance with the enabling provision i.e. Section 19 & 24 of theAct. The order impugned issued by him is subject to passing of necessaryorder by the adjudicating authority. Mr. Lal, apprised this Court that underSection 24(5) of the Act, the Initiating Officer has already referred the matterto the adjudicating authority. In turn, the adjudicating authority has fixed thehearing of the reference on 23.08.2017. In near future, the petitioner willreceive the notice for the said hearing by the adjudicating authority. Petitionercan raise all possible grounds before the said authority. The order ofadjudicating authority is also appealable before the appellate tribunal andbefore this Court as per the provisions of the said act. 4.No other point has been pressed by the learned counsel for the parties. 5.I have heard the learned counsel for the parties at length and perused therecord. 6.The show cause notice shows that it is passed on the basis of certaininformation received by the Initiating Officer. The Initiating Officer has notplaced reliance on any documentary evidence. The petitioner demanded 4.No other point has been pressed by the learned counsel for the parties. 5.I have heard the learned counsel for the parties at length and perused therecord. 6.The show cause notice shows that it is passed on the basis of certaininformation received by the Initiating Officer. The Initiating Officer has notplaced reliance on any documentary evidence. The petitioner demanded certain documents. Since, no document is relied upon in the show causenotice, the documents were not supplied to the petitioner. The order dated29.06.2017 is a provisional attachment order under Section 24(4) of the PBPTAct, 1988. The order itself shows that it is issued with the prior approval ofapproving authority, but will remain subject to passing of necessary order bythe adjudicating authority. Section 24(3) of the PBPT Act makes it clear thatthe order of attachment would be a provisional order. As per Sub-section (5)of Section 24 of the Act, the Initiating Officer after passing the provisionalattachment of property is obliged to draw up the statement of the case andrefer it to the adjudicating authority. On receipt of reference under Sub-section(5) of Section 24, the adjudicating authority shall issue notice to the stakeholders as provided under Sub-section (1) of Section 26 of the Act. Section 26(3) makes it clear that the adjudicating authority will examine the entire issueand relevant material. Sub-section (3) of Section 26 reads as under: “(3) The Adjudicating Authority shall, after— (a) considering the reply, if any, to the notice issued under sub-section (1); (b) making or causing to be made such inquiries and callingfor such reports or evidence as it deems fit; and (c) taking into account all relevant materials, provide an opportunity of being heard to the person specified as abenamidar therein, the Initiating Officer, and any other person whoclaims to be the owner of the property, and, thereafter, pass anorder— (i) holding the property not to be a benami property and revoking the attachment order; or (ii) holding the property to be a benami property andconfirming the attachment order, in all other cases. ” A plain reading of Sub-section (3) makes it clear that the adjudicatingauthority is obliged to examine the stand of alleged Benamindar in reply to theshow cause notice. He is further obliged to make further inquiry or take intoaccount further report or evidence which he deems fit for deciding thequestion. He can take into account all relevant documents. After providing dueopportunity of hearing to alleged Benamindar, he may pass the order todeclare the property as Benami Property and confirm the attachment order or he may hold that the property cannot be treated as Benami Property . In thatcase, he may revoke the attachment order. Pertinently, as per Sub-section (6)of Section 26, the adjudicating authority may at any stage of proceeding,either on the application of any party or suo-moto strike out the name of anyproperty improperly joined or add the name of any person whose presencebefore the adjudicating authority may be necessary to enable him toadjudicate upon and settle all the questions involved in the reference. In my view, the principles of natural justice are codified in terms of Sub-section (6) of Section 26 of the Act.The impugned order is subject to judicialreview before the adjudicating authority. The order passed by the adjudicatingauthority can be assailed before the appellate tribunal constituted underSection 31 of the Act. The order of appellate tribunal can also be called inquestion by preferring appeal to the High Court within a period of 60 days. Amicroscopic reading of provisions make it clear that principles of naturaljustice are reduced in writing in the shape of amendment in the said act. Theamended provisions contains a complete code in itself. In my view, the principles of natural justice are codified in terms of Sub-section (6) of Section 26 of the Act.The impugned order is subject to judicialreview before the adjudicating authority. The order passed by the adjudicatingauthority can be assailed before the appellate tribunal constituted underSection 31 of the Act. The order of appellate tribunal can also be called inquestion by preferring appeal to the High Court within a period of 60 days. Amicroscopic reading of provisions make it clear that principles of naturaljustice are reduced in writing in the shape of amendment in the said act. Theamended provisions contains a complete code in itself. 7.In this back drop, it is to be seen whether at this stage any interference iswarranted by this Court. In C.B. Gautam (Supra) the order of compulsorypurchase under Section 269-UD(1) of Income Tax Act was served on thepetitioner without issuing any show cause notice and without giving anyopportunity to him. The Apex Court in the aforesaid factual back dropinterfered in the matter. In the said case ,neither show cause notice was givennor reasons were assigned in the impugned compulsory purchase order. In thepresent case show cause notice has been issued, opportunity has been given tothe petitioner. The order impugned is provisional/tentative in nature. It issubject to judicial review by adjudicating authority. If order of adjudicatingauthority goes against the petitioner, the further forums of judicial review ofsaid order is available to the petitioner before the appellate tribunal and thenbefore this Court. Hence,against the tentative/provisional order, nointerference is warranted by this court at this stage. As per the scheme of theAct, the petitioner can raise all possible grounds before the adjudicatingauthority. The adjudicating authority is best suited and statutorily obliged to s@if W.P. No. 10280 of 2017 consider all relevant aspects. Thus, at this stage no case is made out forinterference. Moreso, when adjudicating authority has already fixed thehearing on 23.08.2017. Resultantly, the petition is dismissed. 8.No cost. (Sujoy Paul) Judge