M/S.ganga Foundations Private Limited Rep. By Its Managing Director S.senthil Kumar v. The Deputy Commissioner Of Income Tax (Benami Prohibition), Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS RESERVED ON : 24.06.2021PRONOUNCED ON : 25.10.2021 CORAM THE HONOURABLE DR.JUSTICE ANITA SUMANTH W.P.Nos.8146 to 8150, 2813 to 2815, 2817, 2818, 2820, 8540, 8352 and 3641 of 2020 and WMP. Nos.10321, 10023, 3258, 9685, 9682, 9683, 9684, 3253,4289, 3252, 9677, 9678, 9680, 9681. 10322, 9676, 3255, 3256,3257 and 9679 of 2020 1.M/s.Marg Realities Limited (Now Known as M/s.Digital Accelerator Limited) Rep. by its Authorized Signatory 57/2B Sai Subhodaya Apartment Thiruvanmiyur, Chennai-600 041. Rep. by its Authorized Signatory 57/2B Sai Subhodaya Apartment Thiruvanmiyur, Chennai-600 041. ...Petitioner in W.P.No.8146 of 2020 1.M/s.Global Infoserv Limited Rep. by its Authorized Signatory of M/s.Marg Ltd. Group Mr.R.B.Srinivasan No.57/2B Sai Subhodaya Apartment East Coast Road, Thiruvanmiyur Chennai-600 041. M/s.Marg Ltd. Group Mr.R.B.Srinivasan No.57/2B Sai Subhodaya Apartment East Coast Road, Thiruvanmiyur Chennai-600 041. ...Petitioner in W.P.No.8147 of 2020 1.M/s.Venus Meridian Agencies Private Limited Rep. by its Authorized Signatory of M/s.Marg Ltd Group Mr.R.B.Srinivasan No.28, 3[rd] Floor, Bashya Karlu Street Kondithope, Chennai-600 079. Rep. by its Authorized Signatory of M/s.Marg Ltd Group Mr.R.B.Srinivasan No.28, 3[rd] Floor, Bashya Karlu Street Kondithope, Chennai-600 079. ...Petitioner in W.P.No.8148 of 2020 1.M/s.Marg Capital Markets Limited Rep. by its Authorized Signatory M/s.Marg Ltd Group Mr.R.B.Srinivasn 57/2B Sai Subhodadya Apartment East Coast Road, Thiruvanmiyur, Chennai-600 041. M/s.Marg Ltd Group Mr.R.B.Srinivasn 57/2B Sai Subhodadya Apartment East Coast Road, Thiruvanmiyur, Chennai-600 041. ...Petitioner in W.P.No.8149 of 2020 1.M/s.Marg Projects and Infrasatructure Ltd Rep. by its Authorized Signatory M/s.Marg Ltd Group Mr.R.B.Srinivasan 57/2B Sai Subhodadya Apartment East Coast Road, Thiruvanmiyur, Chennai-600 041 M/s.Marg Ltd Group Mr.R.B.Srinivasan 57/2B Sai Subhodadya Apartment East Coast Road, Thiruvanmiyur, Chennai-600 041 ...Petitioner in W.P.No.8150 of 2020 1.N.Naveen Baalaji ...Petitioner in W.P.No.2813 of 20201.Mr.K.Nagarajan ...Petitioner in W.P.No.2814 of 20201.Mrs.N.Manjula ...Petitioner in W.P.No.2815 of 20201.Mrs.N.Sukanya ...Petitioner in W.P.No.2817 of 20201.Mr.K.Nagarajan ...Petitioner in W.P.No.2818 of 2020 1.M/s.Bonjour Bonheur Private limited Represented its Managing Director Mr.N.Naveen Baalaji, No.119, Kosakadai Street, Pondicherry -605 001. ...Petitioner in W.P.No.2820 of 2020 1.V.S.J.Dinakaran ...Petitioner in W.P.No.8540 of 20201.D.V.Balaji ...Petitioner in W.P.No.8352 of 2020 1.M/s.Ganga Foundations Private Limited Rep. by its Managing Director S.Senthil Kumar, No.2, 4[th] Floor, Ishana Apartments, Jayam Gardens, Ratteri Signal, Jawaharlal Nehru Road, Chennai – 600099. ...Petitioner in W.P.No.3641 of 2020Vs. 1.The Deputy Commissioner of Income Tax (Benami Prohibition), Room No.104, 1[st] Floor, Income Tax Investigation Wing Building, 108, M.G.Road, Nungambakkam, Chennai – 600 034. ...Sole Respondent in W.P.Nos.2813 to 2815, 2817, 2818, 2820, 3641 of 2020 2.The Adjudicating Authority, Under the Prohibition of Benami Property Transactions Act, 1988, Room No.26, 4[th] Floor, Jeevan Deep Building, Parliament Street, New Delhi. ...1[st] & 2[nd] Respondent in W.P.Nos.8146 to 8150, 8540 of 2020 3.Joint Commissioner of Income Tax, (Benami Prohibition) Approving Authority, Room No.102, 1[st] Floor, Income Tax Investigation Wing Building, 108, M.G.Road, Nungambakkam, Chennai – 600 034. ...Respondents 1 to 3 in W.P.No.8352 of 2020 1.The Deputy Commissioner of Income Tax (Benami Prohibition), Room No.104, 1[st] Floor, Income Tax Investigation Wing Building, 108, M.G.Road, Nungambakkam, Chennai – 600 034. ...Sole Respondent in W.P.Nos.2813 to 2815, 2817, 2818, 2820, 3641 of 2020 2.The Adjudicating Authority, Under the Prohibition of Benami Property Transactions Act, 1988, Room No.26, 4[th] Floor, Jeevan Deep Building, Parliament Street, New Delhi. ...1[st] & 2[nd] Respondent in W.P.Nos.8146 to 8150, 8540 of 2020 3.Joint Commissioner of Income Tax, (Benami Prohibition) Approving Authority, Room No.102, 1[st] Floor, Income Tax Investigation Wing Building, 108, M.G.Road, Nungambakkam, Chennai – 600 034. ...Respondents 1 to 3 in W.P.No.8352 of 2020 Prayer in W.P.Nos.8146 to 8150, 2813 to 2815, 2817, 2818, 2820,8540, 3641 of 2020 : Writ Petition filed under Article 226 ofthe Constitution of India praying to Writ of Certiorari callingfor the records on the file of the 1[st] respondent in OrderNo.44/DCIT(BP)/2019-20, 47/DCIT(BP)/2019-20, 45/DCIT(BP)/2019-20, 48/DCIT(BP)/2019-20, 46/DCIT(BP)/2019-20 and quash theimpugned order dated 29.01.2020, 17/DCIT(BP)/2019-20, 18/DCIT(BP)/2019-20, 19/DCIT(BP)/2019-20, 20/DCIT(BP)/2019-20, 21/DCIT(BP)/2019-20, 16/DCIT(BP)/2019-20 and quash the impunged orderdated 20.01.2020 and 23/DCIT(BP)/2019-20, quash the impugnedorder dated 23.01.2020 and 22/DCIT(BP)/2019-20 quash theimpugned order dated 20.01.2020 passed under Section 24(4) ofthe Prohibition of Benami Property Transactions Act, 1988 asillegal, arbitrary and without jurisdiction and consequentlydirect the Respondent to supply all the reliedupon documentsincluding the sworn statements of Mrs.Krishnapriya and theComplete the sworn statement of Mrs.V.Sasikala in W.P.No.2813 to2815 of 2020 and 2817, 2818, 2820 of 2020. Prayer in W.P.No.8352 of 2020 : Call for records in the file ofthe First Respondent and quash the impugned order in OrderNo.42/DCIT(BP)/2019-20 dated 28.01.2020 passed under section 24(4) of the prohibition of Benami Property Transactions Act, 1988along with the notice in F No. IO / PBPT / Balaji / 208 in DINITBA / COM / F / 17 / 2019-20 / 1019650705 (1) dated 01.11.2019issued under section 24(1) of the Prohibition of Benami PropertyTransactions Act, 1988 and the consequential reference made tothe Scond Respondent under section 24(5) of the Prohibition ofBenami Property Transaction ACt, 1988 in reference No. Chennai /PBPT / 24(5) / 208 vide letter dated 28.01.2020. For Petitioner in W.P.Nos.8146 to 8150,2813 to 2815, 2817, 2818, 2820 &3641 of 2020: Mr.R.V.Eashwar Senior Counsel For Mr.R.SivaramanFor Petitioner in W.P.No.8540 of 2020: Mr.M.R.VenkateshFor Petitioner in W.P.No.8352 of 2020: Mr.N.V.Balaji For Respondents in the above W.Ps : Mr.R.Sankaranarayanan Addl. Solicitor General of India Assisted by Ms.Sheela Senior Standing Counsel C O M M O N O R D E R This batch involving fourteen Writ Petitions was heard ondifferent dates and thereafter clubbed for the reason that thealleged beneficial owner in all the matters was the same person,viz., Mrs.V.K.Sasikala (henceforth and for the sake of brevity,referred to as ‘VKS’). I have divided the writ petitions intothree (3) batches wherein each of the sub-groups concern thetransfer of an asset common to the constituents of that batch. 2.The submissions advanced by all petitioners aresubstantially similar and I will thus encapsulate the facts inrelation to each of the batches first, including the issuesraised by the respective parties and thereafter, answer the samein seriatim. Detailed submissions of Mr.R.V.Eashwar, learnedSenior Counsel appearing for Mr.Sivaraman, Mr.M.R.Venkatesh andMr.N.V.Balaji,allforthepetitioners,andMr.R.Sankaranarayanan, Additional Solicitor General of Indiaappearing for Ms.Sheela have been heard. Facts and legal submissions in Batch -I (W.P.Nos.3641, 8352& 8540 of 2020) 2.The submissions advanced by all petitioners aresubstantially similar and I will thus encapsulate the facts inrelation to each of the batches first, including the issuesraised by the respective parties and thereafter, answer the samein seriatim. Detailed submissions of Mr.R.V.Eashwar, learnedSenior Counsel appearing for Mr.Sivaraman, Mr.M.R.Venkatesh andMr.N.V.Balaji,allforthepetitioners,andMr.R.Sankaranarayanan, Additional Solicitor General of Indiaappearing for Ms.Sheela have been heard. Facts and legal submissions in Batch -I (W.P.Nos.3641, 8352& 8540 of 2020) 3.The first batch of Writ Petitions relate to GangaFoundations Private Limited (petitioner in W.P.No.3641 of 2020,and referred to hereinafter as ‘company’), V.J.Dinakaran(petitioner in W.P.No.8540 of 2020) and D.V.Balaji (petitionerin W.P.No.8352 of 2020), and the common, connecting factor isthe immovable property known as Spectrum Mall, located atPerambur, Chennai (Mall/Asset1/Property1). for the company, 4.Ganga Foundations, a private limited company (‘Company’)engaged in the business of real estate, initiated theconstruction and development of the mall in the year 2011 alongwith two land owners D.V.Balaji and one Shanmugadurai. The ratiofor sharing of the built-up area as agreed upon by the partieswas 65% to the builder and 35% to the land owners. The companyclaims to be the owner of 37972 sqft. undivided share of themall. 5.The shares of the company in the property had beenmortgaged with the Indian Overseas Bank as collateral for a termloan and overdraft facilities availed to meet day-to-dayoperations as well as construction and development activities. The loans were subsequently transferred to the State Bank ofIndia. 6.While this was so, in or around 2015, the company had,according to it, been under pressure to sell the property toVKS. The company would state that though it put up initialresistance to sell, it met several hurdles in operations,leading it to believe that it was only the refusal to sell thatwas leading to such difficulties. 7.As a result, it succumbed to the pressure and commencednegotiations for sale. A price of Rs.192.50 crores was agreedupon. At that juncture, demonetization was announced,notwithstanding which the negotiations for sale went full steamahead. The petitioners were forced to sign a Memorandum ofUnderstanding (MoU), which, according to them, contained severalblank fields. No consideration was received at the time ofsigning of the MoU. 8.On 16.12.2016, the petitioners allege that a sum ofRs.130 crores was received in demonetized currency after themiddleman deducted Rs.8 crores towards his share of thecommission. Out of the remaining amount of Rs.119.82 crores, theamounts due to the co-owners was paid to them and the balanceretained by the company. Nothing further was paid as,ostensibly, the parties awaited better times when funds could bearranged through regular banking channels. 9.The transaction came to light in the course of a searchconducted in the premise of the company consequent upon a searchconducted in the premises of VKS. The respondents concluded thatthe transaction was a benami transaction as defined under theProhibition of the Benami Property Transactions Act, 1988 (inshort ‘PBPT Act’) and that the petitioners were holding SpectrumMall as benamidhar of VKS. 10.The petitioners argue that the aforesaid conclusion wasentirely erroneous, as the Mall had been built by the effortsand resources of the petitioners and there is no question of anyother party holding title to the same, either beneficial orotherwise. The transaction of sale to VKS had been envisaged andproceeded with as a purely commercial transaction that does notcome within the cover of the PBPT Act. 10.The petitioners argue that the aforesaid conclusion wasentirely erroneous, as the Mall had been built by the effortsand resources of the petitioners and there is no question of anyother party holding title to the same, either beneficial orotherwise. The transaction of sale to VKS had been envisaged andproceeded with as a purely commercial transaction that does notcome within the cover of the PBPT Act. 11.That apart, consideration had itself been paid only inpart, and that too, in demonetized currency which had ceased tobe legal tender with effect from the date of announcement ofdemonetization, being 08.11.2016. This would militate againstthe conclusion sought to be arrived at by the respondents sincethe definition of ‘benami transaction’ under the Act would stand attracted only to cases where the arrangement was established tobe an illegal or malafide arrangement made with dubious designwhere full legal consideration had been paid. 12.Apart from being a simple commercial transaction that hadnot fructified, the consideration had been remitted only inpart. On all fronts, therefore the present transaction does notqualify to be a benami transaction. That apart, the burden thatwas cast upon the investigating officer under Section 24requires reasons to be recorded to support his belief that theproperty in question constituted benami property. 13.The petitioner argues that no material was available withthe Department to discharge such onerous burden and thus theassumption of jurisdiction was itself bad in law. That apart,the procedure set out under Section 24 required the respondentsto supply all materials in their possession to the petitioner toafford full opportunity for their response/rebuttal. The sheetanchor of the respondents' arguments is the MoU and thiscritical document is nowhere to be seen. 14.Admittedly no MoU is available or has been madeavailable by the respondents in the course of the hearing. Infact, learned counsel for the respondents have categoricallyadmitted the position that no MoU had been found even in thecourse of the search. That apart, other documents such as thedocuments seized in the course of search and the swornstatements recorded from various persons have also admittedlynot been furnished to the petitioners on the avowedunderstanding that the same will be supplied to them in thecourse of proceedings for adjudication. 15.The petitioners submit that the show cause noticesissued under Section 24(1) hardly indicate any ‘reason tobelieve’ or independent application of mind to the facts andcircumstances of the respective cases and whether thetransactions in question constituted benami transactions, andmerely adopt the identical contents of the communication of theforwarding authority. 16.The forwarding authority, who is the Deputy Commissionerof Income Tax, Benami Prohibition, refers to the search andseizure action in the case of VKS, and vide communication dated14.05.2019, refers to the search conducted and evidences foundin her premises. He comes to the conclusion, on the basis ofcertain papers / documents and cash found in the course ofsearch as well as material found in the mobile phone of herniece, that as on 08.11.2016, VKS was in possession ofsubstantial cash that had been advanced to various entities towards financial consideration for purchase of their assetsthat she had not been in a position to explain or justify. 17.The notices sent to the petitioners merely replicates thecontents of the forwarding letter and contains extracts from thesworn statements without indicating anywhere, independentapplication of mind as to whether the transaction satisfied therequirements of a benami transaction as defined under the PBPTAct. towards financial consideration for purchase of their assetsthat she had not been in a position to explain or justify. 17.The notices sent to the petitioners merely replicates thecontents of the forwarding letter and contains extracts from thesworn statements without indicating anywhere, independentapplication of mind as to whether the transaction satisfied therequirements of a benami transaction as defined under the PBPTAct. 18.He also refers to certain other Departmental documentsthat make reference to an MoU, emphasising that no MoU has beenproduced by the petitioner in the income tax proceedings. As faras reliance on the MoU is concerned, the Department hasconfirmed in the present proceedings that no MoU has been foundin the course of search, or is part of their record. 19.The petitioners rely upon Circulars issued by theReserve Bank of India with regard to the demonetization schemeas well as the Specified Bank Notes (Cessation of Liability)Act, 2017 and the 2016 Ordinance that preceded it, in an effortto establish that the Rs.500/- and Rs.1000/- currency notes thathad been transacted as between the parties was not legal tenderand thus did not amount to 'consideration' as understood andcontemplated by the PBPT Act. 20.The petitioner in W.P.Nos.8540 of 2020, wouldspecifically emphasize the lack of opportunity in conduct ofproceedings. Admittedly, and though the order of attachmentunder Section 24(1)/show cause notice was duly received by thepetitioner, no reply was filed to the same. This petitionerstates at paragraph 17 of the affidavit filed in support of theWrit Petition that the impugned order contains reference to acommunication dated 03.12.2020 that has not been received byhim. 21.However, in the course of hearing, petitioner wouldconcede to the error in this statement, as the aforesaidcommunication has not only been received but also responded toby the petitioner on 21.02.2020. This was an interim reply thathad not been followed by a detailed response. Yet another noticedated 22.12.2020 had been received by the petitioner but had notfound favour of compliance or response. In the aforesaidcircumstances where the noticee has admittedly received a showcause notice but has not responded to the same, one can hardlyagitate violation of principles of natural justice. 22.A submission in common made by the petitioners is thatthe transaction at issue was a commercial transaction and thatthe Mall was in existence from 2011 onwards. Rentals were being https://hcservices.ecourts.gov.in/hcservices/ received from the lessees to whom space had been leased in theMall and such transactions were conducted through normal bankingroutes. The rental income was being offered by the company toincome tax regularly. 23.The petitioners rely upon the decisions in the cases of(i)Andaman Timber Industries V. Commissioner of Central Excise,Kolkata - II (62 Taxmann.com 3) (ii) Thilagarathinam MatchWorks Vs. Commissioner of Central Excise, Tirunelveli (46taxmann.com 382) (iii).Automotive Tyre Manufacturers AssociationV. Designated Authority and others (2011 (2) SCC 258) and (iv)Sri Meenakshi Mills Ltd. V. CIT (AIR 1957 SC 49). Facts and legal submissions in Batch -II (W.P.Nos.8146 to8150 of 2020) 24.The second sub-batch of Writ Petitions involve variousentities that are constituents of the Marg group. A search wasconducted in the premises of VKS in November, 2017 and in thecourse of search, documents were found, impounded and seized andsworn statements, recorded. Entities of Marg group had receivednotices under the provisions of the Income Tax Act, 1961 (inshort ‘I.T. Act’) calling for return of income for variousassessment years. Facts and legal submissions in Batch -II (W.P.Nos.8146 to8150 of 2020) 24.The second sub-batch of Writ Petitions involve variousentities that are constituents of the Marg group. A search wasconducted in the premises of VKS in November, 2017 and in thecourse of search, documents were found, impounded and seized andsworn statements, recorded. Entities of Marg group had receivednotices under the provisions of the Income Tax Act, 1961 (inshort ‘I.T. Act’) calling for return of income for variousassessment years. 25.The petitioners approached the Income Tax SettlementCommission for settlement of the disputes and demands under theassessments, but their applications were dismissed by theSettlement Commission on 31.12.2019 stating that there had beenno full and true disclosure by the petitioners. Assessmentproceedings thus continued and have been completed adverse tothe petitioners. 26.At the time of hearing of the Writ Petitions, learnedcounsel for the petitioners convey to the Court the intention ofthe petitioners to challenge orders of assessment by way ofstatutory appeals. Simultaneous therewith, the petitioners werein receipt of show cause notices under Section 24(1) of the PBPTAct on 01.11.2019. 27.The petitioner in W.P.No.8146 of 2020 is Marg RealitiesLimited, name subsequently changed to Digital AcceleratorLimited. The petitioners in W.P.Nos.8147 to 8150 of 2020 areshareholders in Digital Accelerator Limited. (W.P.Nos.8146 to8150 of 2020). 28.The Notice is issued on the premise that the petitionersare benamidars for VKS with respect to various properties, (inW.P.No.8146 of 2020, immovable property situated at No.16 RajivGandhi, Karapakkam, Chennai, known as Marg Square and in https://hcservices.ecourts.gov.in/hcservices/ W.P.Nos.8147 to 8150 of 2020, 9,90,000 equity shares held by thepetitioner in Digital Accelerators Limited (collectivelyreferred to as ‘property 2’/asset 2)). A explanation was soughtfor from the petitioners as to why the said properties not beheld to be benami in their hands. 29.The petitioners, on 18.11.2019, replied to the noticesobjecting to the proposal that the properties constitute benamiassets. They stated that Digital Accelerator Limited hadcommenced the construction of Marg Square as a commercialbuilding in 2005. The property had comprised two blocks and wasbuilt on 2,33,079 sq.ft. The intention was to construct theproperty and rent it to multinational companies, particularlythose in the arena of Information Technology. 30.A loan had been availed by the petitioner from theOriental Bank of Commerce that had subsequently been taken overby ICICI Bank in 2011. Additional financial assistance wasobtained from Indian Bank and the petitioner had given acorporate guarantee in this regard. The property startedfetching rentals from 2006 onwards, when it was occupied bySathyam Infotech and thereafter by Tata Consultancy Services in2011. 31.As part of the financial facilities, term loans had beensanctioned by ICICI Bank for settling of the petitioners dueswith Oriental Bank of Commerce as well as to meet otherfinancial obligations. The petitioner was however unable toservice the term loans and the loan accounts were thusclassified as NPAs in or around the middle of 2016. 32.The petitioner also faced SARFAESI action and had todefend O.A.No.540 of 2016 before the Debt Recovery Tribunal - IIat Chennai. On 17.04.2017, a garnishee order had been passed bythe Tribunal attaching any remittances received from theproperty towards the repayment of the bank loans. In view ofthe financial difficulties, the petitioner intended to disposethe immovable asset and started scouting for good offers. 31.As part of the financial facilities, term loans had beensanctioned by ICICI Bank for settling of the petitioners dueswith Oriental Bank of Commerce as well as to meet otherfinancial obligations. The petitioner was however unable toservice the term loans and the loan accounts were thusclassified as NPAs in or around the middle of 2016. 32.The petitioner also faced SARFAESI action and had todefend O.A.No.540 of 2016 before the Debt Recovery Tribunal - IIat Chennai. On 17.04.2017, a garnishee order had been passed bythe Tribunal attaching any remittances received from theproperty towards the repayment of the bank loans. In view ofthe financial difficulties, the petitioner intended to disposethe immovable asset and started scouting for good offers. 33.Demonetization had been announced in the first week ofNovember, 2016 when according to the petitioners one Mr.Senthil,Advocate had approached the promoter of the Marg Reality Group.He claimed to represent the former Chief Minister of Tamil Naduand her associates and negotiated the purchase of equity sharesof the petitioners. Pressure was applied upon the promoters topart with the shares under threat of dire consequences, if theywere not so inclined. 34.On account of the pressure applied, the promoters wereforced to succumb. The consideration for the sale of the shares was fixed at Rs.170 crores and the transaction was to becompleted before the end of April, 2017. According to thepetitioner, the entire transaction was open and transparent andhad been carried out only through banking channels. A draftMemorandum of Understanding (hereinafter referred to as MoU) hadalso been prepared in regard to the transfer of the shares. 35.At that juncture, and pending finalization of thetransaction, the petitioner had been suddenly told that part ofthe consideration would only be paid in demonetized currency foronward transmission to various other persons identified by themiddleman. After a series of negotiations, an amount of Rs.115crores had been agreed to be paid in the form of raw materialsfor completion of unfinished building projects that were to beregularized by material bills and invoices. 36.The petitioners were called upon to execute a MoU which,according to them, was blank in regard to the name of the buyer.It was duly agreed that a sum of Rs.105 crores in demonetizedcurrency would be handed over to the promoter after themiddleman retained a sum of Rs.10.00 crores as his share. Theinstructions were to disburse the amount of Rs.105 crores tovarious named entities/persons. 37.After distribution, as instructed, the petitioners claimto have received raw materials for the purpose of its buildingprojects. Thereafter, according to the petitioners, there wasno move from the vendor, to proceed with the transaction,despite repeated reminders from the petitioners. At thatjuncture, the petitioners were faced with income tax searchaction which it is addressing separately. 38.The petitioners submit that under no circumstances can atransaction of the aforesaid nature fall within the descriptionof a benami transaction as, to begin with, the petitioners arenot benamidars of property 2/asset 2, but its rightful owners.The petitioners refer to a copy of the MoU dated 04.12.2016which was found in the course of a search in the residentialpremises of VKS on 18.11.2017. 39.As per the MoU, a copy of which has been circulated tothe Court, the petitioner is referred to as ‘first party’ and 11other parties, the name and description of the 11[th] party beingleft blank, propose to transfer their equity shareholding in thefirst party company to the 11[th] party. The parties also confirmreceipt of a sum of Rs.115 crores in lumpsum from the 11[th] party,who agrees to pay the balance of Rs.55 crores on or before30.04.2017. 39.As per the MoU, a copy of which has been circulated tothe Court, the petitioner is referred to as ‘first party’ and 11other parties, the name and description of the 11[th] party beingleft blank, propose to transfer their equity shareholding in thefirst party company to the 11[th] party. The parties also confirmreceipt of a sum of Rs.115 crores in lumpsum from the 11[th] party,who agrees to pay the balance of Rs.55 crores on or before30.04.2017. 40.The petitioners point out that since the subject of theMoU was only the equity shares, there is no question ofattachment of Marg Square as it does not figure anywhere in theMoU. The immovable property is an asset, different and distinctfrom the equity shares and the two must not be confused. Thus,what had transpired between the petitioners and the vendor was apure commercial transaction and it does not answer to thedefinition of a benami transaction under the PBPT Act. 41.That apart, the term ‘consideration’ defined under thePBPT Act connotes full consideration and not part consideration.In the present case, admittedly the petitioner has received onlypart consideration of Rs.115 crores as against totalconsideration of a sum of Rs.170 crores. In such a case, theprovisions of the PBPT Act cannot be invoked. The burden ofproving, since that the petitioner does not answer to the term'benamidhar' and that the transaction in question does not fallwithin the scope of a benami transaction under the PBPT Act,lies heavily on the respondents, and it was incumbent upon therespondents to have discharged that burden fully. 42.However, the petitioners received impugned orders dated29.01.2020 under Section 24(4) of the PBPT Act, in terms ofwhich, the provisional attachment of the property originallymade was extended/continued till such time, and subject to afinal order being passed by the second respondent, which wouldbe an order of adjudication. The show cause notices and theimpugned orders proceed on suspicions and surmises, whereas, thePBPT Act, which casts a very onerous liability upon the parties,calls for strict and minute compliance with all its provisions. Facts and legal submissions in Batch -III (W.P.Nos.2813 to 2815,2817, 2818 and 2820 of 2020) 43.The third sub-batch batch of Writ Petitions relate to aresort located at Nos.7, 8 and 9, East Coast Road, ManjakuppamVillage, Tindivanam Taluk, Villupuram District includingconstructions buildings, machinery, fittings and furniture alongwith the wind mill of 1250 KW (property 3/asset 3)which isalleged to be benami property enuring to VKS and held by thepetitioners as benamidars. 44.The asset is owned by a company, Bonjour Bonheur PrivateLimited, that promoted a resort under the name and style ofOcean Spray. Its promoters are five individuals, who are WritPetitioners in W.P.Nos.2813 to 2815, 2817 and 2818 of 2020. Theresort was run on land that belonged to a promoter/director(petitioner in W.P.No.2818 of 2020) that was leased to thecompany for this purpose. 45.The promoters/individuals are all constituents of thesame family and run a business under the name and style ofPondicherry Sri Lakshmi Jewellery. Consequent upon a search inthe premises of VKS, a search was also conducted in the premisesof the petitioners and proceedings for block assessments are on-going in the all cases. Simultaneous therewith, the petitionersreceived show cause notices under PBPT Act similar to the caseof the other petitioners in the previous sub-groups. 45.The promoters/individuals are all constituents of thesame family and run a business under the name and style ofPondicherry Sri Lakshmi Jewellery. Consequent upon a search inthe premises of VKS, a search was also conducted in the premisesof the petitioners and proceedings for block assessments are on-going in the all cases. Simultaneous therewith, the petitionersreceived show cause notices under PBPT Act similar to the caseof the other petitioners in the previous sub-groups. 46.The factual matrix remains more or less the same as inthe earlier two batches, except that in this case, the sale ofthe resort to VKS was initiated voluntarily by the petitionersand not under any threat as alleged by the petitioners in thosebatches. The consideration was fixed at a sum of Rs.168 crores.The facts relating to demonetisation and that too, in partsettlement of the total consideration as in the other cases, areidentical in the present group as well, as the amount receivedwas a sum of Rs.135.25 crores as against the consideration fixedat a sum of Rs.168 crores. 47.These petitioners would also state that an incompleteMoU was executed by them wherein the name of the purchaser wasleft blank. At the time of execution of MoU, share certificateshad been handed over to the representatives of VKS. Thesubmissions advanced by these petitioners to the effect that thetransaction is commercial is the same as argued by the otherpetitioners. 48.In all the cases, the consideration has been added asincome from other sources under Section 156(20(9) of the I.T.Act and those assessments are under challenge before theappellate authorities. Common defence of the respondents 49.The respondents raise a preliminary objection that theWrit Petitions are not maintainable. According to therespondents, sufficient materials were gathered in the course ofthe search of the premises, both that of the petitioners as wellas of VKS and it is only thereafter that the first respondenthas passed the impugned orders in terms of Section 24(4) of thePBPT Act. The petitioners were heard prior to passing of theorder and their replies were considered. The Writ Petitions areliable to be dismissed as pre-mature and the petitionersdirected to co-operate in the proceedings to follow. 50.According to the respondents, proceedings under Section24 only require a recording of prima facie satisfaction that allwas not well as regards a particular transaction. Thisrequirement stands satisfied in the present case as the https://hcservices.ecourts.gov.in/hcservices/ materials found have led to a prima facie satisfaction upon thestrength of which the assets in question have been attached,pending adjudication. 51.Section 25 of the PBPT Act provides for a full-fledgedadjudication requiring the parties to be heard in full, prior toany decision being taken in the matter. The provision alsospecifically requires the respondents to serve all material uponwhich they rely to the petitioners, to ensure that they arefully aware of the basis upon which allegations were beinglevelled in regard to the assets in question and would be ableto meet the same effectively. The respondents would emphasizethat they intend to comply with the mandate of Section in full,and faithfully. https://hcservices.ecourts.gov.in/hcservices/ materials found have led to a prima facie satisfaction upon thestrength of which the assets in question have been attached,pending adjudication. 51.Section 25 of the PBPT Act provides for a full-fledgedadjudication requiring the parties to be heard in full, prior toany decision being taken in the matter. The provision alsospecifically requires the respondents to serve all material uponwhich they rely to the petitioners, to ensure that they arefully aware of the basis upon which allegations were beinglevelled in regard to the assets in question and would be ableto meet the same effectively. The respondents would emphasizethat they intend to comply with the mandate of Section in full,and faithfully. 52.Respondents rely on the following judgments for theproposition that proceedings under Section 24 are provisionaland preliminary in nature and it is for the parties to maketheir objections in detail before the adjudicating authority onall aspects of the matter that must, and will be heard anddecided on merits. No doubt, prior to doing so, the authoritywill ensure that the entirety of the material relied upon by theDepartment in support of the allegations that the assets arebenami will be supplied to the petitioners, the petitionersheard in full and only then a decision taken as to whether thetransactions are benami in nature and the petitioners,benamidhars. i.Kanwar Natwar Singh Vs Directorate of Enforcement ((2010)13 SCC 255)13 SCC 255)ii.Kailash Assudani Vs Commissioner of Income-Tax(W.P.No.10280 of 2017 dated 03.08.2017)(W.P.No.10280 of 2017 dated 03.08.2017)iii. Kailash Assudani Vs Commissioner of Income-Tax(W.A.No.704of 2017 dated 16.08.2017)of 2017 dated 16.08.2017)iv.Harivallabh Mohanlal Joshi &Ors. Vs Union of India &Ors.(W.P.No.16633 of 2018 dated 13.08.2018)(W.P.No.16633 of 2018 dated 13.08.2018)v.Adjudicating Authority Vs Kundan Trading Co.(R/LettersPatent appeal No.748 of 2019 dated 02.04.2019)Patent appeal No.748 of 2019 dated 02.04.2019)vi.Tulsiram&Ors. Vs ACIT (BP) (W.P.(C) No.3819 of 2019 dated15.01.2019)15.01.2019)vii. VPC & Co. Vs Adjudicating Authority &Anr. (W.P.No.25406of 2018 dated 23.10.2019)of 2018 dated 23.10.2019)viii.Mohammed Ibrahim Sait Vs The Deputy Director, Directorateof Enforement and Ors.(W.P.(MD) No.17114 of 2019 dated15.10.2019)of Enforement and Ors.(W.P.(MD) No.17114 of 2019 dated15.10.2019)ix.Simmant Kohli Vs Union of India &Ors. (w.P.Nos.3957 and3963 of 2019 dated 17.12.2019)3963 of 2019 dated 17.12.2019) x.Tulsiram&Ors. Vs ACIT (BP) (W.A.No.29 of 2020 dated06.02.2020)06.02.2020) 53.The respondents also advance submissions in regard tothe merits of the matter pointing out that the PBPT Act does notmake any differentiation between a commercial transaction vis-a-vis any other kind of transaction. Thus, any transaction whichresults in the property of a beneficial owner being camouflagedas one belonging to a benamidhar would come within the sweep ofthe PBPT Act. 54.As to the argument that only part consideration as perMoU has been received, the respondents would state that there isno necessity for the Department to await completion of thetransaction in full and in fact, doing so would be fatal to theinterests of the Department. My attention is drawn to thedefinitions under the PBPT Act to illustrate that anytransaction or arrangement where a property is held directly orindirectly by a third party for the immediate or future benefitof another person who has provided the consideration would fallwithin the definition of benami transaction. Such considerationcan be either part or whole, as the enactment does not containany stipulation, or make any differentiation in this regard. 54.As to the argument that only part consideration as perMoU has been received, the respondents would state that there isno necessity for the Department to await completion of thetransaction in full and in fact, doing so would be fatal to theinterests of the Department. My attention is drawn to thedefinitions under the PBPT Act to illustrate that anytransaction or arrangement where a property is held directly orindirectly by a third party for the immediate or future benefitof another person who has provided the consideration would fallwithin the definition of benami transaction. Such considerationcan be either part or whole, as the enactment does not containany stipulation, or make any differentiation in this regard. 55.Judgments in the celebrated cases of Phool Chand BajranLal V. Income Tax Officer (203 ITR 456), Income Tax Officer V.LakhmaniMewaldas (1976 (3) SCR 956), and Aslam Mohd Merchant V.Competent Authority ((2008) 14 SCC 186) are cited to state thatthe belief that an officer holds that the property was benami atthe time of invocation of power of attachment under Section 24,is only a prima facie belief, based on available evidences andmaterials found in the course of search and enquiry thereafter.This requirement is satisfied in the present case. Discussion and Reasoning 56.The PBPT Act has been enacted with the intention ofprohibiting benami transactions and protecting the right of theState to recover property held as benami. The definitions asrelevant for deciding this matter are set out in terms ofSection 2(8) which defines ‘benami property’ and Section 2(9)which defines ‘benami transaction’. Both are extracted below:2(8) ‘benami property’ means any property which isthe subject matter of a benami transaction and alsoincludes the proceeds from such property; 2(9) ‘benami transaction’ means – (A) a transaction or an arrangement— (a) where a property is transferred to, or is heldby, a person, and the consideration for suchproperty has been provided, or paid by, anotherperson; and (b) the property is held for the immediate or futurebenefit, direct or indirect, of the person who has provided the consideration, except when the propertyis held by— (i) a Karta, or a member of a Hindu undividedfamily, as the case may be, and the property is heldfor his benefit or benefit of other members in thefamily and the consideration for such property hasbeen provided or paid out of the known sources ofthe Hindu undivided family; (ii) a person standing in a fiduciary capacity forthe benefit of another person towards whom he standsin such capacity and includes a trustee, executor,partner, director of a company, a depository or aparticipant as an agent of a depository under theDepositories Act, 1996 (22 of 1996) and any otherperson as may be notified by the Central Governmentfor this purpose; (iii) any person being an individual in the name ofhis spouse or in the name of any child of suchindividual and the consideration for such propertyhas been provided or paid out of the known sourcesof the individual; (ii) a person standing in a fiduciary capacity forthe benefit of another person towards whom he standsin such capacity and includes a trustee, executor,partner, director of a company, a depository or aparticipant as an agent of a depository under theDepositories Act, 1996 (22 of 1996) and any otherperson as may be notified by the Central Governmentfor this purpose; (iii) any person being an individual in the name ofhis spouse or in the name of any child of suchindividual and the consideration for such propertyhas been provided or paid out of the known sourcesof the individual; (iv) any person in the name of his brother or sisteror lineal ascendant or descendant, where the namesof brother or sister or lineal ascendant ordescendant and the individual appear as joint ownersin any document, and the consideration for suchproperty has been provided or paid out of the knownsources of the individual; or(B) a transaction or an arrangement in respect of aproperty carried out or made in a fictitious name;or(C) a transaction or an arrangement in respect of aproperty where the owner of the property is notaware of, or, denies knowledge of, such ownership;(D) a transaction or an arrangement in respect of apropertywheretheperson providingtheconsideration is not traceable or is fictitious;Explanation.—For the removal of doubts, it is herebydeclared that benami transaction shall not includeany transaction involving the allowing of possessionof any property to be taken or retained in partperformance of a contract referred to in section 53Aof the Transfer of Property Act, 1882 (4 of 1882),if, under any law for the time being in force,—(i) consideration for such property has beenprovided by the person to whom possession ofproperty has been allowed but the person who hasgranted possession thereof continues to holdownership of such property; (ii) stamp duty on such transaction or arrangementhas been paid; and (iii) the contract has been registered. 57.A blanket restriction is cast upon all persons, byvirtue of Section 3 of the Act, to enter into a benamitransaction, Section 4 prohibits any person from instituting aclaim or action to enforce any right in regard to benamiproperty as against any other person claiming to be the realowner of the property, and Section 5 states that any propertywhich is the subject matter of benami transactions, onceestablished to be so, shall be liable to be confiscated by theCentral Government. 58.We then move on to Chapter IV which deals withattachment, adjudication and confiscation of benami properties,as Chapter III which enumerates the various authorities underthe Act may not hold any relevance to us now. Chapter IIIrelates to the process of investigation carried out by theInitiating Officer pursuant to which, he, if convinced primafacie that the property is being held as benami, records hisreasons in writing, and issues notice to the alleged benamidharsto show cause as to why the specified property not be treated asbenami property. 59.It is a settled position that where the notice/show causenotice indicates a basis that would justify its issuance, Courtsare not expected to examine the sufficiency or validity of suchreasons. In the present case, the show cause notices indicatesome material that the Department relies upon to come to theprima facie decision that the transactions are benami in nature. 60.The provisions of Section 24 deal with the process bywhich property is attached and the procedure to be followed bythe respondents in that regard. Section 24 is extracted below: 59.It is a settled position that where the notice/show causenotice indicates a basis that would justify its issuance, Courtsare not expected to examine the sufficiency or validity of suchreasons. In the present case, the show cause notices indicatesome material that the Department relies upon to come to theprima facie decision that the transactions are benami in nature. 60.The provisions of Section 24 deal with the process bywhich property is attached and the procedure to be followed bythe respondents in that regard. Section 24 is extracted below: 24. Notice and attachment of property involved inbenami transaction.—(1) Where the Initiating Officer,on the basis of material in his possession, has reasonto believe that any person is a benamidar in respect ofa property, he may, after recording reasons in writing,issue a notice to the person to show cause within suchtime as may be specified in the notice why the propertyshould not be treated