This Aspect Of The Matter[Was Gone ][Into ][B;' ][T.hisr ][Court] In Nexus Feeds Limited V.[Assistant ][Commissioner ][Of] Income Tax And By The[Supreine ][Cour v. Ganpati L)Ealcom Pvt. Ltd2

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD (Special Original Jurisdiction) MONDAY, THE FIFTH DAY OF DECEMBERTWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYANANDTHE HONOURABLE SRI JUSTICE C,V. BHASKAR REDDYANDTHE HONOURABLE SRI JUSTICE C,V. BHASKAR REDDY WRIT PETITION NO: 40618 OF 2022 Between: Shri .Golla. Jagadishwar Narender, S/o Late Sri Golla Rajaiah Jagadishwar,4S"9 [- 4] ][years, ][Occ. Sr. ][Administrative ][Assistant, triilitary ][E-ngineering]4S"9 [- 4] ][years, ][Occ. Sr. ][Administrative ][Assistant, triilitary ][E-ngineering]Services, _Secunderabad, Rl/o 5-53, Prashant Nagar Colony, O[p CViGardens, Back side SBl, Old Alwal, Secunderabad-5d0010, tetangani State.Gardens, Back side SBl, Old Alwal, Secunderabad-5d0010, tetangani State. .,.PETITIONER AND 1The Union 9[!-a.iq,_!tp.is]ry.oJ Finance, Dep. of Revenue Office of CompetentAuthorty SAPEM_(FOP) A&NDPCA, Shasthri Bhavan, 4th Ftoor, No.26,'Haddows Road, Chennai-6Authorty SAPEM_(FOP) A&NDPCA, Shasthri Bhavan, 4th Ftoor, No.26,'Haddows Road, Chennai-6 2. Asst. Commissioner of lncome Tax, (BPU), lnitiating Officer,3rd Floor,Aayakar Bhawan, Basheerbagh, Hyderabad.Aayakar Bhawan, Basheerbagh, Hyderabad. 3. lnspe^cting officer, SAPEM(FOP) A&NDPC Acts &AApBpT, No.64/1 ,G.N.Chetty Road, T.Nagar, Chennai-i 7G.N.Chetty Road, T.Nagar, Chennai-i 7 ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in thecircumstances stated in the affidavit filed therewith, the High Court may bepleased to issue a writ, order or direction more particularly one in the natuie ofwrit of mandamus, by setting aside the Provisional Attachment order underSection 24 (4XbXi) of the Prohibition of Benami property Transactions Act 1988,Section 24 (4XbXi) of the Prohibition of Benami property Transactions Act 1988,vide order daled 27-12-21 No. AClr/BPUl1ydt24(4)t236t3t2ss1s- 2016t2021-22in respect of immovable property, land admeasuring 1.00 acre at Sy. No.in respect of immovable property, land admeasuring 1.00 acre at Sy. No.1O2lAl1 , Situated at Bacharam Village, Hayatnagar Revenue Mandal, RangaReddy District issued by 2nd respondent, as illegal and the petitioner isbeneficial owner as defined in section 2(12) of the said Act in an arbitry manner,without authority of law and without jurisdiction and hence violative of Article 14,19 and 21 of lndian Constitution.beneficial owner as defined in section 2(12) of the said Act in an arbitry manner,without authority of law and without jurisdiction and hence violative of Article 14,19 and 21 of lndian Constitution. lA NO: 1 OF 2022 Petition unde' Section 151 CPC praying that in the r:irr:unrsta nces statedin the affidavit filed in support of the petition, the High Cou 1 Ta)/ be pleased tosuspend the operati rn of Provisional Attachment order under llection 24 (4Xb)(i)of the Prohibition o1 Benami Property Transactions Act l [gtrtl, ]vide Order dated27-12-21 No. ACIT [/BPUlHydl24(4)123613125585- ]201612021..22, in respect ofimmovable property, land admeasuring 1.00 acre at Sy. No. 102/l\/1 , Situated atBacharam Village, Hayatnagar Revenue Mandal, Ranga RedCy District forconsideration u";us [,rf ]Rs. 25,00,000/-, pending disposal of tlrr: main writ petition. Counsel for the Peti ioner: Ms. ANJALI AGARWAL REPRESENTII{G FORSRI P.S.P. SURESH KUMAR Counsel for the Restrondent No.1: GADI PRAVEEN KUMAR (DEPUTY SOL|C|TOR GE vERA.L OF tNDtA) Counsel for the Resl rondent No.2 & 3: SRI B. NARASIMHA S ARM,A The Court made the bllowing: ORDER CE UJJAL [B]HIIYANTHE HON 'BLE ANDTHE HON[,BLE SRI JUS] [ c.v][.BHASKAR REDDY] WRIT PETITION [No.4][o6] [of2022] ORDER: Fer [the ][Hon'bte ][the Chief ][Justi'e ][IlJJal ][Bhugan)] Counsel for the Peti ioner: Ms. ANJALI AGARWAL REPRESENTII{G FORSRI P.S.P. SURESH KUMAR Counsel for the Restrondent No.1: GADI PRAVEEN KUMAR (DEPUTY SOL|C|TOR GE vERA.L OF tNDtA) Counsel for the Resl rondent No.2 & 3: SRI B. NARASIMHA S ARM,A The Court made the bllowing: ORDER CE UJJAL [B]HIIYANTHE HON 'BLE ANDTHE HON[,BLE SRI JUS] [ c.v][.BHASKAR REDDY] WRIT PETITION [No.4][o6] [of2022] ORDER: Fer [the ][Hon'bte ][the Chief ][Justi'e ][IlJJal ][Bhugan)] Heard Ms. [Anj ][ali ][Agarwal, ][learned ][counsel]representing [Mr. ][P'S.P.Suresh ][Kumar, ][learned counsel ][lor]the petitioner; [Mr. ][Gadi ][Praveen ][Kumar, ][learned ][Deputy]Solicitor General [of India ][appearing ][for ][respondent ][No' ][1;]and Mr. B.Narasimha [Sarma, learned counsel ][appearing]for respondents [No.2 ][and ][3'] 2. Challenge [made ][in ][tiris ][writ ][petition ][is to ][the]order [of ][attachment ][dated 27 '12'202 ][1 ][made ][by]provisional respondent No.2. 3. It may be [mentionecl ][that ][respondent No'2 ][in ][exercise]of powers under [Section ][2a(a)(b)(1) ][of ][the ][Prohibition ][of]Benami Property [Transacl'ions ][Act, ][1988 ][(briefly' ]['the]Benami Property [Act' ][hereinafter) ][had ][passed ][the ][I]order [dated ][27'12'2021 provisionally ][attaching]impugned the property [listed ][in ][the ][said ][order ][i'e'' ][immovable] propcrtv bei ng agricultural lar]d admeasuring [.r\c. ][i ]'00 [in]survey No.1O2/A/ 1 situated at Bachararn [Village,]Hayatnagar tevenue Mandal, [Ranga ][Reddl' Distt'tct.] 4. Learne I counsel for the [parties ]have [poin:ed ][out that]the transa :tion vis-a-vlsalleged benami propertyconcerned is dated 01.10.20 [16.] 5. This aspect of the matter [was gone ][into ][b;' ][t.hisr ][Court]in Nexus Feeds Limited v. [Assistant ][Commissioner ][of]Income Tax and by the [Supreine ][Court ][in Uaion ][of ][India]v. Ganpati l)ealcom Pvt. Ltd2. 6. In Nexrrs Feeds Limited [(supra), ][thrs ][Cortrt held ][as]foilov',s: Frrm the conspectus of the [discussions ][nLade]above it is apparent thai Section [2 ][(9) ][(A) ][end]Sectio r 2 (9) [(C) ]are substa;rtive [provisions ][creatitrg]the o Tence of benami transaction. [These ][two]provis ons are significantly altd substantially [uider]than he defrnition of benami transaction [uI ][t,ler]Sectio r 2 (al of the nnamended 1988 [Ar:t.]Theref rre, Section 2 [(9) ](A).and Section [2 ][(9) ][(C) ][can]only h lve cffect [prospectively. ]Central [GovernnLr-'nt]\has n rtified the date of coming [into ][force ][of ][t-he] Amendment Act of 2016 as 01.-1 1.2016. Therefore,these two provisions cannot be applied to atransaction which took place prior to01.1 i.20l6.Admittedly, in the present case, thetransaction in question is dated 14.12.2011. Thatbeing the position, we have no hesitation to holdthat the show cause notice dated 3O.I2.2O19,provisional attachment order dated 31.12.2O l9 andthe impugned order dated 30.03.2027 are null alrdvoid being without jurisdiction. Consequently, theimpugned order is set aside and quashed. 7. Thus, from the above, it is evident that this Courttook the view that Section 2(9)(A) and 2(9)(C) of the BenamiProperty Act inserted by the Amendment Act of 2016 areprospective in nature because these two provisions havesignificantly and substantially widened the definition of'benami transaction' than as was there in the unamendedBenami Property Act of 1988. 8. Taking note of the fact-that Central Government hadnotified the date of coming into force of the Amendment Actof 2016 as 01.11.2016, this Court held that these twoprovisions cannot be applied to a transaction which tookplace prior to 0 I . 1 | .2016. In that case, the transactionwas dated l4.I2.2}ll. Therefore, the show cause notice, provisional attachment order as well as the ailju,lioatingorder \'\:er€ declared null and void bei nii withoutjurisdiction md consequently, quashed. 8. Taking note of the fact-that Central Government hadnotified the date of coming into force of the Amendment Actof 2016 as 01.11.2016, this Court held that these twoprovisions cannot be applied to a transaction which tookplace prior to 0 I . 1 | .2016. In that case, the transactionwas dated l4.I2.2}ll. Therefore, the show cause notice, provisional attachment order as well as the ailju,lioatingorder \'\:er€ declared null and void bei nii withoutjurisdiction md consequently, quashed. 9. In Ganpati Dealcom Prrt. Ltd. (supra), wrjch [went ][to]the Suprem: Court from a decision of the Cirl<:utra [High]Court, the question which [was ]considered by the [Supreme]Court was rrhether the Benami Propert5r Act [,ts ][arnended]by the Ame:rdment Act of 20 16 has a [prospecl-ive ][effect?]While examining this question, Supreme Coutt went intothe constitr ttionality of the original Act [i.et. ], [Benami]Propertv Act At the first [place, ]it has [been ]helc [as ][follows:] T.re simple question acidressed by the cor nselappez ring for both sides it whether the ame;rded2016 Act is retroactive or [prospective. ]Answt:t:ngthe i rbove question is inevitably tied to anintern rediate question as to whether the 1988 l\ctwas c rnstitutional in the first place. The aigumelltsaddre;sed by the Union of India hinges on the i:rctthat t he 1988 Act was a valid substantive law,which required only some gap filIing through the2016 Act, to ensure that sulEcient [procedttral]safegr ards and mechanisms are [ptesent ]to enl3r,rethe lae. According, to the Union of India. the 2016Act wi s a mere gap hlling exercise. H(,r,ev{rr, upon studying the [prorisions ]ofthe 1! 88 Act, we find that there are [questions ]of legality and constitu tionality which arise withrespect to Sections 3 and 5 of 1988 Act. Theanswers to such questions cannot be assumed infavour of constitutionality, simply because thesame was never questioned before the Court of law.We are clarifying that we are not speaking of thepresumption of constitutionality as a matter ofburden of proof. Rather, we are indicating theassumption taken try the Union as to the validity ofthese provisions in the present litigation. Suchassumption cannot be. made when this Court isca.lled upon to ansrver whether the impugnedprovisions are attracted to those transactions thathave taken place before 2O 16. 1 0. After elaborate deliberation, Supreme Court came tothe conclusion that Section 3 (criminal provision), Section2(al (definition clause) and Section 5 (confiscationproceedings) of the Benamfelbperty Ac[ are'oveily broad,disproportionately harsh and without adequate safeguards.Though such provisions r,vere in a dormant condition,nonetheless, Supreme Court declared Sections 3 and 5 ofthe Benami Property Act as unconstitutional frominception. It has been held as follows: From the above, Section 3 (criminal provision)read with Section 2(a) .and Section 5 (confiscationproceedings) of the 1988 Act are overly broad,disproportionately harsh, and operate withoutadequate safeguards [in ][place. ]Such provisions were stillL orn law and never utilized in the lirst [pla.e. In]this light, this Court hnds 1:hatSecti 1988 Act ["were])ns 3 and 5 of the unco :rstitutional from their inception. 1 1. Contir: uing with the deliberation, Supreme [Court]observed tt at once Sections 3 and 5 of -he [Benami]Property Ac were declared as unconstitution ai, it [would]mean that .he Amendment Act of 2016 [r.r'or. ][L. ]cl in effectcreate new provisior-rs axd new offences as [.lt ]e [offences]under Sect.on 3(i) for the transactions erLtere,d [into]between 05. C9. 1988 (when th..:: original Act tr:ceived [the]presider.rtial lssent) and 25.10.20 16 (u,hen the ^.rnertdmentAct of 2016 rvers notified), t1'le law cannot :r:troactivelyinvigorate a still-born crimiftal-oftence. Thereirfter, it wascategorically held that the Amendment Act of 2016containirrg c riminal provisions wouid be app it:ab..e onlyprospectively. Supreme Court iras held as follorrs: 1 1. Contir: uing with the deliberation, Supreme [Court]observed tt at once Sections 3 and 5 of -he [Benami]Property Ac were declared as unconstitution ai, it [would]mean that .he Amendment Act of 2016 [r.r'or. ][L. ]cl in effectcreate new provisior-rs axd new offences as [.lt ]e [offences]under Sect.on 3(i) for the transactions erLtere,d [into]between 05. C9. 1988 (when th..:: original Act tr:ceived [the]presider.rtial lssent) and 25.10.20 16 (u,hen the ^.rnertdmentAct of 2016 rvers notified), t1'le law cannot :r:troactivelyinvigorate a still-born crimiftal-oftence. Thereirfter, it wascategorically held that the Amendment Act of 2016containirrg c riminal provisions wouid be app it:ab..e onlyprospectively. Supreme Court iras held as follorrs: In the case at hand, tif-e 2016 Act containingthe :riminal provisions is applicable crlyprosp,:ctively, as the relevant Sections of the pre-amenr lment 1988 Act containing the p:nal1;rovis [on, ][have ][been declared ][as ][unconstituti( ][nal.]Therel crc, the question of construction of the 2016Act as retroactile qua the penal provisions urrderSectio rs 3 or 53, does not arise. 12. Supreme Court has clarified that as it has held thatcriminal provisions under the Benami Property Act werearbitrary and incapable of application, the law through the2OL6 amendment could not retroactively apply toconfiscation of those trausactions entered into between05.09.1988 to 25.10.2016 as the same lvould amount topunitive punishment. Finally, the Supreme Courtconcluded as under: In view of the.,above discussion, we hold asunder: a) Section 3(2) of the unamended 1988 Act isdeclared as unconstitutional for being manifestlyarbitrary. Accordingly, Se&ir*S{O1 of the 20 16 Act is alsounconstitutional as it, is violative of Article 20(l) ofthe Constitution. b) In rem forfeiture provision under Section 5 ofthe unamended Act of 1988, prior to the 2OL6Amendment Act, was unconstitutional for beingmanife stly arbitrar.v. c) The 2016Amendment Act wasnot merelyprocedural,rather, prescribedsubstantiveprovisions. d) Lr rem forfeiture provision under Section [i ofthe 2116 Act. being punitive in nature, can orly'beappli :d prospectively and not retroactively. c) C oncerned authorities cannot initratt orcontir ruc criminal prosecution or confisc:tionproce:dings for tralsactions entered into prirr tothe [r ]loming into force of the 2016 Act, uiz.,25.LC.2016. As a consequence of the ebovedccla atio:r, all such prosecutions or confisc.rtionproce ,'dings shall stand quashed. f) As this Court is not concerned with theconst. tutionality of such independent forfe I r.rreproce, :dings contemplated under the ',lt) 16Amen lment Act on thc cther grounds. thezr,fores aid questions are [e[t open to be adjudicatedin aptr ropriate proceedings. 13. From tlre above, it is eviC,nr. rhat Suprem,) Court hasdeclared tha . the Amendment Act of 20 16 is n ot merelyprocedural but prescribes substantive Drovlslons.Therefore, [( ]oncerned autho!'ities carnot nitiate orcontinue crir tinal prosecutior-r or confiscation prrtceedingsfor transacti( ns entered into prior to coming itrtt> force ofthe 2016 I mendment Act i.e., 25.10.2O1(' As aail such transactions or [co::rfiscation]consequcnce, proceedil-lgs oriorto 25. lO.2016 shall stand qu:rshed. Supreme Court has also clarified that fn rem forfeitureprovision under Section 5 of the Amendment Act of 2016being punitive in nature can only be applied prospectivelyand not retroactivelv. 14 . In view of the finalitv of the 1au, declared by theSupreme Court, the provisional attachment order dated27.12.2027 cannot be sustained. Accordingly, the same ishereby set aside ald quashed. 15. Consequently, the rvrit petition is allowed Miscellaneous applications pending, if any, shall stand closed. However, there sh;rll be no order as to costs. SD/-A.V.S.PRASADASSISREGISTRARSECTIN OFFICER //TRUE COPY// Supreme Court has also clarified that fn rem forfeitureprovision under Section 5 of the Amendment Act of 2016being punitive in nature can only be applied prospectivelyand not retroactivelv. 14 . In view of the finalitv of the 1au, declared by theSupreme Court, the provisional attachment order dated27.12.2027 cannot be sustained. Accordingly, the same ishereby set aside ald quashed. 15. Consequently, the rvrit petition is allowed Miscellaneous applications pending, if any, shall stand closed. However, there sh;rll be no order as to costs. SD/-A.V.S.PRASADASSISREGISTRARSECTIN OFFICER //TRUE COPY// To,'1 . The Union of lndia, Ivlinistry of Finance, Dep. Of Revenue, Office ofCompetent Authorty SAPEM(FOP) A&NDPCA, Shasthri Bhavan, 4th Floor,No.26, Haddows Road, Chennai-G2. Asst. Commissioner of lncome Tax, (BPU), lnitiating Officer,3rd Floor,Aayakar Bhawan, Basheerbagh, Hyderabad. 3. lnspecting officer, SAPEM (FOP) A&NDPC Acts &AAPBPT, No.64/1,G.N.Chetty Road, T.Nagar, Chennai-'1 7G.N.Chetty Road, T.Nagar, Chennai-'1 7 4. One CC to SRI P.S.P. SURESH KUMAR, Advocate 5. One CC to SRI GADI PRAVEEN KUMAR (Dy. SOLICITOR GENERAL OFINDIA) Advocate 6. One CC to Sri B. NARASIMHA SARIMA, Advocate IOPUC]7. Two CD CopiesBNGJP\)Ak{. I HIGH COUR]'DATED:0511212022 ORDERWP.No.4061t of 2022 ALLOWING TI- E WRIT PETITIONWITHOUT COS TS .....--// <"-'J\).-.1--:-.,