Wpc v. Assistant Commissioner Of Income Tax (Benami Prohibition) Room

NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 4563 of 2019 Laxmi Narayan Agrawal S/o Late Shri Jagannath Agrawal Aged About 63Years R/o Baya Road, Village Lahrod, Police Station And Tahsil Pithora,District Mahasamund Chhattisgarh....(Petitioner) ---- Petitioner Versus 1.Assistant Commissioner Of Income Tax (Benami Prohibition) Room No.201, First Floor, Central Revenue Building, Civil Lines, RaipurChhattisgarh. 201, First Floor, Central Revenue Building, Civil Lines, RaipurChhattisgarh. 2.Intiating Officer Pbpt Act, Assistant Commissioner Of Income Tax (BenamiProhibition) , Room No. 201, First Floor , Central Revenue Building , CivilLines, Raipur ChhattisgarhProhibition) , Room No. 201, First Floor , Central Revenue Building , CivilLines, Raipur Chhattisgarh 3.Union On India Through Its Secretary , Ministry Of Finance DepartmentOf Revenue, Government Of India , New DelhiOf Revenue, Government Of India , New Delhi 4.Adjudicating Officer Under The Prohibition Of Benami PropertyTransactions Act , 1988, Room No. 26, 4th Floor, Jeevan Deep Building ,Parliament Street, New DelhiTransactions Act , 1988, Room No. 26, 4th Floor, Jeevan Deep Building ,Parliament Street, New Delhi 5.Laxman Sarthi S/o Shri Itwaru Indra Aawas , Village Chicharpali, DistrictBaloda Bazar Chhattisgarh., District : Balodabazar-Bhathapara,ChhattisgarhBaloda Bazar Chhattisgarh., District : Balodabazar-Bhathapara,Chhattisgarh ---- Respondents For Petitioner :For Respective Respondents: Mr. Surfaraj Khan, Advocate Mr. Amit Choudhary & Ms. Naushina Afrin Ali, Advocates. Hon'ble Shri Justice P. Sam KoshyOrder on Board 12/12/2019 1.Aggrieved by the order of provisional attachment of the immovableproperty under the provisions of the The Prohibition of Benami PropertyTransactions Act, 1988 (in short ' PBPT Act') dated 04.12.2019 thepresent writ petition has been filed.property under the provisions of the The Prohibition of Benami PropertyTransactions Act, 1988 (in short ' PBPT Act') dated 04.12.2019 thepresent writ petition has been filed. 2.Brief relevant facts for proper disposal of the writ petition is that therespondent on the basis of certain information in respect of the propertysituated at Khasra No.42 at Village Dighepur, Pithora has beenpurchased by the present petitioner as benami property in the name ofrespondent No.5. The respondents on verification of facts found that thesaid information was correct and it was revealed that the aforementionedproperties have been purchased in the name of respondent No.5 by thepresent petitioner.respondent on the basis of certain information in respect of the propertysituated at Khasra No.42 at Village Dighepur, Pithora has beenpurchased by the present petitioner as benami property in the name ofrespondent No.5. The respondents on verification of facts found that thesaid information was correct and it was revealed that the aforementionedproperties have been purchased in the name of respondent No.5 by thepresent petitioner. 3.After verification the authorities decided to initiate proceedings underPBPT Act and after taking due approval as is required under Section 23.That a show cause notice of provisional attachment under Section 24 wasissued to the petitioner on 02.12.2019. That subsequently vide theimpugned order the initiating officer PBPT Act i.e. the ACIT (BenamiProhibition) Raipur has passed an order of provisional attachment of theaforesaid property. It is this order of the Initiating Officer of provisionalattachment which is under challenge in the present writ petition. PBPT Act and after taking due approval as is required under Section 23.That a show cause notice of provisional attachment under Section 24 wasissued to the petitioner on 02.12.2019. That subsequently vide theimpugned order the initiating officer PBPT Act i.e. the ACIT (BenamiProhibition) Raipur has passed an order of provisional attachment of theaforesaid property. It is this order of the Initiating Officer of provisionalattachment which is under challenge in the present writ petition. 4.The main contention of the petitioner in challenging the impugned order isthat the impugned order has been passed without giving any opportunityof hearing, without issuance of the show cause notice, without complyingwith the mandatory provisions of Section 24 of the PBPT Act. It was alsothe contention of the petitioner that the said impugned order is alsowithout proper approval from the approving authority or at least thereasons for grant of approval is not disclosed from the impugned order. Itwas further contention of the petitioner that the alleged show cause noticewas issued under Section 24 in fact has never been served upon thepetitioner nor was there sufficient time of it to be served upon thepetitioner and even if it is issued. That even otherwise, no reasonabletime was granted to the petitioner to reply to the show cause notice andbefore a reasonable time is granted to the petitioner, the respondentsthat the impugned order has been passed without giving any opportunityof hearing, without issuance of the show cause notice, without complyingwith the mandatory provisions of Section 24 of the PBPT Act. It was alsothe contention of the petitioner that the said impugned order is alsowithout proper approval from the approving authority or at least thereasons for grant of approval is not disclosed from the impugned order. Itwas further contention of the petitioner that the alleged show cause noticewas issued under Section 24 in fact has never been served upon thepetitioner nor was there sufficient time of it to be served upon thepetitioner and even if it is issued. That even otherwise, no reasonabletime was granted to the petitioner to reply to the show cause notice andbefore a reasonable time is granted to the petitioner, the respondents have passed the impugned order of provisional attachment. For theaforesaid reasons, the impugned order Annexure P-1 is bad in law,arbitrary and illegal. have passed the impugned order of provisional attachment. For theaforesaid reasons, the impugned order Annexure P-1 is bad in law,arbitrary and illegal. 5.Per contra, learned standing counsel for the department opposing thepetition submitted that the whole petitioner is premature, misconceivedand without any sufficient and cogent reasons and deserves to berejected. According to the respondents the whole action has been purelyin accordance with the provisions of law and that there has been noviolation of any provision of law and that the entire proceeding drawnincluding the issuance of impugned order is strictly in accordance withlaw with there being no scope of any interference for this Court.According to the counsel for the department, there is no such requirementof law for issuance of a show cause notice and calling for a reply of theconcerned person before passing of the order of provisional attachment.It was also the contention of the respondent that the impugned noticeitself both the show cause as well as the impugned order would revealthat the same has been initiated after proper approval as is required fromthe approving authority has been obtained. According to the learnedcounsel for the department it is only an order of provisional attachmentwhich has been passed under Section 24(3) which is only with anintention that the said property may not be alienated by the Benamidar orby the Beneficial owner pending the final adjudication of the proceedings,hence the action on the part of the respondents cannot be said to be inany manner illegal. 6.Having heard the contentions put forth on either side and on perusal ofthe record , it would clearly reveal that the department had initiated ashow cause notice on 02.12.2019 under Section 24(1) calling upon theexplanation from the petitioner who has been held to be the beneficialowner and respondent No.5 as a Benamidar. The show cause notice wasthe record , it would clearly reveal that the department had initiated ashow cause notice on 02.12.2019 under Section 24(1) calling upon theexplanation from the petitioner who has been held to be the beneficialowner and respondent No.5 as a Benamidar. The show cause notice was seeking for explanation as to why the property should not be treated asbenami property and why the respondent No.5 should not be treated asbenamidar so also as to why the present petitioner be not held thebeneficial owner. It is necessary at this juncture also to refer to the SubSection 3 of the Section 24 which for ready reference is reproducedhearinunder :- (i) …............................................................. (ii) ................................................................ “iii) Where the Initiating Officer is of the opinion that the person inpossession of the property held benami may alienate the propertyduring the period specified in the notice, he may, with theprevious approval of the Approving Authority, by order in writing,attach provisionally the property in the manner as may beprescribed, for a period not exceeding ninety days from the dateof issue of notice under sub-section (1)” (iv).................................................................... (i) …............................................................. (ii) ................................................................ “iii) Where the Initiating Officer is of the opinion that the person inpossession of the property held benami may alienate the propertyduring the period specified in the notice, he may, with theprevious approval of the Approving Authority, by order in writing,attach provisionally the property in the manner as may beprescribed, for a period not exceeding ninety days from the dateof issue of notice under sub-section (1)” (iv).................................................................... 7.Plain reading of the aforesaid provisions it is evidently proves that theorder of provisional attachment is nothing but an interim arrangement tillthe finalization of the proceedings. It is also evident that the said order isof interim nature with an intention that property should not get alienatedand beneficial owner or the benamidar may not dispose of the propertycreating further complications for the department for proceeding furtherwith the matter. order of provisional attachment is nothing but an interim arrangement tillthe finalization of the proceedings. It is also evident that the said order isof interim nature with an intention that property should not get alienatedand beneficial owner or the benamidar may not dispose of the propertycreating further complications for the department for proceeding furtherwith the matter. 8.Perusal of Section 24 of the PBPT Act as also on perusal of the contentof the impugned order this Court has no hesitation in reaching to theconclusion that order of provisional attachment has a statutory backingunder Section 24(3) of the Act. The reading of the content of the noticewould also reveal that order has been passed only as an interim measureof the impugned order this Court has no hesitation in reaching to theconclusion that order of provisional attachment has a statutory backingunder Section 24(3) of the Act. The reading of the content of the noticewould also reveal that order has been passed only as an interim measure calling upon the petitioner to give his response at the earliest failing whichthe authorities would be compelled to pass an order under Sub Section 4of the Section 24 which is for continuing of the provisional attachment tillthe final order is not passed. What also has to be seen is that SubSection 2 and Sub Section 3 clearly discloses the inherent powers thathas been conferred upon the authorities under the Act to pass suchorders so as to preserve all that affects a lis or adjudication and to ensurethat the status quo exists until the dispute is resolved. Moreover, the plainreading of the content of the notice dated 02.12.2019 as also the orderimpugned dated 04.12.2019, it clearly reflects that the final adjudication isyet to be concluded and for which the petitioner has been called uponand it is only as an interim measure that the provisional attachment hasbeen made and same has been done too with a purpose that the propertydoes not to get further sold and it remains intact. 9.What has also to be appreciated is that the provisional attachment is onlyan arrangement done to preserve the property until the authoritycompletes the proceedings under the Act. What cannot be lost sight is thefact that the petitioner as well as the respondent No.5 also can appearbefore the authorities and can put forward their defence and establish thefact that the property cannot be termed as a benami property.an arrangement done to preserve the property until the authoritycompletes the proceedings under the Act. What cannot be lost sight is thefact that the petitioner as well as the respondent No.5 also can appearbefore the authorities and can put forward their defence and establish thefact that the property cannot be termed as a benami property. 9.What has also to be appreciated is that the provisional attachment is onlyan arrangement done to preserve the property until the authoritycompletes the proceedings under the Act. What cannot be lost sight is thefact that the petitioner as well as the respondent No.5 also can appearbefore the authorities and can put forward their defence and establish thefact that the property cannot be termed as a benami property.an arrangement done to preserve the property until the authoritycompletes the proceedings under the Act. What cannot be lost sight is thefact that the petitioner as well as the respondent No.5 also can appearbefore the authorities and can put forward their defence and establish thefact that the property cannot be termed as a benami property. 10. What also is revealed from the proceedings drawn is that the petitionerhas been held to be the beneficial owner of the property and which if he isnot he only has to deny the contentions and leave it for the authorities todecide the matter on merits as he is not going to loose anything. On thecontrary, if he claims to be the beneficial owner then the prohibition of thedepartment becomes relevant rather it would make the case of thedepartment stronger of the property being a benami property in the nameof respondent No.5.has been held to be the beneficial owner of the property and which if he isnot he only has to deny the contentions and leave it for the authorities todecide the matter on merits as he is not going to loose anything. On thecontrary, if he claims to be the beneficial owner then the prohibition of thedepartment becomes relevant rather it would make the case of thedepartment stronger of the property being a benami property in the nameof respondent No.5. Rohit 11.Given the aforesaid facts and circumstances of the case, this Court does not find any strong case made out by the petitioner calling for aninterference with the impugned order. The writ petition therefore fails andaccordingly stands dismissed. Sd/- (P. Sam Koshy)Judge