MOTOR STAND FOREIGN LIQUOR SHOP NO.1 AND ANR. V. THE UNION OF INDIA AND 2 ORS.

WP(C)/4985/2018

AI Insights

The case involves a dispute where the Income Tax Department issued notices to the petitioners, who own a licensed liquor shop, under the Prohibition of Benami Property Transactions Act, 1988. The department suspected that the shop was a benami property of Pradip Kumar Saha, based on their investigations. The petitioners contested the provisional attachment of their properties, arguing that their explanations and documents were not adequately considered. The court found that the petitioner's submissions were not properly considered and directed a re-evaluation of the case by the Income Tax authorities.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 683406 (HC-ASSAM NAGALAND MIZORAM AND ARUNACHAL PRADESH)
• Appeal Type: Others
• Pronouncement Date: 07-09-2018
• Assessment Year: misc
• Laws Referred To: Prohibition of Benami Property Transactions Act, 1988
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S G I
• Assessee Lawyers: N DUTTA
• Keywords: Benami property; Income Tax; Liquor business; Provisional attachment
• Section: 24; 19(1); 24(4); 24(4)(b)(i)

Judgement Text

"Page No.# 1/6 GAHC010161732018 THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C) 4985/2018 1:MOTOR STAND FOREIGN LIQUOR SHOP NO.1 AND ANR. REP. BY THE LICENSEE SHRI DEBABRATA SAHA S/O LT. BINOD LAL SAHA R/O SHANTIPARA NEAR AIKATAN CLUB, P.O. AGARTALA, DIST WEST TRIPURA PIN- 799001 2: SHRI DEBABRATA SAHA S/O LT. BINODLAL SAHA R/O SHANTIPARA NEAR AIKATAN CLUB P.O. AGARTALA DIST. WEST TRIPURA PIN - 799001 VERSUS 1:THE UNION OF INDIA AND 2 ORS. REP. BY THE SECRETARY TO THE GOVT. OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI-110001 2:THE ADDITIONAL COMMISSIONER OF INCOME TAX (BP)-CUM-APPROVING AUTHORITY AYAKAR BHAWAN CHRISTIAN BASTI G.S. ROAD GUWAHATI - 781005. 3:THE ASSISTANT COMMISSIONER OF INCOME TAX (BP)-CUM- INITIATING OFFICER AYAKAR BHAWAN CHRISTIAN BASTI Page No.# 2/6 G.S. ROAD GUWAHATI- 781005 Advocate for the Petitioner : MR N DUTTA Advocate for the Respondent : ASSTT.S.G.I. BEFORE HONOURABLE MR. JUSTICE ACHINTYA MALLA BUJOR BARUA Date : 07-09-2018 JUDGMENT & ORDER (ORAL) Heard Mr. H. Buragohain, learned counsel for the petitioner. Also heard Ms. N. Gogoi, learned counsel for the respondents in the Income Tax Department as well as Mr. S.C. Keyal, learned AGI for the Union of India. 2. The petitioner No.1 is a licensed retail shop dealing in the liquor business in the category of (IMFL) Off, whereas, the petitioner No.2 is the proprietor thereof. The petitioners are income tax assessee and it is stated that they are paying the income tax as required under the law in due and appropriate manner, without there being any allegation by the income tax authorities of non-payment thereof. But however, a notice under Section 19(1) of the Prohibition of Benami Property Transactions Act, 1988 (in short Act of 1988) dated 13.09.2017 was served on the petitioner. By the said notice, the petitioner was required to furnish certain documents/information as indicated in the notice and for the purpose; the date fixed was 22.09.2017 at 11.30 a.m. As per the notice, the petitioner was required to show all the requisite details comprising of bank statements, balance sheets and other related documents as a matter of evidence in support that the petitioner No.1 liquor shop is actually the business of the petitioner No.2 and that it is not a benami business of one Pradip Kumar Saha of Kaman Chowmuhani, Agartala. 3. The said notice had been issued by the Income Tax Department in the backdrop of the fact that there was a proceeding initiated against the Pardip Kumar Saha under the Income Page No.# 3/6 Tax Act and as a result, the department had the information that he is making benami investment in certain liquor shops. According to the department, the investigation revealed that Pradip Kumar Saha was also indulging in making benami investment in the petitioner No.1 shop and in the circumstance, notice under Section 19(1) of the Act, 1988 was issued by which the department sought for the necessary documents from the petitioner No.1 so as to enable them to arrive at a conclusion that the petitioner No.1 business is the own business of the petitioner No.2 and that it is not a benami business of the aforesaid Pradip Kumar Saha. 4. By the communication dated 22.09.2017, the petitioner No.2 sought for an adjournment resulting in the subsequent notice dated 19.12.2017 under Section 19(1) of the Act of 1988, by which the petitioner was required to provide the aforesaid documents on 10.01.2018 at 11.30 am. According to the petitioner, the required documents had been furnished to the Income Tax authorities as per the communication of the petitioner No.2 dated 01.10.2017. However, the Income Tax authorities being not satisfied with the documents that the petitioner had submitted, issued the notice dated 28.03.2018 under Section 24 of the Act of 1988 was issued. 5. In the notice dated 28.03.2018, the detailed analysis as to why the department is of the opinion that the petitioner is indulging in a benami transaction of the properties of the Pradip Kumar Saha was provided and the petitioner was given an opportunity to show cause as to why all the assets appearing in the balance sheet of the petitioner No.1 and all proceedings thereof, including the investment made from bank accounts etc., should not be treated as benami property and be attached under Section 24(4) of the Act of 1988. 6. The petitioner submitted the reply on 16.04.2018 to the show cause notice dated 28.03.2018. In paragraph-6 of the said reply, the petitioner makes the following statement:- “That Pradip Kumar Saha was not the real owner of the business he was only interested in getting some profit and has limited interest in the arrangements. This was because of the reason that business required some more capital for smooth running of the business and therefore Pradip Kumar Saha had invested money in the shape of stock in trade to garner some profit in return of his investment. Moreover balance of investment stood as nil as on 31.03.2015.” Page No.# 4/6 7. In the aforesaid circumstance, the Income Tax Department issued the notice dated 25.06.2018 under Section 24(4) of the Act of 1988 by which, the properties indicated therein of the petitioner No.1 had been provisionally attached under Section 24(4)(b)(i) of Act of 1988. 8. The said provisional attachment under Section 24(4)(b)(i) by the notice dated 25.06.2018 has been assailed in this writ petition on the ground that the stand taken by the petitioner in paragraph-6 of their reply dated 16.04.2018 had not been given a due consideration before the provisional order of attachment was passed. It is taken note of in paragraph-6 of the reply dated 16.04.2018, the petitioner No.2 took a stand that Pradip Kumar Saha was not the real owner of his business and he was only interested in getting some profit and has a limited interest in the arrangement. 9. Petitioner No.2 also took the stand that as some amount was required for a smooth running of the business, therefore, the Pradip Kumar Saha had invested the money in the shape of stock in trade by depositing the same in bank, so that he can obtain some profit in return for his investment. 10. In this writ petition, it is the specific case of the petitioner that the aforesaid stand of the petitioner in paragraph 6 of his reply dated 16.04.2018 had not been given a due consideration by the authorities in the Income Tax Department before the order of attachment was passed. 11. On a perusal of the notice under Section 24(4) of the Act of the Act 1988 by which the provisional attachment was made, it is taken note of that the aforesaid stand of the petitioner had not been given a consideration although the department may have otherwise arrived at its satisfaction that there are financial involvement of Pradip Kumar Saha in the business of the petitioner No.1. 12. Benami Transactions Act has been defined under Section 2(ix) of the Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016. According to the amended definition of Benami Transaction, it means a transaction or an arrangement where a property is transferred or held by a person where the consideration for such property is paid by another person and such property is held for Page No.# 5/6 the immediate and future benefit, direct or indirect of the person who has provided the consideration or a transaction or an arrangement in respect of a property carried out or made in a fictitious name or a transaction or an arrangement in respect of a property where the owner of the property is not aware or denies the knowledge of such ownership or where the transaction or an arrangement in respect of a property where the person providing the consideration thereof is not traceable or is fictitious. In view of the aforesaid meaning of the term Benami Transaction, the authorities in the respondent Income Tax Department are required to examine the stand of the petitioner made in paragraph-6 of their reply dated 16.04.2018 and arrive at a conclusion whether the same amounts to benami transaction or not. 13. In the aforesaid circumstance, this Court is of the view that instead of exercising the discretion of continuing the interim order passed on 01.08.2018, the interest of justice will be met and the public revenue will be better served, if the appropriate authorities in the Income Tax Department i.e. the respondent No.3 gives a further consideration to the aforesaid stand of the petitioner as raised in paragraph-6 of the reply dated 16.04.2018. 14. This Court is of the view that in the event the interim order is continued and the attachment is stayed further, the department may suffer an irreparable loss, whereas, on the other hand, if the interim order is refused to be continued any further and the stand of the petitioner happens to be correct and acceptable, the petitioner may also suffer an irreparable loss. 15. In the event, this Court is of the view that interest of justice will be served, if the respondent No.3 gives a fresh consideration to the aforesaid stand of the petitioner made in paragraph-6 of the reply dated 16.04.2018 and pass a reasoned order thereon. If the stand of the petitioner is acceptable, the authorities shall give its reason for the same and if it is unacceptable, then also the authorities shall give its reasons. Depending on the order to be passed upon such exercise, further continuance of provisional attachment by the notice dated 25.06.2018 shall follow. 16. The aforesaid decision shall be taken within a period of three weeks from the date of receipt of certified copy of the order and in doing so, the respondent authorities shall also Page No.# 6/6 give the petitioners an opportunity of hearing and allow them to produce any material, he may desire to produce. In terms of the above, the writ petition is disposed of. The interim order passed on 01.08.2018 stands vacated. JUDGE Comparing Assistant "