MR. CHANNARAJ HATTIHOLI V. UNION OF INDIA

WP/14512/2021

AI Insights

The case involves multiple writ petitions filed by different petitioners challenging the retrospective application of the 2016 Amendment Act to the Prohibition of Benami Property Transactions Act, 1988. The petitioners argued that the amendments were intended to be prospective, as supported by a Supreme Court decision in M/s. Ganapati Dealcom Pvt. Ltd. The respondents, including the Union of India and the Assistant Commissioner of Income Tax, defended the retrospective application. However, the court, referencing the Supreme Court's judgment and a previous decision by a Co-ordinate Bench, ruled in favor of the petitioners, declaring the retrospective application unconstitutional and quashing the related notices and orders.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 678929 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 19-09-2022
• Assessment Year: misc
• Other Referred Cases: Union of India & another vs. M/s.Ganapati Dealcom Pvt. Ltd. [Civil Appeal No.5783/2022 @ Special Leave Petition (C)No.2784/2020 dated 23/08/2022]
• Laws Referred To: Prohibition of Benami Property Transactions Act, 1988, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SHANTI BHUSHAN; K V ARAVIND; DILIP M
• Assessee Lawyers: SHASHI KIRAN SHETTY; A MAHESH CHOWDHARY
• Keywords: Benami property; Null and void; Retrospective operation; Unconstitutional; Amending act of 2016
• Section: 54; 24(1); 53; 226; 26(1); 227; 24(3); 24(5); 26(3); 24(4)(a)(i)

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF SEPTEMBER, 2022 BEFORE THE HON’BLE Mrs. JUSTICE K.S. HEMALEKHA WRIT PETITION NO. 14512/2021 (GM-RES) C/W WP NOS.16497/2021, 16515/2021 & 16536/2021 IN WP NO.14512/2021 BETWEEN: MR. CHANNARAJ HATTIHOLI S/O. BASAVARAJ HATTIHOLLI AGED ABOUT 41 YEARS, FLAT NO. 452, EMBASSY HERITAGE, 4TH BLOCK, 8TH MAIN ROAD, MALLESHWARAM, BANGALORE-560 012. ...PETITIONER (BY SRI.SHASHIKIRAN SHETTY, SR.COUNSEL A/W SRI.A MAHESH CHOWDHARY, ADVOCATE) AND: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI-110 001, REPRESENTED BY ITS SECRETARY. 2. ASSISTANT COMMISSIONER OF INCOME TAX (BPU) THIRD FLOOR, RIGHT WING, TRISTAR BUILDING, PLOT NO. 13-B, EDC COMPLEX, PATTO, PANAJI-403 001. - 2 - 3. ADJUDICATING AUTHORITY PROHIBITION OF BENAMI PROPERTY TRANSACTION ACT, 1988, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, ROOM NO. 26, 4TH FLOOR, JEEWANDEEP BUILDING, PARLIAMENT STREET, NEW DELHI-110 001. …RESPONDENTS (BY SRI.SHANTI BHUSHAN, ASG FOR R1; SRI.K.V.ARAVIND, ADVOCATE A/W SRI.DILIP.M, ADVOCATE FOR R2 & R3) THIS W.P IS FILED UNDER ARTICLES 226 & 277 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE INTERPRETATION OF RESPONDENTS TO THE RETROSPECTIVE OPERATION PROVIDED OF THE AMENDING ACT OF 2016 IN RESPECT OF THE PROVISIONS VIDE SECTION 1, 2(8), 2(9)(a), 2(26), 19(1)(b), 21(1), 24(1), 24(3), 24(4)(a)(i), 24(5) 26(1) AND 26(3) 53, 54 VIDE ANNEXURE-A AS UNCONSTITUTIONAL AND THEREFORE TO BE NULL AND VOID AND ETC., IN WP NO.16497/2021 BETWEEN: M/S HARSHA SUGARS LTD FLAT NO B 1402, SALARPURIA SATTAVA GROUP LUXURIA 14TH FLOOR, IRIS BLOCK NO 62/3 8TH MAIN ROAD, MALLESHWARAM BANGALORE 560055 REP BY ITS CFO RAJA MALLAPPA KARADI S/O MALLAPPA KARADI AGED 39 YEARS ...PETITIONER (BY SRI.NAGARAJA NAIDU A, ADVOCATE) - 3 - AND: 1. UNION OF INDIA MINISTRY OF FINANCE DEPT OF REVENUE GOVERNMENT OF INDIA, NORTH BLOCK NEW DELHI 110001 REP BY ITS SECRETARY 2. ASSISTANT COMMISSIONER OF NCOME TAX (BPU) 3RD FLOOR, RIGHT WING TRISTAR BUILDING, PLOT NO 13-B EDC COMPLEX, PATTO, PANAJI-403001 3. ADJUDICATING AUTHORITY PROHIBITION OF BENAMI PROPERTY TRANSACTION ACT 1988 DEPT OF REVENUE, MINSITRY OF FINANCE ROOM NO 26, 4TH FLOOR JEEWANDEEP BUILIDNG, PARLIAMENT STREET NEW DELHI 110001 REPRESENTED BY ITS CHAIRMAN …RESPONDENTS (BY SRI.SHANTHI BHUSHAN, ASG FOR R1; SRI.K.V.ARAVIND, ADVOCATE A/W SRI.DILIP.M, ADVOCATE FOR R2 & R3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE INTERPRETATION OF RESPONDENTS TO THE RETROSPECTIVE OPERATION PROVIDED OF THE AMENDING ACT OF 2016 IN RESPECT OF THE PROVISIONS VIDE SECTIONS 1, 2(8), 2(9)(a), 2(26), 19(1)(b), 21(1), 24(1), 24(3), 24(4)(a)(i), 24(5), 26(1) AND 26(3), 53, 54 VIDE ANENXURE-A AS UNCONSTITUTIONAL AND THEREFORE, TO BE NULL AND VOID AND ETC., - 4 - IN WP NO.16515/2021 BETWEEN: GIRIJA HATTIHOLI W/O BASAVARAJ CHANNAPPAN HATTIHOLI AGED 66 YEARS R/AT FLAT NO 452, EMBASSY HERITAGE 4TH BLOCK, 8TH MAIN ROAD MALLESHWARAM, BENGALURU 560008 ...PETITIONER (BY SRI.SHASHIKIRAN SHETTY, SR.COUNSEL A/W SRI.A MAHESH CHOWDHARY, ADVOCATE) AND: 1. UNION OF INDIA MINISTRY OF FINANCE DEPT OF REVENUE GOVERNMENT OF INDIA, NORTH BLOCK NEW DELHI 110001 REP BY ITS SECRETARY 2. ASSISTANT COMMISSIONER OF NCOME TAX (BPU) 3RD FLOOR, RIGHT WING TRISTAR BUILDING, PLOT NO 13-B EDC COMPLEX, PATTO, PANAJI-403001 3. ADJUDICATING AUTHORITY PROHIBITION OF BENAMI PROPERTY TRANSACTION ACT 1988 DEPT OF REVENUE, MINSITRY OF FINANCE ROOM NO 26, 4TH FLOOR JEEWANDEEP BUILIDNG, PARLIAMENT STREET NEW DELHI 110001 REPRESENTED BY ITS CHAIRMAN - 5 - AGED MAJOR …RESPONDENTS (BY SRI.SHANTHI BHUSHAN, ASG FOR R1; SRI.K.V.ARAVIND, ADVOCATE A/W SRI.DILIP.M, ADVOCATE FOR R2 & R3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE INTERPRETATION OF RESPONDENTS TO THE RETROSPECTIVE OPERATION PROVIDED OF THE AMENDING ACT OF 2016 IN RESPECT OF THE PROVISIONS VIDE SECTIONS 1, 2(8), 2(9)(a), 2(26), 19(1)(b), 21(1), 24(1), 24(3), 24(4)(a)(i), 24(5), 26(1) AND 26(3), 53, 54 VIDE ANENXURE-A AS UNCONSTITUTIONAL AND THEREFORE, TO BE NULL AND VOID AND ETC., IN WP NO.16536/2021 BETWEEN: LAXMI HEBBALKAR DD/O BASAVARAJ CHANNAPPA HATHIHOLLI AGED 47 YEARS FLAT NO 452, EMBASSY HERITAGE 4TH BLOCK, 8TH MAIN ROAD MALLESHWARAM, BANGALORE 560008 ...PETITIONER (BY SRI.NAGARAJA NAIDU A, ADVOCATE) AND: 1. UNION OF INDIA MINISTRY OF FINANCE DEPT OF REVENUE GOVERNMENT OF INDIA, NORTH BLOCK NEW DELHI 110001 REP BY ITS SECRETARY - 6 - 2. ASSISTANT COMMISSIONER OF NCOME TAX (BPU) 3RD FLOOR, RIGHT WING TRISTAR BUILDING, PLOT NO 13-B EDC COMPLEX, PATTO, PANAJI-403001 3. ADJUDICATING AUTHORITY PROHIBITION OF BENAMI PROPERTY TRANSACTION ACT 1988 DEPT OF REVENUE, MINSITRY OF FINANCE ROOM NO 26, 4TH FLOOR JEEWANDEEP BUILIDNG, PARLIAMENT STREET NEW DELHI 110001 REPRESENTED BY ITS CHAIRMAN AGED MAJOR …RESPONDENTS (BY SRI.SHANTHI BHUSHAN, ASG FOR R1; SRI.K.V.ARAVIND, ADVOCATE A/W SRI.DILIP.M, ADVOCATE FOR R2 & R3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE INTERPRETATION OF RESPONDENTS TO THE RETROSPECTIVE OPERATION PROVIDED OF THE AMENDING ACT OF 2016 IN RESPECT OF THE PROVISIONS VIDE SECTIONS 1, 2(8), 2(9)(a), 2(26), 19(1)(b), 21(1), 24(1), 24(3), 24(4)(a)(i), 24(5), 26(1) AND 26(3), 53, 54 VIDE ANENXURE-A AS UNCONSTITUTIONAL AND THEREFORE, TO BE NULL AND VOID AND ETC., THESE PETITIONS COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:- - 7 - O R D E R Petitioners in all these petitions are seeking to declare interpretation of respondents to the retrospective operation provided of the amending the Act of 2016 in respect of the provisions of Sections 1, 2(8), 2(9)(a), 2(26), 19(1)(b), 21(1), 24(3), 24(4)(a)(i), 24(5), 26(1), 26(3), 53 and 54 (Annexure – A) as unconstitutional and therefore, are null and void and to quash the show-cause notice issued under Section 24(1) of the Prohibition of Benami Property Transactions Act, 1988 (Annexures – B to B7) issued by respondent No.1-Assistant Commissioner of Income Tax (BPU) by making amendments from 1988 and they are prospective in operation and therefore, the impugned proceedings taken up with an assumption that it was retrospective are void. 2. Heard learned senior counsel, Sri Shashi Kiran Shetty for the petitioners, Sri Shanti Bhushan, Assistant Solicitor General and Sri K.V.Aravind, learned counsel - 8 - appearing for the contesting respondents and perused memorandum of petition and material on record. 3. Learned Senior Counsel for the petitioners submits that provisions of the Amendment Act 2016 has been held to have prospective effect by the Apex Court in the case of Union of India & another vs. M/s.Ganapati Dealcom Pvt. Ltd. [Civil Appeal No.5783/2022 @ Special Leave Petition (C)No.2784/2020 dated 23/08/2022] (M/s.Ganapati Dealcom Pvt. Ltd.), wherein the Apex Court has held at para No.18 as under: “18. Conclusion 18.1 In view of the above discussion, we hold as under: a) Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution. b) In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 - 9 - Amendment Act, was unconstitutional for being manifestly arbitrary. c) The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. d) In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively. e) Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016. As a consequence of the above declaration, all such prosecutions or confiscation proceedings shall stand quashed. f) As this Court is not concerned with the constitutionality of such independent forfeiture proceedings contemplated under the 2016 Amendment Act on the other grounds, the aforesaid questions are left open to be adjudicated in appropriate proceedings. 18.2 The appeal is disposed of in the above terms.” - 10 - 3. Learned counsel for the petitioners also submitted that the Co-ordinate Bench of this Court under similar circumstance has allowed the writ petitions in W.P.No.27322/2019 and connected matters vide order dated 5th September 2022, in terms of the decision of the Apex Court in the case of M/s.Ganapati Dealcom Pvt. Ltd. 4. Learned counsel for the contesting respondents fairly submit that the petitions are covered by the decision of the Hon’ble Apex Court in M/s Ganapathi Dealcom Pvt. Ltd., stated supra as well as the decision of the Co- ordinate Bench. 5. Having heard learned counsel appearing for the parties, this Court is of the considered opinion that the issue involved is no more a res integra in view of the judgment of the Apex Court in the case of M/s Ganapathi Dealcom Pvt. Ltd., and the decision of the Co-ordinate Bench of this Court in W.P.No.27322/2019 - 11 - and connected matters disposed of on 05/09/2022. Accordingly, the writ petitions are disposed of in terms stated supra. Consequently, the impugned proceedings having taken on wrong assumption being retrospective in operation, have made an error apparent on the face of it and therefore, are liable to be quashed and accordingly, Notices Annexure-B to B7 dated 05/03/2021, provisional attachment order Annexure-C dated 27/03/2018 and Annexures-D to D7 dated 22/06/2018 and consequent orders are hereby set aside. No order as to costs. SD/- JUDGE S* "