P.M.SHARJITH, V. THE ASST COMMISSIONER OF INCOME TAX (BENAMI PROHIBITION UNIT),

WP(C)/4432/2020

AI Insights

The case revolves around the application of the Prohibition of Benami Property Transactions Act, 1988, concerning transactions entered into by the petitioner, P.M. Sharjith. The petitioner challenged the actions taken by the income tax authorities under this Act. The High Court of Kerala, referencing a Supreme Court decision, ruled that the provisions of the Act amended in 2016 could only be applied prospectively, specifically to transactions occurring after October 25, 2016. This ruling effectively quashed any ongoing or past proceedings against the petitioner for transactions made before this date.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 749625 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 08-02-2023
• Assessment Year: misc
• Other Referred Cases: Union of India & Anr. v. M/s. Ganpati Dealcom Pvt.Ltd.; 2022 LiveLaw (SC) 700 (Civil Appeal No.5783 of 2022)
• Laws Referred To: Benami Property Transactions Act, 1988, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K P SATHEESAN; P MOHANDAS; S K ADHITHYAN; SABU PULLAN; GOKUL SUDHAKARAN; S MANU
• Assessee Lawyers: M P AHAMED; HARISH MENON; CYRIAC TOM
• Keywords: Benami property; Forfeiture; Prohibition of Benami Property Transactions Act; Unconstitutional
• Section: 5; 24(1); 3(2); 24(4); 24(5)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE T.R.RAVI WEDNESDAY, THE 8TH DAY OF FEBRUARY 2023 / 19TH MAGHA, 1944 WP(C) NO. 4432 OF 2020 PETITIONER: P.M.SHARJITH, AGED 42 YEARS S/O.KUNHAMEED, POOVANITHERUVATH MALIYEKKAL HOUSE, 12/510, THEKKUMTHALA, KUTTICHIERA, CALICUT - 673 001. BY ADVS. M.P.SHAMEEM AHAMED SRI.HARISH R. MENON SRI.CYRIAC TOM RESPONDENTS: 1 THE ASST COMMISSIONER OF INCOME TAX (BENAMI PROHIBITION UNIT),GROUND FLOOR, POORNIMA BUILDING, NEAR MANORAMA JUNCTION, PANAMPILLY NAGR, KOCHI - 682 036. 2 THE ADJUDICATING AUTHORITY UNDER THE BENAMI PROPERTY TRANSACTIONS ACCT, 1988, ROOM NO.26, 4TH FLOOR, JEEVAN DEEP BUILDING, PARLIAMENT STREET, NEW DELHI - 110 001. 3 UNION OF INDIA, (REPRESENTED BY FINANCE SECRETARY),MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, ROOM 46, NORTH BLOCK, NEW DELHI - 110 00. * ADDL.R4 FEROS V.P., SALEENA MANZIL, CALICUT UNIVERSITY P.O., MALAPPURAM DISTRICT, PIN-673 635. *ADDL.R4 IS IMPLEADED AS PER ORDER DT.8.2.2023 IN I.A.NO.1/2021. BY ADVS. DR.K.P.SATHEESAN (SR.) SRI.P.MOHANDAS (ERNAKULAM) SRI.S.K.ADHITHYAN SRI.SABU PULLAN SRI.GOKUL D. SUDHAKARAN SRI. S. MANU, DSGI. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 4432 OF 2020 2 T.R. RAVI, J. -------------------------------------------- W.P.(C) No.4432 of 2020 -------------------------------------------- Dated this the 08th day of February, 2023 JUDGMENT The issues raised in the writ petition are covered by a judgment of the Supreme Court in Union of India & Anr. v. M/s. Ganpati Dealcom Pvt.Ltd.; 2022 LiveLaw (SC) 700 (Civil Appeal No.5783 of 2022), where a three judge Bench of the Supreme Court has concluded as follows: “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 Amendment Act, was unconstitutional for being manifestly arbitrary. c) The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. WP(C) NO. 4432 OF 2020 3 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”. In view of the aforesaid, it is declared that the amended provisions of the Prohibition of Benami Property Transactions Act, 1988, shall be applied against the petitioner in the case only if the transaction/transactions in question is/are entered into on or after 25-10-2016. Sd/- T.R.RAVI JUDGE mpm WP(C) NO. 4432 OF 2020 4 APPENDIX OF WP(C) 4432/2020 PETITIONER’S EXHIBITS EXHIBIT P1 COPY OF THE NOTICE DATED 2/09/2019 U/S 24(1) IN CONNECTION WITH SALE DEED 15/01/2015 DT.25/03/2015. EXHIBIT P2 COPY OF THE COMMON REPLY DATED 10/10/2019 BEFORE THE RESPONDENT. EXHIBIT P3 COPY OF THE ORDER DATED 26/11/2019 PASSED BY THE 1ST RESPONDENT UNDER SEC 24 (4) IN CONNECTION WITH SALE DEED 15/01/2015 DT.25/03/2015. EXHIBIT P4 COPY OF THE PROVISIONAL ATTACHMENT ORDER DATED 26/11/2019. EXHIBIT P5 COPY OF REFERENCE MADE BY THE 1ST RESPONDENT U/S 24 (5) OF THE BENAMI PROHIBITION ACT. EXHIBIT P6 COPY OF THE SHOW CAUSE NOTICE DATED 23/12/2019 IN R-1869/2019. EXHIBIT P7 COPY OF THE NOTIFICATION SO 3289 (E) DT. 25/10/2016. EXHIBIT P8 COPY OF THE INTERIM ORDER DATED 4/04/2018 IN WP 10387/2018. EXHIBIT P8 (A) COPY OF INTERIM ORDER DATED 4/04/2018 IN WP 10441/2018. EXHIBIT P8 B COPY OF COMMON INTERIM ORDER DATED 30/01/2020 PASSED IN WP 2577/2020, 2590/2020, 2595/2020,2596/2020, 2621/2020 AND 2627/2020. "