M/S. PIONEER FOREIGN LIQUOR SHOP AND ANR. V. THE UNION OF INDIA AND 2 ORS

WP(C)/626/2019

AI Insights

The case involves M/S. Pioneer Foreign Liquor Shop and its licensee, Sri Pradip Kr. Saha, who are contesting proceedings initiated under the Prohibition of Benami Property Transaction Act, 1988, by the Income Tax Department. Following a search and seizure operation, the Income Tax Department issued several notices and orders, including a Show Cause Notice alleging that certain properties are benami properties. The petitioners challenged the initiation of these proceedings, arguing that the amendments to the Act in 2016 should not apply retrospectively to transactions prior to the amendment. However, the court dismissed the writ petition, advising the petitioners to participate in the ongoing proceedings before the Adjudicating Authority.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 731624 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 04-02-2019
• Assessment Year: misc
• Laws Referred To: Prohibition of Benami Property Transaction Act, 1988
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ASSTT S G I
• Assessee Lawyers: K N CHOUDHURY
• Keywords: Benami property; Income Tax Department; Provisional attachment order; Search and seizure; Show cause notice
• Section: 24; 19(1); 26(1); 24(4); 24(5)

Judgement Text

"Page No.# 1/4 GAHC010015092019 THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C) 626/2019 1:M/S. PIONEER FOREIGN LIQUOR SHOP AND ANR. REP. BY ITS LICENSEE SRI PRADIP KR. SAHA, S/O- LATE PRAFULLA KUMAR SAHA, SHOP LOCATED AT KAMAN CHOWMUHANI, AGARTALA, WEST TRIPURA 2: PRADIP KR SAHA S/O- LATE PRAFULLA KUMAR SAHA R/O- EAST SHIBNAGAR AGARTALA WEST TRIPURA PIN- 79900 VERSUS 1:THE UNION OF INDIA AND 2 ORS REP. BY THE SECRETARY TO THE GOVT OF INDIA, MIN OF FINANCE, DEPTT OF REVENUE, NEW DELHI- 01 2:THE ADDITIONAL COMMISSIONER OF INCOME TAX (BP) CUM APPROVING AUTHORITY AAYKAR BHAWAN CHRISTIAN BASTI G S ROAD GUWAHATI- 781005 3:THE ASSISTANT COMMISSIONER OF INCOME TAX (BP) CUM INITIATING OFFICER AAYKAR BHAWAN CHRISTIAN BASTI G S ROAD GUWAHATI- 78100 Advocate for the Petitioner : MR. K N CHOUDHURY Page No.# 2/4 Advocate for the Respondent : ASSTT.S.G.I. BEFORE HONOURABLE MR. JUSTICE MANOJIT BHUYAN ORDER Date : 04-02-2019 Heard Mr. K.N. Choudhury, learned senior counsel representing the petitioners as well as Ms. N. Hawelia, learned counsel for the respondents. Following search and seizure operation by Income Tax Department in the residence and business premises of petitioner no.2, Assessment Order dated 30.12.2016 came to be passed which, according to the petitioner, was duly satisfied. Thereafter, again by Notice dated 13.09.2017 the Income Tax Department, under Section 19(1) of Prohibition of Benami Property Transaction Act, 1988, demanded production of certain documents, with further intimation of the initiation of proceedings under the aforesaid Act, 1988, as amended in 2016. It is stated that the petitioner had responded to it. Further contention is that a Show Cause Notice under Section 24 of the Act was issued on 28.03.2018 (page 189), addressed to the petitioner no.2, which in essence alleges that Motor Stand Foreign Liquor Shop in the name of one Debabrata Saha falls under ‘benami properties’ within the meaning of Section 2(9)(A) of the aforesaid Act and that said Debabrata Saha is benamidar as per Section 2(10) of the Act and that the petitioner no. 2 Sri Pradip Kumar Saha is the beneficial owner. On record, there is a reply dated 16.04.2018 (page 197) against the Show Cause Notice. In the course of proceedings the Initiating Officer has passed an order under Section 24(4) in respect of the properties and have also provisionally attached the properties, followed by reference made under Section 24(5) for confirmation of the aforesaid Provisional Attachment Order. The Initiating Officer has held the properties in question to be benami properties involved in benami transactions within the meaning of Section 2(9) of the Act. Page No.# 3/4 On the above and as required by the statute, the petitioner was served with the Show Cause Notice dated 27.7.2018 (page 212) under Section 26(1) of the Act, requiring appearance before the Adjudicating Authority to explain as to why all or any of such properties should not be declared as benami properties involved in benami transactions under the Act and as to why the Provisional Attachment Order should not be confirmed. Although in terms of the aforesaid Show Cause Notice dated 27.7.2018 the petitioner no.2 was directed to appear before the Adjudicating Authority on 10.09.2018 at the specified time and address, Mr. Choudhury submits that the petitioner did not appear on the fixed date and neither on subsequent date. Basic challenge to the initiation of proceedings under Section 19 is on the premise that the aforesaid Act had undergone amendment in August 2016 and made effective from 1st day of November, 2016 vide Government of India Notification dated 25.10.2016, and this being the position, any proceeding drawn under the amended Act in respect of business transactions/arrangements prior to the date of coming into effect of the aforesaid Amendment Act of 2016, the same cannot be allowed to stand as it would amount to applying penal provisions of law retrospectively, thereby violating Article 20(1) of the Constitution of India. I have given my anxious consideration. At the outset, the writ petition in its present form, cannot be entertained. The petitioners have efficacious and alternative remedy to contest the proceedings which, in fact, have already reached the stage of issuance of Show Cause Notice under Section 26(1) and is pending consideration before the Adjudicating Authority. Apparently, proceedings before the Adjudicating Authority are presently stalled only because of non-participation of the petitioner, which conduct this court records its disapproval. The stage at which the matter now stands before the competent Adjudicating Authority, this Court would desist from making any interference to the pending Page No.# 4/4 proceedings. Needless to say, it would always be open to the petitioners to contest the proceedings by taking recourse to such facts and law, as permissible under the law. In so far as the present writ petition is concerned, I find no ground to entertain the same in its present form. The petitioners would be well advised to participate and await the final outcome of the proceedings, which is sub-judice before the Adjudicating Authority under the Act. Writ petition stands dismissed. No cost. JUDGE Comparing Assistant "