SRI KEMPEGOWDA V. INITIATING OFFICER UNDER THE PBPT ACT AND DEPUTY COMMISSIONER OF INCOME TAX (BP)

WP/50104/2019

AI Insights

The case revolves around the challenge to a provisional attachment order under Section 24(3) of the Prohibition of Benami Property Transactions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016. The petitioners argued that the provisions of the Amendment Act should be applied prospectively from November 1, 2016, as per the notification dated October 25, 2016, and not retrospectively, which was the basis of the impugned proceedings. The respondents did not dispute this position, acknowledging the Supreme Court's decision in a similar case, which held that the amendments are prospective. Consequently, the High Court of Karnataka quashed the attachment orders and the show cause notice, granting the petitioners all consequential benefits.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 765789 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 07-12-2022
• Assessment Year: misc
• Other Referred Cases: Union of India and Another v. Ganpati Dealcom Pvt. Ltd.
• Laws Referred To: Prohibition of Benami Property Transactions Act, 1988, Benami Transactions (Prohibition) Amendment Act, 2016
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND; H BHUSHAN
• Assessee Lawyers: VANI H
• Keywords: Benami property; Prospective operation; Provisional attachment; Retrospective effect
• Section: 24(3)

Judgement Text

" - 1 - WP No. 50104 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF DECEMBER, 2022 BEFORE THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 50104 OF 2019 (GM-RES) BETWEEN: 1. SRI KEMPEGOWDA S/O LATE APPEGOWDA AGED ABOUT 78 YEARS, RESIDING AT HULLENAHALLI VILLAGE, DHUDHA HOBLI HASSAN TALUK HASSAN DISTRICT. 2. SRI H.K.SURESH S/O SRI KEMPEGOWDA AGE ABOUT 45 YEARS, RESIDING AT NO.13, 1ST MAIN ROAD, TEMPLE ROAD, CHANDRA LAYOUT VIJAYA NAGAR BENGALURU – 560 040. …PETITIONERS (BY SRI. VANI H., ADVOCATE) AND: 1. INITIATING OFFICER UNDER THE PBPT ACT AND DEPUTY COMMISSIONER OF INCOME TAX (BP) Digitally signed by PADMAVATHI B K Location: HIGH COURT OF KARNATAKA - 2 - WP No. 50104 of 2019 NO.208, 2ND FLOOR, C.R.BUILDING QUEENS ROAD, BENGALURU – 560 001. 2. THE ADJUDICATING AUTHORITY UNDER THE PROHIBITION OF BENAMI PROPERTY TRANSACTION ACT, 1988 ROOM NO.26, 4TH FLOOR JEEVAN DEEP BUILDING, PARLIAMENT STREET NEW DELHI – 110 001. 3. UNION OF INDIA MINISTRY OF FINANCE THROUGH ITS SECRETARY (REVENUE) DEPARTMENT OF REVENUE, NORTH BLOCK NEW DELHI – 110 001. …RESPONDENTS (BY SRI.K.V.ARAVIND, ADVOCATE FOR R1 & R2; SRI H.SHANTHI BHUSHAN, DSG. FOR R3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE COMMENCEMENT OF OPERATION OF THE PROVISIONS OF BENAMI AMENDMENT ACT, 2016 DATED 11.08.2016 IN RESPECT OF PROVISIONS VIDE SECTION 1 AND 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) OF THE PBPT ACT, 1988 VIDE ANNEXURE-A AS PROSPECTIVE WITH EFFECT FROM 1.11.2016 AS NOTIFIED BY THE CENTRAL GOVERNMENT BY ISSUE OF NOTIFICATION DATED 25.10.2016 AND ETC., - 3 - WP No. 50104 of 2019 THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioners are before this Court calling in question the provisional attachment order made under Section 24(3) of the Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016. 2. Learned counsel appearing for the petitioners would submit that the issue in the lis stands covered by the judgment rendered by the Hon’ble Apex Court in the case of Union of India and Another v. Ganpati Dealcom Pvt. Ltd. reported in 2022 SCC OnLine SC 1064. 3. Learned counsel for the respondents would not dispute the position. 4. Learned counsel for the petitioners would further take this Court through an order passed by this Court in W.P.No.27322/2019 and connected matters, disposed on - 4 - WP No. 50104 of 2019 05.09.2022, following the judgment of the Hon'ble Apex Court rendered in the case of UNION OF INDIA (supra), wherein, this Court has held as follows: \"Petitioners are knocking at the doors of Writ Court in effect, seeking a declaration that certain provisions of the Prohibition of Benami Property Transaction Act, 1988 as amended by Amendment Act, 2016 are prospective in operation and therefore, the impugned proceedings taken up with an assumption of the said provisions being retrospective in effect are liable to be voided. Some of the petitioners have the grievance against the interdiction of registration of conveyances issued by the official respondents. 2. Learned ASG Mr. Nargund appearing for the answering respondents fairly agrees that the subject provisions of the Amendment Act have been held to be prospective in effect by the Apex Court in UNION OF INDIA Vs. GANAPATHI DEALCOM PVT. LTD Civil Appeal No.5703/2022 disposed off on 23.08.2022, which decision learned advocates appearing for the petitioners heavily banked upon in support - 5 - WP No. 50104 of 2019 of their cases. However, he seeks a short accommodation contending “a decision is being taken at the highest level”. 3. Having heard the learned counsel appearing for the parties and having perused the petition papers, this Court is of a considered opinion that there is no reason to keep the matter pending any longer in view Apex Court decision supra. The impugned proceedings having been taken up with a wrong assumption of the subject provisions of the Amendment Act being retrospective in operation, have a demonstrable error apparent on their face and therefore, are liable to be voided. Further, the interdiction of execution & registration of the conveyances is also liable to be set at naught. When highest Court of the Country has clarified the legal position, the contention that “a decision is being taken at the highest level and therefore, matter be kept pending for a short while” does not merit acceptance. Ordered accordingly and all the petitions stand disposed off, costs having been made easy.\" - 6 - WP No. 50104 of 2019 In the light of the issue standing covered by the judgment of the Apex Court and that of the coordinate Bench of this Court on all its fours, I deem it appropriate to pass the following: ORDER (i) The writ petition is allowed. (ii) The show cause notice dated 18.03.2019 issued by respondent No.1 against the petitioner invoking the provisions of the Prohibition of Benami Property Transactions Act, 1988 stands quashed. (iii) The consequent attachment orders passed by the authorities also stand quashed. (iv) Petitioners would be entitled to all consequential benefits that would flow from the quashment of the attachment orders. Sd/- JUDGE NVJ List No.: 1 Sl No.: 72 "