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of <h1>2016 Benami Transactions Amendment Can't Apply Retroactively; Pre-Act Notices and Orders Quashed.</h1> <h3>M/s. Neopride Pharmaceuticals Limited., Meka Veeraju Chowdary Versus The Adjudicating Authority, Assistant Commissioner of Income Tax, Immaneni Mallamma, Union of India</h3> M/s. Neopride Pharmaceuticals Limited., Meka Veeraju Chowdary Versus The Adjudicating Authority, Assistant Commissioner of Income Tax, Immaneni Mallamma, ... Issues Involved:1. Retroactive application of the Benami Transactions (Prohibition) Amendment Act, 2016.2. Constitutionality of the Benami Transactions (Prohibition) Act, 1988 and its amendments.3. Validity of show cause notices and orders under the Benami Property Act issued for transactions prior to the 2016 Amendment.Detailed Analysis:1. Retroactive Application of the Benami Transactions (Prohibition) Amendment Act, 2016:The primary issue in this case was whether the Benami Transactions (Prohibition) Amendment Act, 2016, which introduced substantive changes to the definition of 'benami transaction,' could be applied retroactively to transactions that occurred before the amendment came into force on 01.11.2016. The court highlighted that the provisions introduced by the 2016 Amendment, specifically Sections 2(9)(A) and 2(9)(C), significantly expanded the definition of 'benami transaction' compared to the original 1988 Act. The court referred to its previous decision in Nexus Feeds Limited v. the Assistant Commissioner of Income Tax, which held that these provisions could only have prospective effect. Therefore, transactions that took place prior to the amendment could not be classified as benami transactions under the new provisions.2. Constitutionality of the Benami Transactions (Prohibition) Act, 1988 and its Amendments:The court examined the constitutionality of the original Benami Transactions (Prohibition) Act, 1988, particularly Sections 3 and 5, which dealt with criminal provisions and confiscation proceedings. The Supreme Court, in Union of India v. Ganpati Dealcom Pvt. Ltd., had declared these sections unconstitutional due to their overly broad and harsh nature, lacking adequate safeguards. The court noted that the 2016 Amendment, which sought to fill procedural gaps, could not retroactively apply to transactions prior to its enactment, as it would amount to enforcing a still-born law. Consequently, the 2016 Amendment's provisions were deemed substantive and could only apply prospectively.3. Validity of Show Cause Notices and Orders Under the Benami Property Act Issued for Transactions Prior to the 2016 Amendment:The court addressed the validity of various show cause notices and orders issued under the Benami Property Act for transactions that occurred before the 2016 Amendment. It was concluded that such notices and orders were null and void due to the retroactive application of the amended provisions. The Supreme Court's decision in Union of India v. Ganpati Dealcom Pvt. Ltd. established that authorities could not initiate or continue criminal prosecution or confiscation proceedings for pre-amendment transactions. Therefore, all such proceedings were quashed.In conclusion, the court allowed the writ petitions, setting aside all impugned notices and orders, and declared that the 2016 Amendment Act's provisions could not be applied retroactively. The court emphasized that the law declared by the Supreme Court in Union of India v. Ganpati Dealcom Pvt. Ltd. was binding, rendering any pending proceedings under the Benami Property Act for transactions before 25.10.2016 unsustainable.
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