TaxTMI 
TaxTMI 
TaxTMI 
2019 (12) TMI 840
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....hase of this property six individuals appeared to have been allotted shares in the appellant. They were Nakul, Neha, Shruti, Ritu, Rajesh and Ashok Kumar Goenka, all living in Kamdhenu Building, 4A Ray Street, Kolkata - 700020. Nakul, Neha and Shruti were allotted substantial shares, 4,881 for Nakul, 15,214 for Neha and 10,048 for Shruti. Each of the others was allotted 200 to 300 shares. At the time when this transaction was made The Benami Transactions (Prohibition) Act, 1988 was in force. Some material provisions of the Act need to be set out:- "THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 1. Short title, extent and commencement- ................................... (3) The provisions of sections 3, 5 and 8 shall come into force at once, and the remaining provisions of this Act shall be deemed to have come into force on the 19th day of May, 1988. 2. Definitions- In this Act, unless the context otherwise requires,-- (a) benami transaction means any transaction in which property is transferred to one person for a consideration paid or provided by another person; (c) property means property of any kind, whether movable or immovable, tangible or intangible, and incl....
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....g- (1) The Benami Transactions (Prohibition of the Right of Recover Property) Ordinance, 1988 (Ord.2 of 1988.) is hereby repealed. (2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been or taken under the corresponding provisions of this Act." This Act was amended by the Benami Transaction (Prohibition) Amendment Act, 2016. It was to come into force on the date notified in the Official Gazette by the Central Government. This date was 1st November, 2016 as notified on 25th October, 2016. By the amending Act benami transaction was redefined and widened. More exceptions were provided. For example under the 1988 Act to attract its rigour, it was enough that a property was transferred to one person for a consideration provided by another. But the amending Act relaxed this liability by the addition of a provision that the property had to be held for the benefit of the person providing the consideration. I will give you another example. In the unamended Act property transferred to the wife or unmarried daughter was outside its purview. By this amendment transfer in favour of any child of the transferee would have a simi....
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....Act. There was no Section 2(8) in the original 1988 Act. Therefore, the reference was unmistakably to the Act as amended in 2016. Secondly, it was said that the rules were not framed under the 1988 Act making it inoperative. Or, in other words, the government had deliberately not given effect to this Act. The 2016 amendment contained a detailed machinery for the enforcement of the provisions of the 1988 Act as amended in 2016. In those circumstances a valuable right had accrued to the appellant on the date of coming into force of the amendment. This valuable right had not been taken away by the amendment. Therefore, a transaction of 2011 against which the government had taken no action could not be revived by the amendment Act which did not have any retrospective effect. In the affidavit-in-opposition of the respondent authority which was affirmed in December, 2018 the following case was made out: "5. a) ................................. b) ................................. c)................................. d) It is further submitted that material on record indicated that Petitioner has invested in property of Rs. 9,44,00,000/- in the financial year 2011-12. Thus, the ....
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....interest income, profit on sale of investment and dividend income during this period. Further material in possession indicated that the amount of investment and continuance thereof in the form of share capital by such companies where virtually there is no business operation is a pre-meditated investment to facilitate the beneficiary to use the share capital on his own interest. In this case share capital received from the shell companies was invested in the property in the form of (land containing 8 Kattash 13 Chattacks together with a residential building having total floor containing 6336 Sq. Ft.) on 02.05.2011 at 9, Sarat Chatter Avenue, Kolkata in the name of the company (M/s. Ganpati Dealcom Pvt. Ltd.)." The learned Additional Solicitor General argued that the amendments were very carefully woven into the fabric of the parent Act. He referred to Section 1(2) of the amending Act which stated that different dates may be appointed for coming into force of different provisions of the Act. He argued that Section 1(3) of the Parent Act said that provisions of the Act except 3, 5 and 8 as per the Act would come into force on 19th May, 1988. The amending Act was grafted into it. Th....
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....d by the Central government. The use of the words "acquisition" and the explanation thereto that benami property acquired would not be compensated for by the government, in the 1988 Act, were deleted. In R. Rajagopal Reddy (Dead) By LRS. and Ors. Vs. Padmini Chandrasekharan (Dead) by LRS. reported in (1995) 2 SCC 630, the Supreme Court interpreting Section 3(1) of the said Act of 1988 opined in paragraph 10 that it created "a new offence.....new liability" and would have prospective operation in relation to offences which took place after the provision came into force. It also opined in paragraph 18 that the Act was not declaratory or curative legislation but created substantive rights. In Commissioner of Income Tax (Central)- I, New Delhi vs. Vatika Township Private Limited reported in (2015) 1 SCC 1 the Supreme Court laid down the following dictum with regard to retrospectivity of a legislation in paragraph 28 of the report as under: "28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule ....
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.... AIR 1952 SC 324 in page 621: "The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a, part of itself, into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repugnancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all". Now there is no question about the correctness of this dictum. But it appears to us that it has no application to this case. It is perfectly true as stated therein that whenever an amended Act has to be (1) (1952) S.O.R. 683." The learned Judge added that this reading of the unamended portion with the amended provisions was to ascertain the meaning of the Act as amended, but subject to the following condition: "But this is not the same thing as saying that the amendment itself must be taken to have been in existence as from the date of the earlier Act. That would be imputing to the amendment retrospective operation which could only be done if such retrospective operation is given by the amending Ac....
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.... prosecution etc. The show-cause notice dated 29th August, 2017 was issued under Section 24(1) of the 1988 Act as amended. It referred to the alleged benami transaction by the appellant under Section 2(8) and 2(9)(D) thereunder. Therefore to allege contravention of the 1988 Act as amended in 2016 the contravention should have been made after the date of coming into force of the amendment. In the absence of retrospective operation of the amending Act, one cannot allege that the transaction resulting in the said contravention of the 1988 Act as amended in 2016 took place in 2011. That is exactly what the impugned show-cause notice proposed to do. Now, it is an accepted principle of law that the statute cannot have any retrospectivity unless expressly provided therein. In Rao Shiv Bahadur Singh and Anr. Vs. State of Vindhya Pradesh reported in AIR 1953 SC 394, the Supreme Court was concerned with the interpretation and application of Article 20 of our Constitution. The court remarked that "this article in its broad import has been enacted to prohibit convictions and sentences under ex-facto laws." It defined ex-post facto laws as those which "voided and punished what had been lawfu....
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....C 348, the Supreme Court said: "Moreover, the Act and the Rules form part of a composite scheme. Many of the provisions of the Act can be put into operation only after the relevant provision or form is prescribed in the Rules. In the absence of the Rules the Act cannot be enforced." In Canbank Financial Services Ltd vs Custodian & Others reported in (2004) 8 SCC 355 the Supreme Court specifically held in paragraph 67 that the said Act of 1988 had not been made workable as no rules under Section 8 of the said Act for acquisition of benami property had been framed. These two cases were also cited by Mr. Khaitan. Section 6(c) of the General Clauses Act, 1897 is most important. It lays down that repeal of an enactment, which necessarily includes an amendment, would not affect "any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed", unless a different intention is expressed by the legislature. Without question, the omission on the part of the government to frame rules under Section 8 of the 1988 Act rendered it a dead letter and wholly inoperative. Assuming that the appellant had entered into a benami transaction in 2011, no actio....