TaxTMI 
TaxTMI 
2022 (9) TMI 1356
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....G. Mohan Sai and Mr. Rohan Aloor, learned counsel for the petitioners; Mr. B.Narsimha Sarma, learned counsel for the respondents- Income Tax Department; and Mr. B. Mukherjee, learned counsel representing learned Assistant Solicitor General of India appearing for Union of India. 3. For the sake of convenience, we divide the above batch of writ petitions into three groups in the following manner: Group A:- W.P.Nos.23070, 23497, 23501, 23566, 23575 of 2021. Group B:- W.P.Nos.33191, 33195, 33198, 33199, 33203, 34454, 34670, 34676, 34687, 34691, 34755, 34799, 34800, 34801, 34802, 34803, 35092, 35093, 35113, 35132, 35134, 35144, 35146, 35153, 35154, 35155, 35156, 35171, 35276, 35279 of 2022 Group C:- W.P.No.33403 of 2022 4. In the first batch of cases i.e., Group A, the challenge made is to the show cause notices dated 02.09.2021 issued by the Assistant Commissioner of Income Tax being Initiating Officer, Benami Transactions (Prohibition) Unit, Hyderabad under Section 24(1) of the Prohibition of Benami Property Transactions Act, 1988 (briefly 'the Benami Property Act' hereinafter) 5. In the second batch of cases i.e., Group B, the challenge is to the order passed by the adjudica....
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....(3) of the Benami Property Act. By the said order, the adjudicating authority held that the movable property is a benami property being subject matter of benami transaction within the meaning of Section 2(9)(c) of the Benami Property Act. Consequently, the provisional attachment order has been confirmed. 12. At this stage, we may note that in the year 2016, Benami Transactions (Prohibition) Amendment Act, 2016 was enacted to amend the Benami Property Act. 13. We may mention that Benami Transactions (Prohibition) Amendment Act, 2016 (briefly 'the Amendment Act' hereinafter) had received the assent of the President on 25.10.2016 whereafter, it was notified in the Gazette on 01.11.2016. 14. In all the writ petitions before us, the primary challenge made is that the transactions which have been classified by the respondents as benami transactions and the property accrued therefrom, which have been classified by the respondents as benami property, were acquired prior to 25.10.2016 or 01.11.2016. Such a transaction could not have been classified as benami transaction by retroactively applying the law enacted in the year 2016. For example, in W.P.No.33191 of 2022, the alleged benami pr....
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....x (1 supra). However, the adjudicating authority proceeded to decide on merits with the observation that the legal question as to retrospectivity vis-à-vis prospectivity of the Amendment Act of 2016 was pending before the Supreme Court. 19. In Nexus Feeds Limited v. the Assistant Commissioner of Income Tax (1 supra), this Court held as follows: From the conspectus of the discussions made above, it is apparent that Section 2 (9) (A) and Section 2 (9) (C) are substantive provisions creating the offence of benami transaction. These two provisions are significantly and substantially wider than the definition of benami transaction under Section 2 (a) of the unamended 1988 Act. Therefore, Section 2 (9) (A) and Section 2 (9) (C) can only have effect prospectively. Central Government has notified the date of coming into force of the Amendment Act of 2016 as 01.11.2016. Therefore, these two provisions cannot be applied to a transaction which took place prior to 01.11.2016. Admittedly, in the present case, the transaction in question is dated 14.12.2011. That being the position, we have no hesitation to hold that the show cause notice dated 30.12.2019, provisional attachment order ....
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....ed before the Court of law. We are clarifying that we are not speaking of the presumption of constitutionality as a matter of burden of proof. Rather, we are indicating the assumption taken by the Union as to the validity of these provisions in the present litigation. Such assumption cannot be made when this Court is called upon to answer whether the impugned provisions are attracted to those transactions that have taken place before 2016. 23. After elaborate deliberation, Supreme Court came to the conclusion that Section 3 (criminal provision), Section 2(a) (definition clause) and Section 5 (confiscation proceedings) of the Benami Property Act are overly broad, disproportionately harsh and without adequate safeguards. Though such provisions were in a dormant condition, nonetheless, Supreme Court declared Sections 3 and 5 of the Benami Property Act as unconstitutional from inception. It was held as follows: From the above, Section 3 (criminal provision) read with Section 2(a) and Section 5 (confiscation proceedings) of the 1988 Act are overly broad, disproportionately harsh, and operate without adequate safeguards in place. Such provisions were stillborn law and never utilized i....