TaxTMI 
TaxTMI 
2024 (5) TMI 1161
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....Delhi And Others Hon'ble Rajan Roy And Hon'ble Om Prakash Shukla JJ. For the Petitioner : Shishir Srivastava, Lalta Prasad Misra, Nida Navi, Syed Zulfiqar Husain Naqvi, Atma Ram Verma For the Respondent : A.S.G.I., , Dr. Ravi Kumar Mishra, Kushagra Dikshit, Neerav Chitravanshi ORDER 1. Heard Mr. H.G.S. Parihar, learned Senior Advocate assisted by Ms. Radhika Singh, Mr. Atma Ram Verma, Mr. Prashant Kumar Singh, Mr. Jitendra Kumar Yadav and Dr. L.P. Misra along with Mr. Syed Zulfiquar Hussain Naqvi, Mr. Tarun Mishra and Mr. Shishir Srivastava, learned counsels for the petitioner, Mr. Manmeet Arora, Special Public Prosecutor along with Mr. Neerav Chitravanshi and Mr. Kushagra Dikshit, learned counsel for the respondent Nos.2 & 3 and Dr. Ravi Kumar Mishra, learned counsel for the respondent No.1-Union of Inda. 2. This is a bunch of eight writ petitions challenging show cause notices issued by the Initiating Officer under Section 24 (1) of the Prohibition of Benami Property Transactions Act, 1988 (hereinafter referred to as 'the Act 1988') on various grounds. 3. Out of eight writ petitions, seven are by the alleged Benamidars referred in the impugned show cause notices is....
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.... of its partners such as Rajat Sahai, Rohit Sahai, etc. have been mentioned as interested party in the impugned notices. 7. All the eight companies whose names are mentioned in the impugned show cause notices as Benamidars are part of the said consortium. To achieve the object of developing an integrated township, it is stated that some out of these eight companies entered into a Joint Development Agreement dated 05.05.2022 (hereinafter referred as 'JDA 05.05.2022') while remaining of these eight entered into another Joint Development Agreement dated 21.03.2023 (hereinafter referred as 'JDA 21.03.2023') with the same LLP. In pursuance thereof, huge tracts of land were purchased by the eight companies which were part of the consortium on different dates between 2021-22 and 2022-23 to develop an Integrated Township in terms of the Policy 2014. 8. Tilicho Ventures LLP which is one of the eight companies involved in these proceedings has not approached the Court challenging the notices. 9. It is alleged that the petitioners-companies are dummy companies having hardly any business activities or financial assets to purchase huge tracts of land and these dummy companies or shell compa....
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....sed on the material collected during such inquiry including the material which may have been part of the two references made to him, the Initiating Officer is said to have recorded his reasons to believe that the properties in question were, in fact, Benami properties, although beneficial owner was not identifiable. Accordingly, he issued notices under Section 24 (1) of the Act 1988 which are impugned herein. 14. The contention of learned counsel appearing for the petitioners, in nutshell, was that the non-existence of the jurisdictional facts which was a prerequisite for issuance of a notice under Section 24 (1) of the Act 1988; absence of any relevant material which could have formed the basis for reason to believe and the reasons to believe having not been supplied to the petitioners; the material which is alleged to be the basis for issuance of the impugned notice not having been supplied; absence of approval under Section 23 of the Act 1988 after the second reference by the Investigating Wing of the Income Tax Department; absence of independent application of mind by the Initiating Officer before issuing the show cause notice; pre-determination on the part of the Initiating O....
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....e legally through valid documents which are duly stamped and registered as per law. In this context we find that the said provision in U.P. Revenue Code, 2006 itself vide sub-Section (3) of Section 89 permits the grant of approval of such purchase done or proposed to be done in excess of the limits specified in sub-Section (2) of Section 89, if such acquisition or purchase is in favour of a registered firm, company, partnership firm, limited liability, etc. and if it is of the opinion that the acquisition or purchase would be in public interest and likely to generate economic activities (other than agricultural) and provide employment. How far this is relevant can be seen at the time of final hearing. 19. On the other hand, learned counsel for the Revenue has taken us through the reasons given in the impugned show cause notice which are very detailed and run into 150 pages each as also the provisional attachment order which is equally extensive and detailed. After taking us through the reasons mentioned therein and the material discussed, it was contended that the stage of issuance of show cause notice by the Initiating Officer does not involve adjudication of any issue but only r....
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....nsideration after submission of reply of the petitioners under Section 24 (4) of the Act 1988, therefore, the said order also does not require interference. 21. He contended that the petitioners-companies are dummy companies who as is evident from the facts and reasons given in the impugned show cause notices, were recently incorporated/constituted just before the purchase of huge tracts of land by them without any financial capacity to meet the said expenditure and without they having been carrying on any business activities worth the name which is evident from their finances as discussed in the notice. There was a long layering of funds and a maze was created to hide the source of the funds and ultimately they were routed through M/s Siddhi Vinayak Infra Zone to all these companies and the said funds have been used for purchasing properties in the names of these dummy petitioners-companies who, in fact, have not been carrying out any business activities worth the name and are in fact shell companies, a concept which has been discussed at length by the Initiating Officer. 22. He has also invited our attention to the JDAs, according to which, the Benamidars and M/s Siddhi Vinayak....
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....hat adjudication under Section 24 (4) is mandatory and requires the authority to examine the same on a prima facie basis and also that such adjudication must take place after providing collected material to the accused along with the show cause notice which as per the petitioners herein has not been complied and no such material has been proved, Mr. Arora, learned counsel for the Revenue submitted that this was not an issue before the Supreme Court in the said case, therefore, these observations are nothing but an orbiter and not binding upon the High Court, which we find it rather difficult to accept, at least, at this stage, but, do not record any conclusive opinion, as, we are only at the stage of admission and consideration of interim relief. 24. Moreover, it is also the contention of the petitioners' counsel that they had moved an application to the concerned Initiating Officer for providing the reasons to believe which may have been recorded and in response thereto the Initiating Officer has responded that there was no such obligation to provide the reasons to believe which have been recorded separately, especially as the gist of the information and documents have already be....
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....at after having gone through the records including the records placed before us in sealed cover, we find it difficult to hold, at least as of now, that there was no material in possession of the Initiating Officer on the basis of which he could form his opinion or reason to believe that the properties in question were, in fact, Benami properties. At this stage, the beneficial owners are not identifiable. The record reveals that as per the returns filed by the petitioners-companies and the finance disclosed by them not much business activities had taken place in the said companies in the relevant years. There has been change of management in the year 2021-22 and thereafter i.e. just prior to the purchase of huge tracts of land for which the companies as stated by the Revenue's counsel did not have the necessary finances, but, the said finances have been routed to these eight companies through M/s Siddhi Vinayak Infra Zone and the Partners of M/s Siddhi Vinayak Infra Zone have further links with other companies as has been discussed in the impugned show cause notice. The allegation is that there has been routing of funds from unknown sources through various companies and layering in ....
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....ice under Section 24 (1) of the Act 1988 or thereafter during 90 days period as envisaged in Section 24 (3) and (4) of the Act 1988 material in possession of the Initiating Officer is required to be provided to the Benamidars or the beneficial owner, if identifiable, at both, or either of the stages. According to Ganpati Dealcom Private Limited (supra), it is required to be provided before issuance of show cause notice i.e. 24 (1). No doubt, the Act 1988 does not specifically enjoin upon the Initiating Officer to provide the said material to the noticees, but, then the question arises that considering the stringency of the law with which we are dealing, if the material is not provided at the stage of Section 24 (1) then such harsh proceedings would be undertaken without the noticees having been confronted with the material which will be used against them, especially as, after issuance of notice an adjudication has to take place under Section 24 (4) at the level of the Initiating Officer, which, even though not final, nevertheless, is necessary for referring the matter to the Adjudicating Authority and the question would be as to whether the noticees can be subjected to such proceed....
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....he says that reasons have been given in the provisional attachment order with reference to the activities claimed to be carrying on i.e. development and sale of land and flats and the prime area in which the land is situated. Therefore, taking into consideration these facts, especially regarding sale of some of the lands/flats by Tilicho Ventures LLP which is part of the same consortium but, intriguingly has not challenged the notices before us, and, in spite of sufficient opportunities, the counsel for the petitioners did not deny this fact even orally during argument, although Mr. Parihar, learned Senior Counsel along with Ms. Radhika Singh, etc. appeared for all the seven petitioners-companies and Jitendera Prasad Verma is a Director in Tilocho Infra Developers Private Limited and also a partner in Tilocho Ventures Private LLP., whereas, Satish Kumar who has filed the affidavits in two of the petitions on behalf of the other companies is also a Director in the Tilicho Infradevelopers Private Limited, therefore, we are not inclined to stay the order of provisional attachment. 36. Based on the discussion made except Writ Tax No. 79 of 2024, we admit all other writ petitions, but,....