2019 (12) TMI 1594 - AT - Benami Property

Benami transaction - respondent submits that in view of Section 27 of the PBPT Act, 1988 so long as the appeal is pending, no confiscation of the property can be done without issuing a proper show cause notice under Section 27 of the Act and there is no need of issuing such notice in view of the pendency of the present appeal - HELD THAT - It appears that subsequent to the order passed by the Adjudicating Authority which is impugned before this Appellate Tribunal, the concerned authority under the said act has issued the show cause notice dated 18.10.2019 giving opportunity as stated above. In the said notice, the concerned authority i.e. Principal Director, Income Tax Department, Lucknow has categorically mentioned about the order passed by the Adjudicating Authority in PBPT Act, 1988. In the above circumstances, the appellant is apprehending for prosecution and confiscation in the PBPT Act, 1988. In view of the above, appellant has a prima facie case that the operation of the impugned order be stayed till the next date of hearing. It is clarified that this order will not come in the way if any prosecution case is filed. Reply is not on record. The counsel for the respondent has undertaken to file the same in the registry during the course of the day. The copy of the same has been served on other side. The counsel for the appellant does not want to file rejoinder. The right to file the rejoinder is closed. Parties are allowed to file the written synopsis by the next date. List for final hearing on 27th May, 2020.

Summary

Issues:
- Stay application filed by the appellant in response to the show cause notice under the Prohibition of Benami Transactions Act, 1988.
- Interpretation of Section 27 of the PBPT Act, 1988 regarding confiscation of property during the pendency of an appeal.
- Apprehension of prosecution and confiscation by the appellant under the PBPT Act, 1988.

Stay Application Analysis:
The appellant filed a stay application along with an appeal in response to a show cause notice issued under the Prohibition of Benami Transactions Act, 1988. The appellant's counsel argued that the show cause notice dated 18.10.2019 was received on 29th October, 2019, providing an opportunity to submit a written reply before the Special Court. The appellant submitted a reply on 25th November, 2019, expressing apprehension that the Income Tax Department might take action based on the Adjudicating Authority's order. The appellant sought a stay on the operation of the impugned order until the next hearing, clarifying that the stay order would not hinder any potential prosecution case.

Interpretation of Section 27 of PBPT Act, 1988:
The respondent's counsel contended that as per Section 27 of the PBPT Act, 1988, no confiscation of property can occur while an appeal is pending without issuing a proper show cause notice. The respondent argued that issuing such a notice was unnecessary given the ongoing appeal. The concerned authority had issued a show cause notice on 18.10.2019, explicitly referencing the Adjudicating Authority's order under the PBPT Act, 1988. The appellant feared prosecution and confiscation under the Act, leading to the stay application.

Apprehension of Prosecution and Confiscation:
The appellant expressed apprehension regarding potential prosecution and confiscation under the PBPT Act, 1988. The Tribunal acknowledged the appellant's concerns and granted a stay on the impugned order until the next hearing date, specifying that the stay order would not prevent the filing of a prosecution case. The respondent undertook to file a reply, which was not on record, during the day's proceedings. The appellant opted not to file a rejoinder, and the right to do so was closed. Both parties were allowed to submit written synopses by the next hearing scheduled for 27th May, 2020, with the order copies provided to both sides for reference.