2019 (7) TMI 275 - HC - Benami Property

Show cause notice u/s 24(1) of Benami Act - disposal of objection by passing speaking order before passing final order - Benami transaction - attachment orders - show cause as to why the property in question not be treated as benami property within the meaning of Section 2(9)(C) of the Benami Act? - HELD THAT - The contention and reliance upon the judgment of GKN DRIVESHAFTS (INDIA) LTD. VERSUS ITO 2002 (11) TMI 7 - SUPREME COURT is made by contending that Section 24(1) of the Benami Act and Section 147 are adopting the same language and therefore, are parimateria. The Court is unable to accept such contention as the sphere and operation of Section 24 of the Benami Act and Section 147 are completely different. Section 24 of the Benami Act and the subsequent provisions are for the purpose of coming to conclusion as to whether the property in question is to be treated as benami property whereas operation of Section 147 and the subsequent provisions, viz. Sections 148 to 153 would be operating while the process for assessing or reassessing of the income is undertaken by the concerned officer. Therefore, contention of passing a separate speaking order to the objections raised cannot be accepted. When the petitioner filed reply to the show cause notice on 18.04.2019, there is nothing in such reply which can be termed to be objection of preliminary nature which would be required to be dealt with before passing final order. The only objection that comes near to the contention raised by learned Advocate for the petitioner is non-supply of the documents. This, in the opinion of the Court, is also an objection on merits which can be and should be dealt with in the final order and therefore, subsequent communication dated 30.04.2019 appears to be an afterthought to prevent respondent No.1 from proceeding any further as per the provisions of the Benami Act and hence, the Court is not inclined to entertain this petition.

Summary

Issues:
Seeking direction for passing a speaking order under the Prohibition of Benami Property Transactions Act, 1988.

Analysis:
The petitioner filed a petition under Article 226 seeking a direction for the Deputy Commissioner of Income Tax to pass a speaking order disposing of objections raised before the final order under the Benami Act. The petitioner had raised objections regarding a transaction involving deposit of old high demonetized notes, leading to a summons under the Benami Act. The petitioner requested the respondent to deal with objections before passing the final order. The petitioner relied on a case stating that the noticee is entitled to file objections, and the Assessing Officer must pass a speaking order. However, the Court found that the Benami Act does not provide for dealing separately with preliminary objections before passing the final order.

The Court examined the petitioner's reply to the show cause notice and subsequent communications. The petitioner raised concerns about not being provided with full copies of statements, affidavits, and evidence, citing a violation of natural justice. The petitioner's reply mainly focused on the case's merits and defenses, with no preliminary objections highlighted. The petitioner later requested a separate speaking order before the final order, referencing the Income Tax Act and a relevant judgment. The Court noted that the Benami Act does not mandate a separate order for objections and rejected the petitioner's claim based on the cited case law.

Regarding the petitioner's reliance on a judgment related to the Income Tax Act, the Court differentiated the operation of Section 24 of the Benami Act and Section 147 of the Income Tax Act. The Court emphasized that the Benami Act aims to determine if the property is benami, while the Income Tax Act deals with income assessment. The Court found no preliminary objections in the petitioner's reply that necessitated separate consideration before the final order. The Court dismissed the petition, concluding that the subsequent request for a separate speaking order seemed like an afterthought to delay proceedings under the Benami Act.