2022 (5) TMI 1233 - HC - Income Tax

Attachment of property passed under Section 24(3) of the Prohibition of Benami Property Transactions Act, 1988 - challenge, amongst others is violation of the procedure, including the requirement to arrive at a satisfaction before forming an opinion that the property in question may be alienated during the period specified in the notice - HELD THAT - On a specific query as petitioners has submitted that apart from the lack of satisfaction, there is no intention on the part of the petitioners to alienate the property in question and in this regard, attention of this Court has been invited to an undertaking contained in paragraph 24 of the petition whereby the petitioners have undertaken not to alienate the said property and the averments have also been properly verified in the accompanying affidavit. Shri Goswami, learned Senior Counsel further submits that the petitioners are ready and willing to submit the reply to the show cause notice which is an obligation under Section 24(1) of the Act and prays for time of two weeks for the said purpose. This Court is of the view that interest of justice would be served if a period of 10 days is granted to the petitioners to submit the reply to the show cause notice dated 30.03.2022. In the event, the reply is filed within 10 days from today i.e., 06.06.2022, the respondent authorities would consider the same strictly in accordance with the provisions laid down in Section 24 of the Act. The proceedings impugned in this writ petition, namely, order dated 31.03.2022 will not be given effect to in view of the clear undertaking given by the petitioners in the writ petition supported by an affidavit and the process will start afresh from the stage of the procedure laid down in Section 24(1) of the Act which will be done strictly in accordance with law.

Summary

Issues:
Challenge against an order under Section 24(3) of the Prohibition of Benami Property Transactions Act, 1988 for attaching the petitioner's property due to alleged violation of procedure in arriving at a satisfaction regarding possible alienation.

Analysis:
The petitioners challenged an order under Section 24(3) of the Benami Property Transactions Act, 1988, seeking attachment of a property, alleging procedural violations. The petitioners claimed they were not provided necessary materials to respond to the notice, resulting in a delayed reply. The key contention was the absence of a proper satisfaction before concluding the property could be alienated during the specified period. The Senior Counsel argued that lack of such satisfaction renders the action void ab initio due to jurisdictional deficiency.

The Central Government Counsel (CGC) countered the challenge by presenting written instructions indicating that the appropriate authority had prima facie satisfaction before issuing the show cause notice. The CGC referred to notes showing that a satisfaction was reached regarding the potential alienation of the property in question. The CGC argued that the procedure followed was correct, as evidenced by the note dated 30.03.2022, demonstrating a valid satisfaction regarding possible alienation.

The Senior Counsel contested the validity of the satisfaction, claiming it was mechanical and lacked objective standards. Despite acknowledging that the Court should not assess the adequacy of reasons in the note, it was noted that the satisfaction did not seem connected to the issue of property alienation. However, the Court refrained from making further observations on the case's merits to prevent prejudice to either party.

The petitioners expressed no intention to alienate the property and offered an undertaking not to do so, supported by a verified affidavit. They sought time to submit a reply to the show cause notice, as required by Section 24(1) of the Act. The Court granted a 10-day extension for filing the reply, emphasizing that if submitted within the stipulated time, the authorities must consider it in compliance with Section 24 of the Act. The Court ruled that the impugned order would not be enforced, and the process would restart from the initial stage in accordance with the law.

In conclusion, the writ petition challenging the order under Section 24(3) was disposed of, with the Court directing a fresh start of proceedings based on the petitioners' undertaking and affidavit, ensuring strict adherence to the statutory procedures outlined in Section 24(1) of the Act. The written instructions forming part of the records were also noted for reference.