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TMI Blog2022 (7) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... ng into account all the relevant materials, shall pass an order continuing the provisional attachment of the property till the passing of the order by the Adjudicating Authority under sub section (3) of section 26. Under section 24(4)(a)(ii), the Initiating Officer may revoke the provisional attachment of the property with the prior approval of the Approving Authority. Section 24(5) requires the Initiating Officer, who passes an order continuing the provisional attachment of the property under section 24(4)(a)(i), to draw up a statement of the case and refer it to the Adjudicating Authority, within fifteen days from the date of the attachment. As noticed earlier, the appellants in the writ proceedings, questioned the action of the first respondent under section 24(4)(a)(i) of the Act, in ordering continuance of the attachment made under section 24(3) till the final order under section 26(3) is passed by the Adjudicating Authority. Upon considering the rival submissions and the decisions relied on by the parties, the learned Judge has dismissed the writ petitions filed by the appellants, along with other connected cases, by the common order dated 25.10.2021. As grievance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Writ Appeal Nos.1257 to 1261 of 2022 And C.M.P.Nos.7951, 7954, 7955, 7956 & 7957 of 2022 - - - Dated:- 30-6-2022 - Honourable Mr. Justice R. Mahadevan And Honourable Mr. Justice J.Sathya Narayana Prasad For the Appellant : Mr.R.Sivaraman in all W.As. For the Respondents : Mrs. Sheela Special Public Prosecutor (Income Tax) in all W.As. COMMON JUDGMENT R.MAHADEVAN, J. These writ appeals arise from a common order dated 25.10.2021 passed by the learned Judge in a batch of writ petitions viz., W.P.Nos.8150, 8149, 8148, 8147 8146 of 2020, filed by the appellants herein. 2.The relief sought in the aforesaid writ petitions is to issue a writ of certiorari to call for the records from the file of the first respondent pertaining to the orders dated 29.01.2020 passed under section 24(4) of the Prohibition of Benami Property Transactions Act, 1988 (hereinafter referred to as the Act ) and quash the same as illegal, arbitrary and without jurisdiction. 3.1. According to the appellants, they are involved in the business of real estate and developing infrastructure projects including ports, SEZ's, hotels, malls, etc. In the month of November, 2017, a se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent are treating as benami transactions. According to the learned counsel, the shareholders have not received any consideration which was to be received on or before 30.04.2017 as per the Memorandum of Understanding and hence, the shares were not transferred and the shareholders continue to hold the shares in M/s.Digital Accelerator Limited. With respect to the original share certificate found with the third party, it is submitted that the certificates were given as surety for the materials stored at M/s.Digital Accelerator Limited and hence, the entire transactions are only commercial in nature and in any event, it cannot be treated as benami transactions as contemplated under the Act. Thus, it would be inappropriate to call the appellants, who are the rightful owners of the shares, to be benamidars, merely because the cash in demonetized currencies was thrust on during the fag end of the demonetization period to the promoters of the company. 4.2. The learned counsel for the appellants further contended that even though the appellants sought for the documents that have been relied upon by the first respondent for initiating the impugned proceedings and requested for pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first respondent after proper application of mind and having 'reasons to believe', has passed the orders impugned in the writ petitions and therefore, the same were rightly upheld by the learned Judge in the writ proceedings. It is also submitted that the first respondent, who armed with the sufficient materials to proceed against the appellants, has initiated the impugned proceedings as per law, after providing the required documents to the appellants to file their submissions, in adherence to the principles of natural justice; and as such, the order of the learned Judge directing the respondents to continue the proceedings, while dismissing the writ petitions, does not call for any interference by this court. 6.Heard both sides and perused the materials available on record. 7.At the outset, it is but necessary to refer to the provisions of law for effective adjudication. The Benami Transactions (Prohibition) Act, 1988, was enacted to prohibit benami transactions and the right to recover property held benami. The said Act makes it clear that all the properties held benami shall be subject to acquisition by such authority in such manner and after following such proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 26; or (ii)decide not to attach the property as specified in the notice, with the prior approval of the Approving Authority. [Explanation.- For the purposes of this section, in computing the period of limitation, the period during which the proceeding is stayed by an order or injunction of any Court shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-section (4) available to the Initiating Officer for passing order of attachment is less than thirty days, such remaining period shall be deemed to be extended to thirty days: Provided further that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-section (5) available to the Initiating Officer to refer the order of attachment to Adjudicating Authority is less than seven days, such remaining period shall be deemed to be extended to seven days.] (5)Where the Initiating Officer passes an order continuing the provisional attachment of the property under sub-clause (i) of clause (a) of sub-section (4) or passes an order provisionally attaching the property under sub-clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions in question have to be established by the petitioner before the authorities upon the respondents discharging the initial burden cast upon them to furnish the primary evidences available with them to the effect that the property is benami in nature. This is a rebuttable presumption and the effectiveness of the rebuttal will depend on the evidences furnished by the noticees to the authorities. 66.In my considered view, therefore, the enquiry contemplated at the stage of initial investigation is only preliminary, based upon prima facie reasons and conclusions. A detailed verification of the evidences as regards whether the transactions were benami or otherwise can, and must only be undertaken in the course of adjudication and not at the stage of preliminary enquiry. 67..... 68.The thrust of the petitioner's case is the alleged insufficiency of materials as well as the fact that the evidences gathered are unreliable. However, and at the risk of repetition, the enquiry conducted under section 24 is only a preliminary enquiry and the use of the phrase 'reason to believe' only indicates a prima facie satisfaction that all was not well as regards a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act will be issued within a period of 30 days from date of issue of these orders accompanied with all material that the respondents rely on and proceedings under section 26 shall be conducted scrupulously in line with the mandate thereof. 78.The petitioners shall be affored full opportunity to put forth all contentions before the adjudicating authority who shall take note of the same and pass speaking orders in accordance with law. ... 9.As already stated, the grievance of the appellants is that the first respondent did not furnish the entire documents relied on by them, nor provided any opportunity to the appellants to cross examine the persons whose statements have been referred to in the impugned proceedings and as such, the orders passed under section 24(4) of the Act, which were impugned in the writ petitions, are arbitrary, illegal and violative of the principles of natural justice. Whereas, it is the specific stand of the respondents that they have supplied the required documents to the appellants and that, there is no provision for providing an opportunity to cross examine the witnesses from whom they have collected the information regarding benami properties, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prohibition of Benami Property Transactions Act, 1988, was not conferred upon any such authority to grant an opportunity for cross-examination of any person. Further, the Beneficial Owner seeks cross examination without mentioning the points on which the cross examination was to be held, which is beating around the bush. This office has initiated the benami proceedings on the basis of sworn statements recorded by the quasi-judicial authorities (income tax authorities) and other evidences, which are treated as primary evidences. Further, there is no retraction possible for the deponent based on the theory of Estoppel, unless it is substantiated by any material evidence. There is no such material evidences placed on record by the benamidar and beneficial owner. It is pertinent to note that as the Initiating Officer was not the examination-in-chief for the sworn statements recorded under the Income-tax Act, the question of cross-examination does not arise. However, opportunities were given time and again, to furnish their material evidences which have not been utilised by them. It is placed on record that the entire proceedings have been initiated based on the evidences c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no real prejudice caused by infraction of any particular rule of natural justice of which appellant before us complained in this case. See in this connection observations of this Court in the case of Union of India and Anr. v. P.K. Roy and Ors. MANU/SC/0049/1967 : (1970) ILLJ 633 SC where this Court reiterated that the doctrine of natural justice cannot be imprisoned within the strait-jacket of a rigid formula and its application depends upon the nature of the jurisdiction conferred on the administrative authority, upon the character of the rights of the persons affected, the scheme and policy of the statute and Ors. relevant circumstances disclosed in a particular case . See also in this connection the observations of Hidayatullah, C.J., in the case of Channabasappa Basappa Happali v. State of Mysore. MANU/SC/0476/1970 : [1971] 2 SCR 645 In our opinion, in the background of facts and circumstances of this case, the nature of investigation conducted in which the appellant was associated, there has been no infraction of that principle. In the premises, for the reasons aforesaid, there has been in the facts and circumstances of the case, no infraction of any principle of natural jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to cross-examination, even before the adjudication has commenced, in our opinion, surely would not arise. It is only after the adjudication proceedings have commenced pursuant to the show cause notice and if the Revenue seeks to rely upon the statements or documents, then the principles of natural justice would require in the absence of any statutory provision, that the person whose statement was recorded is made available for cross-examination to test the veracity of the statement. 16.We, therefore, have no hesitation in holding, that there is no requirement in the Act or Rules, nor do the principles of natural justice and fair play require that the witnesses whose statements were recorded and relied upon to issue the show cause notice, are liable to be examined at that stage. If the Revenue choose not to examine any witnesses in adjudication, their statements cannot be considered as evidence. However, if the Revenue choose to rely on the statements, then in that event, the persons whose statements are relied upon have to be made available for cross-examination for the evidence or statement to be considered. 17.We are, therefore, clearly of the opinion that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights of any party unless the same has been issued by a person having no jurisdiction to do so and it is quite possible that after considering the reply to the show cause notice or after holding an enquiry, the authority concerned may drop the proceedings. It was further held that a writ lies only when some right is infringed and a mere show cause notice does not infringe the right of any one and it is only when a final order adversely affecting the party is passed, that the said party can be said to be having any grievance. The Supreme Court held that the writ jurisdiction being discretionary, should not ordinarily be exercised by quashing a show cause notice. (Emphasis supplied) (v) An order dated 03.08.2017 passed by the learned Single Judge of the Madhya Pradesh High Court in WP.No.10280 of 2017 in the case of Kailash Assudani v. CIT, wherein, the challange was to the order passed by the Initiating Officer under section 24(4) of the Prohibition of Benami Property Transaction Act, 1988 and the same was rejected. The relevant portion of the order, reads as follows: 6....In my view, the principles of natural justice are codified in terms of sub section (6) of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issuance of show cause notice as to why the property specified in the notice should not be treated as Benami property. However, the substantive order of treating the property has Benami is required to be passed by Adjudicating Authority under section 26 of the Act only. Therefore, the appellant is at liberty to take all such plea of law and facts as may be available to the appellant before the Adjudicating Authority. The Adjudicating Authority shall decide the Benami nature of the property in accordance with law. (Emphasis supplied) 13.In the given factual matrix and applying the legal proposition as enunciated in the earlier paragraph, we are of the opinion that in the absence of any provision of law as well as the compelling circumstances warranting the respondent authorities to provide an opportunity of cross examination of witnesses, whose statements have been relied on by the respondent authorities, to the appellants at the stage of section 24 proceedings, the plea raised by the appellants in this regard, cannot be countenanced. Therefore, we do not find any error in the orders passed by the first respondent, under section 24(4) of the Act, as an interim measure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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