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TMI Blog2023 (12) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 will have retrospective effect and therefore, the common order passed by the Tribunal, to the contrary, is liable to be interfered with. HELD THAT:- In view of the above, this court is of the opinion that as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd [ 2022 (8) TMI 1047 - SUPREME COURT] holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced. It is to be noted that in the Review Petition [ 2023 (1) TMI 1327 - SC ORDER] filed by the Department to review the order passed by the Honourable Supreme Court in Union of India vs. Ganapati Dealcom Pvt Ltd [ 2022 (8) TMI 1047 - SUPREME COURT] delay was condoned and the application for oral hearing of the review petition was allowed, however, no stay order was granted. In such circumstances, pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd , cannot be a ground to interfere with the order passed by the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marg Group of Companies, a search was conducted on 9th November 2017 in the premises of M/s. Midas Golden Distilleries Private Limited/Smt. V.K. Sasikala Group. The search proceedings resulted in recovering incriminating documents based on which, search and seizure action under Section 132 of The Income Tax Act, 1961 were initiated against Marg Group of Companies. 2.2. The search disclosed that Marg Group of companies was incorporated in the year 1994 by Mr. G. Ramakrishna Reddy, who was it's Managing Director and Chairman. The said company involved in real estate business. Subsequently, several other shell companies numbering around 196 have been incorporated by the group in the State of Tamil Nadu, Karnataka and Andhra Pradesh. However, those shell companies have been classified as Independent Companies as well as subsidiary companies of Marg Limited., But in reality, all these companies are controlled and managed by Mr. G. Ramakrishna Reddy, as Managing Director of Marg Limited through his employees. 2.3. Further, from the records recovered during the course of search, it was disclosed that the shell companies of Marg Group were inter-related in a complex arrangement t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, the shell companies have been floated and/or established in such a manner to conceal the identity of the real beneficiary with an intention to over coming the provisions of Land Ceiling Act. 2.6. It is further stated that the Initiating Officer had reasons to believe that the arrangements made by the respondent with various shell companies is a benami transaction within the meaning of Section 2 A (9) of the Prohibition of Benami Property Transactions Act, 1988 (in short the Act). The initiating officer also had reasons to believe that M/s. Advance Infradevelopers Private Limited is a benamidar and the property measuring 17.702 acres in Muttam Village, Nagore Vattam held by them is a benami property within the meaning of Section 2 (8) and (10) of the Act. 2.7. In the light of the above facts and conclusion reached, a show cause notice dated 26.04.2018 under Section 24 (1) of the Act was issued to M/s. Advance Infradevelopers Private Limited classifying them as benamidar of M/s. Marg Limited and a copy of the said notice was also served on Marg Limited as a beneficial owner to show cause as to why the property should not be treated as a benami property. It is specifically p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal preferred before the Appellate Tribunal and allowed the appeal preferred by the respondent herein to that extent. 2.12. Subsequently, the respondent herein in the appeal filed before the Appellate Tribunal, contended that the appellants did not take note of the fact that the properties attached were already sold and sale considerations have been received by the respective companies and such transactions have also been duly accounted for in the books of accounts of such companies. It was also stated that the appellants have not collected any materials to form a reason to believe and had merely replicated the contents of the letter received from the Deputy Director of Income Tax (Investigation) to initiate and conclude the proceedings against them. In fact, no enquiry was conducted after receipt of the communication from the Deputy Director of Income Tax (Investigation) before issuing the show cause notice. The Adjudicating Authority also failed to take note of the fact that the burden of proof regarding benami is upon the appellants, who allege the transaction to be benami as has been held in Valliammal (D) by legal heris vs. Subramaniam and others [(2004) 7 Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the fact that by virtue of Section 1 (3) of the Act, except the provisions of Sections 3, 5 and 8, remaining provisions had come into force on 19th May 1988. Sections 3, 5 and 8 also came into force on 5th September 1988, on which date, assent was received from the President of India. However, the Amendment Act, 2016 has only set the procedure for confiscation of the property classified as benami and imposition of punishment for those who have entered into a benami transaction after 05.09.1988 and upto 31.10.2018. Thus, the amended provisions provide for greater degree of punishment and penalty with prospective effect for those who entered into benami transaction after 05.09.1988. In other words, the benami transaction entered into prior to 25.10.2016 is a continuing offence as contemplated under Section 3 of the Act. Even after amendment, if there is acquisition of property or holding the property for future benefit of the beneficial owner, it will attract the provisions of the Amended Act. The learned Special Public Prosecutor also contended that Section 5 (1) read with 5 (2) of the Act clearly prescribes for acquisition of benami asset without any consideration by prescribed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Public Prosecutor appearing for the appellants that the decision of the Honourable Supreme Court in the Review Petition filed against the judgment in Union of India vs. Ganpati Dealcom Pvt Ltd., will have a bearing in this case. While so, the common order passed by the Tribunal, only by placing reliance on the said decision of the Honourable Court, against which a review petition is pending, cannot be sustained and it is liable to be set aside. 4. Per contra, the learned counsel for the respondent(s) submitted that the Tribunal, by placing reliance on the decision of the Honourable Supreme Court in Union of India vs. Ganpati Dealcom Pvt Ltd., has rightly held that the transactions that have taken place prior to the Amendment Act, 2016 are legally not sustainable and allowed the statutory appeals filed by the respondents. Even though a review petition has been filed before the Honourable Supreme Court against the aforesaid decision, as on date, the decision of the Honourable Supreme Court is applicable to the case of the respondent(s) herein and therefore, the decision of the Tribunal is proper. The learned counsel also submitted that when once the decision of the Honourabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) Section 3 (2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3 (2) of the 2016 Act is also unconstitutional as it is violative of Article 20 (1) of the Constitution. b) In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary. c) The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. d) In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively. e) Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016. As a consequence of the above declaration, all such prosecutions or confiscation proceedings shall stand quashed. f) As this Court is not concerned with the constitutionality of such independent forfeiture proceedings contemplated under the 2016 Amendment Act on the other grounds, the aforesaid questions are left open to be adjudicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitions are also allowed in terms of the aforesaid judgment. 8.1. As against the decision of the Telangana High Court, mentioned above, an appeal was filed by the department and the Honourable Supreme Court in Assistant Commissioner of Income Tax vs. Nutrient Marine Foods Limited [(2023) 152 taxmann.com 87 (SC)] has dismissed the same, in the following terms: 1. The issues raised in this petition is squarely covered by the judgment of this Court in Union of India v. Ganpati Dealcom (P) Ltd., (2022) (4) taxmann.com 389/289 Taxman 177/447 ITR 108/2022 SCC Online SC 1064. Learned counsel for the petitioner (s) contend that review of the said judgment is pending. 2. Since as of now the issue stands covered by the judgment in the case of Ganapati Dealcom (supra) we dismiss this special leave petition for the same reasons and ground. 3. Delay, if any, is condoned. 4. However, liberty to the petitioners to approach this Court again by filing a fresh petition in case the review petition (s) is allowed, is kept reserved. Pending application (s), if any, shall stand disposed of. 9. In view of the above, this court is of the opinion that as on date, the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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