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TMI Blog2023 (12) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... order on 01.05.2023 HELD THAT:- From bare perusal of the provisions of Section 24 of the PBPT Act, it is clear that the Initiating Officer is not required to wait or consider the response/reply filed pursuant to the notice under Section 24(1) (2) of the PBPT Act before passing the provisional attachment order. The only requirement for the Initiating Officer is to seek approval of the approving authority before passing the provisional attachment order under Section 24(3) of the PBPT Act and from the provisional attachment order dated 01.05.2023, it is clear that prior approval of the approving authority was obtained by the Initiating Officer. Hence, the said argument of the learned counsel for the petitioner being bereft of merits is rejected. So far as argument of the learned counsel for the petitioners that the Initiating Officer, at the time of issuance of show cause notice under Section 24(1) (2) of the PBPT Act, did not record any reason to believe, is concerned, it is to be noticed that the Initiating Officer in the show cause notice dated 28.04.2023 has specifically recorded the reasons to believe. In such circumstances, we do not find any merit in the above argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rained in Sec. 24 and 26 of the Act of 1988 is compared with the PML Act, it will be clear that the Scheme is almost pari materia. For this reason also, we deem it proper to hold that adjudicating authority is best suited and statutorily obliged to consider the validity of provisional attachment order and the case put forth by the present appellants. No case for interference made. Hence, all these writ petitions fail and are hereby dismissed. - Hon'ble Mr. Justice Vijay Bishnoi And Hon'ble Mr. Justice Yogendra Kumar Purohit For the Petitioner(s) : Mr Sanjay Jhanwar, Sr. Advocate assisted by Mr Sanjay Nahar, r Rajat Sharma (through VC), Mr Aryan Singh Chouhan, r Pushkar Taimini For the Respondent(s) : Mr K.K.Bissa, Mr Har Govind Chanda JUDGMENT (PER HON BLE VIJAY BISHNOI,J.) 1. Facts of all these cases are identical and common question of law is involved in these writ petitions, therefore, they are decided together. For the sake of convenience, the facts of D.B.Civil Writ Petition No.16732/2023 are taken into consideration for adjudication of these writ petitions. 2. The petitioner No.1 is a private limited company incorporated under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 24(3) of the PBPT Act was issued on 01.05.2023. It is submitted that the said action of the respondents is violative of principles of natural justice and, therefore, the provisional attachment order is liable to be quashed and set aside. 6. Learned counsel for the petitioners have further submitted that as per Section 24(1) and (2) of the PBPT Act, if the Initiating Officer, on the basis of material in his possession, has reason to believe that a person is a Benamidar and other person is beneficial owner in respect of the property, then only he may, after recording reasons in writing, issue a show cause notice to such persons. In the present case, the Initiating Officer has failed to record any reasons for initiating the impugned proceedings against the petitioners and the said action of the Initiating Officer is, therefore, violative of the provisions of the PBPT Act as well as the violative of principles of natural justice. 7. Learned counsel for the petitioners have further submitted that as per the circular dated 14.08.2019 issued by the Central Board of Direct Taxes, every communication issued by any Income Tax Authority should contain computer generated D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders, however, such assumption of the respondents is contrary to the specific provision of law and beyond the scope of definition of Benami transaction. It is submitted that the petitioner No.2 cannot be called beneficial owner of the immovable property purchased by the petitioner No.1 within the meaning of PBPT Act. 12. It is argued that as per the exception provided under Section 2(9) of the PBPT Act, the transaction or arrangement cannot be called as a Benami transaction when the property is held by a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity. It is submitted that the petitioner No.2 being the Director and shareholder of the petitioner No.1-company, even if provided funds for purchase of the property in the name of petitioner No.1, it cannot be held that the property purchased in the name of petitioner No.1 is the property of petitioner No.2. In support of the above contention, learned counsel for the petitioners have placed reliance on a decision dated 06.10.2021 rendered by a learned Single Judge of this Court at Jaipur Bench in S.B.Civil Writ Petition No.11176/2020, M/s Shri Kalyan Building Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual; (iv) any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendant and the individual appear as joint-owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual; or (B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or (C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership; (D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious; Explanation . For the removal of doubts, it is hereby declared that benami transaction shall not include any transaction involving the allowing of possession of any property to be taken or retained in part performance of a contract referred to in section 53A of the Trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Approving Authority, till the passing of the order by the Adjudicating Authority under subsection (3) of section 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-claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benami property, but is not able to specifically identify such part, he shall record a finding to the best of his judgment as to which part of the properties is held benami. (5) Where in the course of proceedings before it, the Adjudicating Authority has reason to believe that a property, other than a property referred to it by the Initiating Officer is benami property, it shall provisionally attach the property and the property shall be deemed to be a property referred to it on the date of receipt of the reference under sub-section (5) of section 24. (6) The Adjudicating Authority may, at any stage of the proceedings, either on the application of any party, or suo motu , strike out the name of any party improperly joined or add the name of any person whose presence before the Adjudicating Authority may be necessary to enable him to adjudicate upon and settle all the questions involved in the reference. (7) No order under sub-section (3) shall be passed after the expiry of one year from the end of the month in which the reference under sub-section (5) of section 24 was received. [ Explanation . For the purposes of this subsection, in computing the period of limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to seek approval of the approving authority before passing the provisional attachment order under Section 24(3) of the PBPT Act and from the provisional attachment order dated 01.05.2023, it is clear that prior approval of the approving authority was obtained by the Initiating Officer. Hence, the said argument of the learned counsel for the petitioner being bereft of merits is rejected. 18. So far as argument of the learned counsel for the petitioners that the Initiating Officer, at the time of issuance of show cause notice under Section 24(1) (2) of the PBPT Act, did not record any reason to believe, is concerned, it is to be noticed that the Initiating Officer in the show cause notice dated 28.04.2023 has specifically recorded the reasons to believe in para 13.3, which reads as under: 13.3. In view of the evidence on record, material in possession and facts discussed in foregoing paras, the undersigned as Initiating Officer has reasons to believe that :- 1. The transactions carried out by Sh. Mahaveer Lunia in the form of making payments to the seller(s) which was routed through Sh. Anil Sanklecha, CA as discussed above for making purchase of the said lands/imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) to Section 2(9) of the PBPT Act, a property cannot be treated as Benami merely for the reason that shareholder provided funds to the company for purchasing any property is concerned, we are of the view that no doubt the funds provided by the shareholders form the capital of a company and if from the said capital, any property is purchased in the name of the company, certainly it cannot be treated as Benami, however, if a property is purchased in the name of the company but not from company s funds or its capital then the situation would be different. 23. Section 2(9)(A)(a) of the PBPT Act provides that where a property is transferred or held by a person and the consideration for such property is paid by another person, then the said transaction means Benami transaction. 24. The stand of the respondents is that the petitioner-company is a shell company, however, immovable properties are purchased in its name not from company s funds or its capital but from the funds made available by the petitioner No.2 from the income earned through other businesses. 25. The Initiating Officer, after taking into consideration the material available with it and the response file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns to be fulfilled, which were seen fulfilled in light of the facts circumstances of the instant case :- S.No. Condition as per section 2(9)(A) Applicability in the present case 1. Where a property is transferred to or held by a person The said lands were transferred/held in the name of M/s Alishan Complex Pvt. Ltd. as per details of the immovable properties mentioned in Annexure-A. 2. Consideration for such property has been provided, or paid by, another person The entire consideration for purchase of the said lands/immovable properties in the name of M/s Alishan Complex Pvt. Ltd. was paid by Sh. Mahaveer Lunia S/o Sh. Jawari Lal Lunia which was routed through Sh.Anil Sankhlecha, CA as discussed above and not by M/s Alishan Complex Pvt. Ltd. M/s Alishan Complex Pvt. Ltd., was a shell/paper company and engaged in providing bogus entries. Thus, the company was not having capacity/creditworthiness to purchase the said lands/ immovable properties for making payment of such a huge amount. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sh. Mahaveer Lunia. 4. The position of the parties and the relationship, if any, between the claimant and the alleged benamidar; Sh. Mahaveer Lunia through self and his family members is having full control and management of the company since F.Y. 2016-17 (from the date of transfer of shares of the company in their own names or in the name of the other companies wherein they are holding 100% share). Thus, since F.Y. 2016-17 the company is controlled managed by Sh. Mahaveer Lunia, therefore all the said lands/immovable properties were purchased in F.Y. 2016-17 and later on after getting control management over the company. 5. The custody of the title deeds after the sale; It is evident from the fact that during the search conducted on 16.06.2022, a detailed list of various immovable properties purchased in the name of this company found at the residence premises of Sh. Mahveer Lunia i.e. Lalit. Kunj, Opposite Hotel Mapple Abhay, Paota, Jodhpur which was inventorised and seized as Exhibit-6 of Annexure-BS. Further, original registered sale deeds of some of the said lands/im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prefer appeal, was not functional, however, no such situation exists in the present case. Apart from that, the findings recorded by the learned Single Judge in M/s Shri Kalyan Building s case is based on that facts and, therefore, the same are not binding. 28. As per the provisions of Section 24 of the PBPT Act, the Initiating Officer is required to record its prima facie satisfaction before referring the matter to the adjudicating authority. Considering the provisions of Section 24 of the PBPT Act, the Division Bench of Madras High Court in Dinesh Chand Surana Vs. Deputy Commissioner of Income Tax (Benami Prohibition) Chennai Ors., 2022 0 Supreme (Mad) 3397 held as under: 15. That part, it is important to note that the proceedings under section 24 only require a recording of prima facie opinion as to the benami nature of the transaction and the respondent is required to furnish the documents, particulars or evidence and provide an opportunity of being heard to the appellants only at the stage of adjudication proceedings. 29. The Division Bench of M.P. High Court in Abhay Nigam Ors. vs. Union of India Ors., 2021 0 Supreme (MP) 399 held as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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