Writ Not Maintainable Against Provisional Attachment of Property As Per Benami Law | HC

Case Details: M. Kumudhavalli v. Initiating Officer Joint Commissioner of Income-tax (OSD) - [2023] 154 taxmann.com 344 (Madras)

Judiciary and Counsel Details

• • N. Seshasayee, J.
  • K. Ravi for the Petitioner.
  • Ms M. Sheela, Special Public Prosecutor for the Respondent.

Facts of the Case

Petitioner, a company and its directors were booked for the offence under sections 409, 420, 465 and 468 IPC, and they were taken into judicial custody about a year later. While so, the Initiating Officer issued a notice under section 24(1), directing the petitioners to show cause as to why certain properties of theirs should not be treated as benami properties.

Subsequently, the Initiating Officer sent two reminders for the petitioners to respond to the show cause notice. Within a few days, the properties of both the company and the Directors were provisionally attached. The petitioners replied to show cause after they came out of judicial custody and challenged provisional attachment by filing a writ petition.

High Court Held

The Madras High Court held that nothing was on record to indicate whether the initiating officer knew that the petitioners were in judicial custody when section 24(1) show cause notice was issued and provisional attachment under section 24(3) was made.

The scheme of the Prohibition of Benami Property Transaction Act 1988 makes the Benami transaction a crime. Besides confiscating the property found to be held benami, it also provides that both the benamidars and the beneficiary are liable for criminal prosecution under section 53. Before the issuance of a confiscation order, the property attachment represents an initial phase towards that objective, necessitating only the suspicion that the property might be linked to a benami transaction.

The provisional attachment made by the initiating officer cannot be considered bad in law. He has done that which the statute contemplates. Admittedly, the petitioners have all the opportunities to approach the adjudicating officer and explain why the provisional attachment order was bad.

Accordingly, the writ petition was dismissed.

List of Cases Referred to

• • J. Sekar v. Union of India [2018] 89 taxmann.com 159 (Delhi) (para 2)
  • Ajay Kumar Gupta v. Adjudicating Authority (PMLA) [2017] MCH 4443 (para 2)
  • Siemens Ltd. v. State of Maharashtra [2006] 12 SCC 33 (para 2)
  • Union of India v. Vicco Laboratories 2008 taxmann.com 520 (SC) (para 2)
  • Oryx Fisheries (P.) Ltd. v. Union of India [2010] 13 SCC 427 (para 2)
  • Marg Projects & Infrastructure Ltd. v. Dy. CIT [2023] 147 taxmann.com 130/[2022] 448 ITR 649 (Mad.) (para 3)
  • Naveen Balaji v. Dy. CIT [W.A.Nos.1054, 1007 of 2022] (para 3)
  • Dinesh Chand Surana v. Dy. CIT [2022] 142 taxmann.com 494 (Mad.) (para 3)
  • Griffin Developers (P.) Ltd. v. Union of India [2018] 98 taxmann.com 506 (Ker.) (para 3)
  • Simmant Kohli v. Union of India [W.P. Nos. 3957 and 3963 of 2019, dated 17-12-2019] (para 3).