Madras High Court


Madras High Court: A Division Bench of R. Mahadevan and Sathya Narayana Prasad, JJ. approved the orders of the Deputy Commissioner of Income Tax, Chennai, to continue with the provisional property attachment till the Adjudicating Authority decides the Benami nature of such property in accordance with law.

The present appeal arises from a common order dated 25-10-2021. The facts of the case that led the appellants to demand a writ of certiorari begin from November 2017. In consequence of the case of V.K. Sasikala, the petitioner’s premises were searched, and various documents were impounded. Subsequently, he received a show cause notice on 01-11-2019, under section 24(1) of Prohibition of Benami Property Transactions Act, 1988 with respect to him being the benamidar for the beneficial owner V.K. Sasikala, with regard to his share in the Spectrum Mall. The petitioner has henceforth challenged the order of the first respondent for continuance of provisional attachment, under section 24(4) of Prohibition of Benami Property Transactions Act, 1988.

The counsel for the appellant denied any involvement of the appellant in the alleged benami transaction and submitted that neither did the respondent provide all the documents relied upon, nor was the appellant given the opportunity to cross-examine the witnesses before the impugned order was passed. And so, there has been gross violation of the principles of natural justice in conducting the proceedings.

While the Special Public Prosecutor submitted corroborative evidence, copies of sworn statements referring to the receipt of Rs. 18 crores by the appellant and sales deeds were discovered during searches, which led the respondent to take such recourse. In addition to this, the appellant was provided with sufficient opportunities to raise objections and the respondent has fairly adhered to the provisions of the said Act in passing the order.

The Court, while dismissing the writ petition, held that there was no error in the order passed by the first respondent as the proceedings under Section 24 of Prohibition of Benami Property Transactions Act, 1988 required a mere prima facie opinion as to the benami nature of the transaction, which was fairly made out in the case. The Court placed reliance on the case of K.L. Tripathi v. State Bank of India, (1984) 1 SCC 43, where the Supreme Court observed that the mandate of furnishing all material documents to the appellant, the exercise of cross-examination and the opportunity of being heard shall be given to the petitioner only after the proceedings for adjudication have commenced and that a writ petition shall not be entertained against a show cause notice.

In view of the aforementioned arguments, the Court dismissed the writ appeal, while the contentions raised by the appellant were left to be decided on merit by the concerned authority.

[V.S.J. Dinakaran v. The Deputy Commissioner of Income Tax, Writ Appeal No. 1174 of 2022, decided on 30-06-2022]

Advocates who appeared in this case :

Vandana Vyas, Advocate, for the Appellant;

Sheela Special Public Prosecutor (Income Tax), Advocate, for the Respondents.

*Arunima Bose, Editorial Assistant has reported this brief.

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