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TMI Blog2018 (9) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... hat similar orders had been passed earlier which were set aside by the Adjudicating Authority. The Adjudicating Authority had - after considering the responses of the petitioners - held the properties (amounts) sought to be attached were not benami properties. The petitioners claim that in the aforesaid circumstances, it was not open for the IO to issue a fresh show cause notice and pass a provisional order attaching the properties in question (the amounts lying in the respective bank accounts of the petitioners). 3. In order to provide a factual context to the controversy, the facts as obtaining in W.P. (C) 8522/2018 are narrated below:- 3.1 On 25.01.2017, the IO passed an Order of Provisional Attachment under Section 24 (3) of the Act restraining Smt Sunita Gupta - the petitioner in W.P. (C) 8522/2018 - from transferring or charging the property amounting to Rs. 2,99,000/- deposited in the savings bank account of the petitioner bearing no. 006001013451 maintained with Jain Cooperative Bank, Vishwas Nagar Branch, Delhi. The aforesaid order was also accompanied by summons issued under Section 19(1) of the Act, whereby Ms. Gupta was called upon to furnish certain documents. 3.2 O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta is the benami property of Sh Nitin Jain; in W.P. (C) 8470/2018, it is alleged that a sum of Rs.2,83,000/- deposited in the account of Sh Shubham Gupta is the benami property of Sh Nitin Jain; and in W.P. (C) 8678/2018, the sum of Rs.2,99,000/- deposited in the account of Smt Sakshi Gupta is alleged to be the benami property of Sh Nitin Jain. It is alleged that the properties (amounts) amounts in question were deposited in the bank accounts of the petitioners in high value currency notes that were demonetized on 08.11.2016. Reasons and Conclusions 4. The petitioners contend that the Adjudicating Authority had already passed an order under Section 26 (3) of the Act holding that the properties (amounts) in question are not benami properties and, therefore, it is not open for the IO to once again pass orders attaching the same. The petitioners have also relied on the decision of the Calcutta High Court in Jasoda Jiban Saha (P.) Ltd. v. S.K. Chatterjee & Anr.: AIR 1961 Cal 195 in support of their contention 5. Before proceeding further, it would be relevant to refer to Section 24 of the Act, which reads as under:- "24. Notice and attachment of property involved in benami tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the attachment, draw up a statement of the case and refer it to the Adjudicating Authority." 6. The Adjudicating Authority was of the view that an order under Section 24(3) of the Act could not be passed by the IO without first issuing a show cause notice in terms of Section 24(1) of the Act. A plain reading of Section 24(1) of the Act indicates that where the IO has reason to believe that any person is a benamidar in respect of a property, he may after recording reasons in writing, issue a notice to the person to show cause within such time as may be specified in the notice as to why such property should not be treated as a benami property. Thus, the two essential conditions for issuing a show cause notice under Section 24(1) of the Act are: (i) that the IO must have reason to believe on the basis of material in his possession, that any person is a benamidar; and (ii) he must record such reasons in writing. If the aforesaid conditions are met/complied with, the IO may issue a notice calling upon the person to show cause, within such time as may be specified in the notice, as to why the property in question should not be treated as a benami property. 7. A plain reading of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the opinion that the person is in possession of the property held Benami may alienate the property during the period specified in the Notice, he may, with the previous approval of the approving Authority, by order in writing, attach provisionally the property in the manner as may be prescribed, for a period not exceeding ninety days or the dated of issue of notice under sub-section (1) of section 24. From the said communication dated 25.01.2017 it is evident that there is no period specified, which may be in accordance with the period mentioned in the show cause notice issued in terms of section 24(1) of PBPT Act. Further there is no reference as to the duration of the period for which the said order passed under section 24(3) of the PBPT Act would be operative. The provisions requires that it should not exceed 90 days from the date of issue of notice under section 24(1) of the PBPT Act. Thus neither there is any order passed nor produced in terms of section 24(3). However, most significantly the order passed in terms of section 24(3) could not have been passed unless a notice in terms of section 24(1) was issued; As aforesaid admittedly the show cause notice in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an order- (i) holding the property not to be a benami property and revoking the attachment order; or (ii) holding the property to be a benami property and confirming the attachment order, in all other cases." 11. The expression 'benami property' is defined under Section 2(8) of the Act to mean 'any property which is subject matter of a benami transaction and also includes the proceeds from such property.' The term 'benami transaction' is defined under Section 2(9) of the Act. 12. As noticed above, the Adjudicating Authority had concluded that the IO could not pass an order under Section 24(3) of the Act prior to issuing a show cause notice under Section 24(1) of the Act. In this view, the Adjudicating Authority did not sustain the Orders of Provisional Attachment passed by the IO. A plain reading of Section 26(3) of the Act also indicates that the Adjudicating Authority had no power to remand the matter to the IO. In terms of Section 26(3) of the Act, he was either required to hold the properties (amounts) in question not to be benami properties and revoke the Provisional Attachment Orders or proceed to hold the properties (amounts) in question to be benami properties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the sums deposited in the bank accounts of the petitioners were benami properties of Sh Nitin Jain. 16. It is well settled that if an order is set aside on account of violation of the principles of natural justice or on account of any procedural defect in the decision making process, the concerned authority is not precluded from re-initiating the proceedings after curing the procedural defects. This is, of course, subject to the condition that the fresh proceedings are (a) within the jurisdiction of the authority; and (b) are not barred by limitation. In the present case, there is no dispute that the IO has the jurisdiction to issue a show notice under Section 24(1) of the Act. There is also no dispute that such notice is not barred by limitation. In view of the above, this Court is unable to accept that the IO (respondent no.3) was in any manner precluded from issuing the show cause notice. 17. In Thimmasamudram Tobacco Co. vs Assistant Collector of Central Excise, Nellore: AIR 1961 AP 324, the Andhra Pradesh High Court had considered the question whether the Assistant Collector could initiate proceedings under the Central Excise Act after his order had been set aside for vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IO had not complied with the provisions of Section 24 of the Act, the finding that the properties (amounts) in question were not benami properties was on merits. Therefore, the IO could not issue a fresh show cause notice. 21. The aforesaid contention is also unpersuasive. A plain reading of the orders dated 21.05.2018 passed by the Adjudicating Authority clearly indicate that he had not examined the question whether the properties (amounts) in question were benami properties within the meaning of Section 2(8) of the Act. He had, nonetheless, held the properties to be not benami properties in view of the provisions of Section 26(3) of the Act, which only provided the Adjudicating Authority two options: pass orders holding the properties (amounts) in question not to be benami properties and revoking the Provisional Attachment Orders; or holding the properties (amounts) in question to be benami properties and confirming the Provisional Attachment Orders. Thus, if the petitioners insist that the finding of the Adjudicating Authority is on merits, the orders passed by the Adjudicating Authority would be unsustainable. 22. This Court is of the view that the conclusion of the Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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