TMI Blog2018 (9) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purposes of provisionally attaching the property till the IO completes his inquiry pursuant to the show cause notice issued under Section 24(1) of the Act. It is also relevant to note that an Order of Provisional Attachment under Section 24(3) of the Act cannot exceed period of ninety days from the date of issuance of the show cause notice under Section 24(1) of the Act. It is apparent that the Adjudicating Authority had set aside the Provisional Attachment Orders passed under Section 24(3) and 24(4)(a)(i) of the Act only on the ground that the IO had not followed the procedure in terms of the scheme of Section 24 of the Act. The Adjudicating Authority had not examined the issue whether the properties (amounts) in question were benami properties in terms of Section 2(8) of the Act - this Court finds no reason which would preclude the IO from issuing a fresh show cause notice and curing the procedural defect as observed by the Adjudicating Authority. The principles analogous to res judicata do not apply, as the Adjudicating Authority has not taken any decision on the merits of the matter; that is, he has not decided whether the sums deposited in the bank accounts of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 On 08.02.2017, the IO issued a show cause notice under Section 24(1) of the Act calling upon Ms Sunita Gupta to explain as to why an order under Section 24(4)(a)(i) of the Act should not be passed continuing the Provisional Attachment Order passed under Section 24 (3) of the Act. It was alleged that Sh Nitin Jain was the beneficial owner of the sum of ₹2,99,000/-, which was deposited in the personal account of Ms Sunita Gupta. 3.3 In compliance of the aforesaid show cause notice, the petitioner as well as Sh Ni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency 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 transaction. (1) Where the Initiating Officer, on the basis of material in his possession, 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 why the property should not be treated as benami property. (2) Where a notice under sub-section (1) specifies any property as being held by a benamidar refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect 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 sub-section (3) of Section 24 of the Act indicates that the IO may issue an Order of Provisional Attachment if he is of the opinion that the person in possession of the property held benami would alienate such property during the period specified in the notice; that is, the time provided by the IO for the noticee to show cause as to why such property should not be treated as a benami property. 8. It is, at once, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case was issued on 08.02.2017, i.e. much after 25.01.2017, when the order under section 24(3) was passed. Section 24(1) of the Act provides that where the I.O., on the basis of material in his possession, has a reasons to believe that any person is a Benamidar in respect of the property he may, after recording reasons in writing, issue a notice to the person to show cause within such time as may be spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cludes 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 and confirm the Provisional Attachment Orders. 13. The question whether the Adjudicating Officer could independently conclude whether the properties (amounts) in question are benami properties notwithstanding any procedural defect in issuance of the Orders of Provisional Attachment is a contentious issue. This Court is, prima facie, of the view that the Adjudicating Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 violating the procedure and/or the principles of natural justice. In the aforesaid context, the Division Bench of Andhra Pradesh High Court has observed as under:- Assuming that section 35 of the Central Excise Act does not clothe the appellate authority with power to remand the matter to the officer whose orders is appealed against, nothing stands in the way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Adjudicating Authority must be read in the context of its reasons. As noticed above, the orders of the Adjudicating Authority are founded on the basis that the IO did not follow the procedure as required under Section 24 of the Act. Thus, the only manner, in which the orders passed by the Adjudicating Authority dated 21.05.2018 under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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