Applicability of Benami Property Act to cash seized-High Court declines to interfere with show cause notice

Applicability of Benami Property Act to Cash seized-High Court declines to interfere with show cause notice as source and nature were in the “special knowledge” of the possessor

ABCAUS Case Law Citation:
ABCAUS 2429 (2018) 07 HC

The petitioner was found in possession of money, the source of which he could not explain. The Income Tax department took custody of the money and they attached it. Thereafter the Department started proceedings under The Prohibition of Benami Property Transactions Act, 1988 (the Act) and issued a show cause notice (SCN).

The Petitioner had challenged the said SCN and contended that money could not be treated as “Benami property” for which it ought to have been the proceeds of some property, which, by itself, ought to be Benami.

It was submitted that the burden lied on the department, at least prima facie, to allege that the money was generated out of the proceeds of a benami property. But no such allegation was levelled in the instant case.

It was contended that thoigh the petitioner has been served with a show cause notice, the authorities, in fact, had already wrongly concluded that the money seized was a benami asset. So the SCN could not be termed a show cause notice. For that reason, the writ petition did not face any the procedural constraint. It was also contended that once the authorities had no jurisdiction, then under Article 226 of the Constitution, even a show-cause notice could be questioned.

On the other hand, the Standing Counsel drawn attention to Section 24(4) of the Act and contended that the SCN only confirmed a decision without concluding about the nature of the proceeds. He also submitted that SCN, pure and simple, was a show-cause notice. And whether the property was tainted lies in the petitioner’s “special knowledge.” Under these circumstances, the petitioner must produce before the authorities sufficient material or place his defence.

The Hon’ble High Court observed that it was a show-cause notice. It only required the petitioner to explain how he came to possess that money as the source of money and its nature were in the “special knowledge” of the possessor. The petitioner could take all possible pleas before the authorities, including the plea about their jurisdiction and also about the discharge of primary burden, if any, on the official’s

The Hon’ble High Court opined that there was no merit in the writ petition because, as is well settled, there lies no writ petition against a show-cause notice.

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