# Smt. Meera Pandey v. U.O.I. & Ors

- **Citation:** (2024) 4 ILRA 1002
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-04-25
- **Case number:** Writ Tax No. 11 of 2023
- **Bench:** Vivek Chaudhary, Om Prakash Shukla
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/smt-meera-pandey-v-u-o-i-ors-51726
- **Pages:** 11

## Headnote

Civil Law - Prohibition of Benami Property
Transactions Act, 1988 - Sections 2(8),
2(9), 2(10), 2(12), 24(1) & 24(3) -
Constitution of India, 1950- Article 226- -
Petitioner challenged show cause notice and
provisional attachment order dated 05.01.2023,
alleging constructions on Plot No. 35, Srijan
Vihar Colony, Gomti Nagar, Lucknow, as benami
transactions for her son-in-law. Court held: (1)
No proceedings could be initiated for the plot
purchased before the 2016 amendment to the
Act, as per U.O.I. Vs Ganpati Dealcom Ltd.,
(2023) 3 SCC 315, which declared retrospective
application unconstitutional. (2) Show cause
notice under Section 24(1) lacked sufficient
material to establish "reason to believe"
petitioner was a benamidar, relying solely on
contractor's
St.ment
without
supporting
evidence (Indra Prastha Chemicals (P) Ltd. Vs
CIT,
(2005)
UPTC
53).
(3)
Provisional
attachment order under Section 24(3) invalid
due to absence of material indicating likelihood
4 All. Smt. Meera Pandey Vs. U.O.I. & Ors.
1003
of alienation. (4) "Reason to believe" requires
rational, relevant material, not mere suspicion
(Calcutta Discount Co. Ltd. Vs ITO, (1961) 41
ITR 0191; Johri Lal (HUF) Vs CIT, (1973) 88 ITR
0439). Show cause notice and attachment order
set aside; consequential orders deemed non-est
and void. (Paras 4-27)

Show Cause Notice and Provisional Attachment
Order Set Aside; Writ Petition Allowed.

List of Cases cited:

## Text

1002 INDIAN LAW REPORTS ALLAHABAD SERIES
be issued taking into consideration, the
circumstances of a particular case.

22. In child custody matters, the
remedy
ordinarily
lies
under
the
statutory law, or the personal law, as
applicable in the facts of the case;
however, in cases which justify the
exercise
of
the
extraordinary
discretionary jurisdiction under Article
226, a writ of habeas corpus would be
issued where it is demonstrated that the
detention of minor child, is illegal or
without any authority of law.

23. In the facts of the present case, the
petitioner no. 1 (corpus), who is the minor
son of the petitioner no. 2, born on
01.01.2022 was being detained by the
respondent no. 4 (wife of the brother of the
petitioner no. 2), who is stated to be having
a strained relationship with her husband.
The petitioner no. 1 (corpus), being an
infant of aged about two years, the
petitioner no. 2 (his father), would be the
natural guardian, and the biological mother
of the petitioner-corpus would be entitled
to a right of custody (hizanat) as per the
personal law.

24. Looking to the entirety of the
facts, which are before the Court, the
detention of the petitioner no. 1 (corpus),
by the respondent no. 4, cannot, in any
manner, be legally supported.

25. Having regard to the aforesaid, the
rule issued earlier is made absolute.

26. The petition stands disposed of.

27. The petitioner No. 1 (corpus) is
permitted to be taken back by the petitioner
No. 2 (his father), to the place from where
he has been brought.

28. The demand draft stated to have
deposited in the name of respondent no. 4,
be returned in original to the petitioner no.
2, upon an application to be made before
the Registrar General, in this regard.
----------
(2024) 4 ILRA 1002
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 25.04.2024

BEFORE

THE HON'BLE VIVEK CHAUDHARY, J.
THE HON'BLE OM PRAKASH SHUKLA, J.

Writ Tax No. 11 of 2023

Smt. Meera Pandey ...Petitioner
Versus
U.O.I. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Abhinav Trivedi, Sri Mudit Agarwal

Counsel for the Respondents:
A.S.G.I., Dr. Ravi Kumar Mishra, Kushagra
Dikshit, Sri Manish Misra, Sri Neerav Chitavanshi

Civil Law - Prohibition of Benami Property
Transactions Act, 1988 - Sections 2(8),
2(9), 2(10), 2(12), 24(1) & 24(3) -
Constitution of India, 1950- Article 226- -
Petitioner challenged show cause notice and
provisional attachment order dated 05.01.2023,
alleging constructions on Plot No. 35, Srijan
Vihar Colony, Gomti Nagar, Lucknow, as benami
transactions for her son-in-law. Court held: (1)
No proceedings could be initiated for the plot
purchased before the 2016 amendment to the
Act, as per U.O.I. Vs Ganpati Dealcom Ltd.,
(2023) 3 SCC 315, which declared retrospective
application unconstitutional. (2) Show cause
notice under Section 24(1) lacked sufficient
material to establish "reason to believe"
petitioner was a benamidar, relying solely on
contractor's
St.ment
without
supporting
evidence (Indra Prastha Chemicals (P) Ltd. Vs
CIT,
(2005)
UPTC
53).
(3)
Provisional
attachment order under Section 24(3) invalid
due to absence of material indicating likelihood
4 All. Smt. Meera Pandey Vs. U.O.I. & Ors.
1003
of alienation. (4) "Reason to believe" requires
rational, relevant material, not mere suspicion
(Calcutta Discount Co. Ltd. Vs ITO, (1961) 41
ITR 0191; Johri Lal (HUF) Vs CIT, (1973) 88 ITR
0439). Show cause notice and attachment order
set aside; consequential orders deemed non-est
and void. (Paras 4-27)

Show Cause Notice and Provisional Attachment
Order Set Aside; Writ Petition Allowed.

List of Cases cited:

1. U.O.I. Vs Ganpati Dealcom Ltd., (2023) 3 SCC
315 (Para 4)

2. Indra Prastha Chemicals (P) Ltd. Vs CIT,
(2005) UPTC 53 (Para 16)

3. Calcutta Discount Co. Ltd. Vs ITO, (1961) 41
ITR 0191 (Para 20)

4. CST Vs Bhagwan Industries (Pvt.) Ltd.,
(1973) 31 STC 293 (Para 20)

5. Madhya Pradesh Industries Ltd. Vs ITO,
(1965) 57 ITR 0637 (Para 20)

6. Johri Lal (HUF) Vs CIT, (1973) 88 ITR 0439
(Para 22)

(Delivered by Hon'ble Vivek Chaudhary, J.
&
Hon'ble Om Prakash Shukla, J.)

1. Heard Shri J.N. Mathur, learned
Senior Counsel assisted by Shri Mudit
Agarwal and Ms. Aishwarya Mathur,
learned Counsel for the petitioner, Shri
Surya
Bhan
Pandey,
learned
Senior
Advocate/Deputy Solicitor General of India
assisted by Dr. Ravi Kumar Mishra
representing the respondent no.1/Union of
India and Shri Neerav Chitravanshi and
Shri Kushagra Dixit, learned Counsel for
the respondent nos. 2 and 3.

2. By the present writ petition,
primarily the petitioner has challenged the
show cause notice dated 05.01.2023 issued
under 24(1) of The Prohibition of Benami
Property Transactions Act, 1988 (hereafter
referred to as 'Benami Transactions Act
1988') and provisional attachment order
dated 05.01.2023 issued under Section
24(3) of the Benami Transactions Act,1988.
Petitioner has sought for further reliefs, but,
at the very initial stage, learned counsel for
the petitioner states that the main challenge
is to the aforesaid show cause notice dated
05.01.2023 and the provisional attachment
order dated 05.01.2023. In case the relief is
granted to the said extent rest of the
consequential orders and further actions
would by themselves stand non-est and
void.

3. By the impugned notice under
challenge, the respondents-authorities have
proposed to treat the constructions being
raised by the petitioner on her Plot No.35
Srijan
Vihar
Colony,
Gomti
Nagar,
Lucknow, to be a benami transaction, being
carried out by the petitioner on behalf of
respondent no.5, her son-in-law. The plot in
question was purchased by the petitioner by
a sale deed dated 23.04.2016. The Benami
Transactions Act,1988 was amended w.e.f.
25.10.2016. The sale deed of the petitioner
is admittedly prior to the said amendment.

4. The Supreme Court has considered
the validity of the Benami Transactions
Act,1988 in the case of Union of India Vs.
Ganpati Dealcom Ltd. & others; (2023) 3
SCC 315 and in Paragraph 127, the
Supreme Court has given the following
findings:

"127. In view of the above
discussion, we hold as under:

127.1. Section 3(2)(sic Section 3)
of the unamended 1988 Act is declared as
1004 INDIAN LAW REPORTS ALLAHABAD SERIES
unconstitutional
for
being
manifestly
arbitrary. Accordingly, Section 3(2) of the
2016 Act is also unconstitutional as it is
violative
of
Article
20(I)
of
the
Constitution.

127.2. In rem forfeiture provision
under Section 5 of the unamended 1988
Act, prior to the 2016 Amendment Act, was
unconstitutional
for
being
manifestly
arbitrary.

127.3. The 2016 Amendment Act
was
not
merely
procedural,
rather,
prescribed substantive provisions.

127.4. In rem forfeiture provision
under Section 5 of the 2016 Act, being
punitive in nature, can only be applied
prospectively and not retroactively.

127.5. The authorities concerned
cannot
initiate
or
continue
criminal
prosecution or confiscation proceedings for
transactions entered into prior to the coming
into force of the 2016 Act viz. 25.10.2016. As
a consequence of the above declaration, all
such
prosecutions
or
confiscation
proceedings shall stand quashed.

127.6. As this Court is not
concerned with the constitutionality of such
independent
forfeiture
proceedings
contemplated under the 2016 Amendment
Act on the other grounds, the aforesaid
questions are left open to be adjudicated in
appropriate proceedings."

5. Thus, the purchase of the said land
being prior to coming into force of the
amendment to the Benami Transactions
Act,1988, no proceedings with regard to
the
same
can
be
initiated
by
the
department. The said fact is also admitted
by the respondents in their show cause
notice. The respondents have only initiated
proceedings
with
regard
to
the
constructions of residential house being
raised by the petitioner on the said plot.
The department claims that the petitioner is
a Benamidar of the said constructions
while the son-in-law of the petitioner,
namely Sri Indramani Tripathi, is the
beneficial owner of the said constructions.
However, petitioner disputes the same by
claiming that the department did not have
any material to reach the said conclusion
and the notice is based on the basis of
presumptions, surmises and conjectures and
thus is without jurisdiction. On the other
hand the department submits that the show
cause notice is based upon the sound
evidence and concrete findings and the
same is a show cause notice to which the
petitioner can submit her reply to the
department which shall be considered by
the department.

6. This writ petition was filed in the
year 2023 and on 3.5.2023, the following
interim order was granted by this Court.

"Order on Memo of Petition

Heard.

Let the Counsel for the petitioner
bring on record the reply filed by her to the
impugned show cause notice issued during
pendency of the present writ petition.

Learned Counsel for the Income
Tax Department bring on record statement
of then Assessee/witness in response to the
summons issued to him on 02.12.2022
under Section 131(1A) of the Income Tax
Act, 1961, as referred in the impugned
order.
4 All. Smt. Meera Pandey Vs. U.O.I. & Ors.
1005

As we are seiged with the validity
of jurisdictional notice issued under
Section 24(1) of The Prohibition of Benami
Property Transactions Act, 1988 and the
arguments which are on the verge of
conclusion, list/put up this matter on
05.05.2023 to be taken up immediately
after fresh. Any order referring the matter
to the Adjudicating Officer under Section
24(5) of the Act, 1988 shall not be passed
till the next date of listing.

C.M. Application No. IA/06 of
2023

This
is
an
application
for
amendment supported with an affidavit.

The amendment application is
allowed.

Let necessary amendment, as
prayed, be carried out.

The opposite parties, if so choose,
may file response to the amended portion of
the writ petition."

7. The parties have exchanged their
affidavits and the matter is now being heard
finally.

8. The relevant provisions of the
Benami Transactions Act,1988 for the
purpose of the present case reads as
follows:-

"Section 2(8) benami property"
means any property which is the subject
matter of a benami transaction and also
includes the proceeds from such property;

Section
2(9)
"Benami
Transactions"

(A)
Transaction
or
an
arrangement-

(a)
where
a
property
is
transferred to, or is held by, a person, and
the consideration for such property has
been provided, or paid by, another person;
and

(b) the property is held for the
immediate or future benefit, direct or
indirect, of the person who has provided the
consideration,except when the property is
held by-

(i) a Karta, or a member of a
Hindu undivided family, as the case may
be, and the property is held for his benefit
or benefit of other members in the family
and the consideration for such property has
been provided or paid out of the known
sources of the Hindu undivided family;

(ii) a person standing in a
fiduciary capacity for the benefit of another
person towards whom he stands in such
capacity and includes a trustee, executor,
partner,
director
of
a
company,
a
depository or a participant as an agent of a
depository under the Depositories Act,
1996 and any other person as may be
notified by the Central Government for this
purpose;

(iii)
any
person
being
an
individual in the name of his spouse or in
the name of any child of such individual
and the consideration for suchproperty has
been provided or paid out of the known
sources of the individual;

(iv) any person in the name of his
brother or sister or lineal ascendant or
descendant, where the names of brother or
1006 INDIAN LAW REPORTS ALLAHABAD SERIES
sister or lineal ascendant ordescendant and
the individual appear as joint-owners in any
document, and the consideration for such
property has been provided or paid out of
the known sources of the individual; or

(B)
a
transaction
or
an
arrangement in respect of a property carried
out or made in a fictitious name; or

(C)
a
transaction
or
an
arrangement in respect of a property where
the owner of the property is not aware of, or,
denies knowledge of, such ownership;

(D)
a
transaction
or
an
arrangement in respect of a property where
the person providing the consideration is not
traceable or is fictitious;

Explanation.-For the removal of
doubts, it is hereby declared that benami
transaction shall not include any transaction
involving the allowing of possession of any
property to be taken or retained in part
performance of a contract referred to in
section 53A of the Transfer of Property Act,
1882, if, under any law for the time being in
force,-

(i) consideration for such property
has been provided by the person to whom
possession of property has been allowed but
the person who has granted possession
thereof continues to hold ownership of such
property;

(ii) stamp duty on such transaction
or arrangement has been paid; and

(iii) the contract has been registered.

2(10)
"benamidar"
means
a
person or a fictitious person, as the case
may be, in whose name the benami property
is transferred or held and includes aperson
who lends his name;

2 (12) beneficial owner" means a
person, whether his identity is known or not,
for whose benefit the benami property is
held by a benamidar;

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 subsection (1) specifies any property as being
held by a benamidar referred to in that subsection, a copy of the notice shall also be
issued to the beneficial owner if his identity
is known.

(3) Where the Initiating Officer is
of the opinion that the person 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 [from the last day
of the month in which the the notice under
sub-section (1) is issued.]

(4) The Initiating Officer, after
making such inquires and calling for such
reports or evidence as he deems fit and
4 All. Smt. Meera Pandey Vs. U.O.I. & Ors.
1007
taking into account all relevant materials,
shall, within a period of ninety days [from
the last day of the month in which the
notice under sub-section (1) is issued],-

(a)
where
the
provisional
attachment has been made under subsection (3),--

(i) pass an order continuing the
provisional attachment of the property with
the prior approval of the Approving
Authority, till the passing of the order by
the
Adjudicating
Authority
under
subsection (3) of section 26; or

(ii)
revoke
the
provisional
attachment of the property with the prior
approval of the Approving Authority;

(b) where provisional attachment
has not been made under sub-section (3),-

(i) pass an order provisionally
attaching the property with the prior
approval of the Approving Authority, till the
passing of the order by the Adjudicating
Authority under sub-section (3) of section
26; or

(ii) decide not to attach the
property as specified in the notice, with the
prior approval of the Approving Authority.

(5). Where the Initiating Officer
passes an order continuing the provisional
attachment of the property under subclause (i) of clause (a) of sub-section (4) or
passes an order provisionally attaching the
property under sub-clause (i) of clause (b)
of that sub-section, he shall, within fifteen
days from the date of the attachment, draw
up a statement of the case and refer it to the
Adjudicating Authority.

[Explanation.- For the purposes
of this section, in computing the period of
limitation, the period during which the
proceeding is stayed by an order or
injunction of any court shall be excluded:

Provided that where immediately
after the exclusion of the aforesaid period,
the period of limitation referred to in subsection (4) available to the Initiating
Officer for passing order of attachment is
less than thirty days, such remaining period
shall be deemed to be extended to thirty
days:

Provided
further
that
where
immediately after the exclusion of the
aforesaid period, the period of limitation
referred to in sub-section (5) available to
the Initiating Officer to refer the order of
attachment to Adjudicating Authority is less
than seven days, such remaining period
shall be deemed to be extended to seven
days.]"

9. The case of petitioner is that the
petitioner has been a regular assessee of the
Income Tax department for long and is
regularly filing her Income Tax returns.
Petitioner belongs to an affluent family.
Her husband is a retired IAS Officer and
her son is a successful lawyer practicing in
the High Court at Allahabad. The son-inlaw of the petitioner, respondent no.5, to
whom the department claims to be the
beneficial owner, is an IAS officer of Uttar
Pradesh cadre.

10. Submission of learned counsel for
the petitioner is that the department has no
evidence to prove any benami transaction
or that the petitioner was a Benamidar of
the
constructions
in
question
and
respondent no.5 is the beneficial owner,
while on the other hand, the claim of the
1008 INDIAN LAW REPORTS ALLAHABAD SERIES
department that it is respondent no.5, who
has paid and invested the entire amount
for
the
said
constructions.
The
department in support of the show cause
notice has based its case upon the
statement given by the contractor Sri
Krishna Kumar Dubey, Partner of M/s.
Vishnu Mitra Buildcon.

11. A perusal of the show cause
notice shows that the total value of the
constructions in dispute is around Rs.1.05
crores and out of the same an amount of
Rs.95.00 lakhs has been transferred to
M/s. Vishnu Mitra Buildcon from the
Bank
account
of
petitioner
herself.
Admittedly, the construction of the house
was still underway, when on 5.1.2023 the
show cause notice was issued.

12. Learned counsel for the parties
have taken the Court through the detailed
evidence on the basis of which the notice
dated 5.1.2023 is issued. The only
relevant portion, as per both the parties,
is the statement of Sri Krishna Kumar
Dubey, Partner of M/s. Vishnu Mitra
Buildcon given on 4.1.2023. The relevant
portion of the statement of Sri Krishna
Kumar Dubey reads as follows:-

^^iz'u 9% vkidks nks QksVks 1⁄4uhps
yxh1⁄2 fn[kkbZ tk jgh gSaA d`i;k bldh iqf"V
djsa dh ;s QksVks vkids }kjk Plot No.35,
Srijan Vihar Colony, Gomti Nagar,
Lucknow ij cuk, tk jgs Hkou dh gSaA

mRrj% th gSa Jheku] eq>s fn[kkbZ
x;h ;s nks QksVkst Meera Pandey/Vineet
Pandey/Neelendra
Pandey/
Indramani
Tripathi ds Plot No.35, Srijan Vihar
Colony, Gomti Nagar, Lucknow ij esjs
}kjk fufeZr fd, tk jgs semi-furnished Hkou
dh gh gSaA bl construction dk yxHkx 90%
ls T;knk dk;Z iwjk gks pqdk gSA

--------

iz'u11% Jherh ehjk ik.Ms; dks vki
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pqds gSa\

mRrj% eSa Jherh ehjk ik.Ms; dks izR;{k
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gwaA

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tkurs gSa\

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feJ th ds ek/;e ls feyk FkkA

iz'u13% d`i;k crk,a Jh uhysanz ik.Ms;
ls vkids D;k O;kolkf;d laca/k gSaA

mRrj% uhysanz th us ,d ?kj Plot
No.35, Srijan Vihar Colony, Gomti Nagar,
Lucknow tehu ij cukus dk contract eq>s
fnyok;k FkkA blds vykok esjk ,d nwljk
izkstsDV Hkh fnyok;k tks dh gS&Plot No. 98,
Srijan Vihar Colony, Gomti Nagar, Lucknow
ftldk LokfeRo Dr. Sambhavi Singh dk gSA

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dks tkurs gSa\

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No. 35, Srijan Vihar Colony, Gomti
Nagar, Lucknow ij cu jgs ?kj ds vlyh ekfyd
ogh gSaA muds vkfQl ds LVkQ vkSj mudh iRuh
le; le; ij Hkou dh site ij fuekZ.k ns[kus
vkrs FksA

iz'u15% d`i;k crk;sa dh Plot
No.35, Srijan Vihar Colony, Gomti Nagar,
Lucknow ij cuk, tk jgs Hkou ds fuekZ.k ls
lEcaf/kr [kpksZa ds ckjs esa vkidh ckr fdlls gksrh
Fkh\

mRrj% bl Hkou ds fuekZ.k ds [kpksZa
ls lEcaf/kr ckr Jh uhysanz ik.Ms; th ls gksrh
FkhA tc fuekZ.k lEcU/kh fd'r vdkmaV esa vkrh
Fkh ;k tc eq>s fd'r dh t:jr gksrh Fkh rc
Jh uhysanz ik.Ms; th ls gh ckrphr gksrh FkhA
;g ckrphr dHkh Qksu }kjk ;k dHkh muds
vkfQl esa [kqn tk dj djrk FkkA esjh mudh
eqykdkr muds nksuksa ?kjksa ij gksrh Fkh ftuds
4 All. Smt. Meera Pandey Vs. U.O.I. & Ors.
1009
irs gSa&3/299, Vishal Khand, Gomti Nagar,
Lucknow
rFkk
H.No.57,
Srijan
Vihar
Colony, Gomti Nagar, LucknowA

iz'u16% d`i;k crk,a dh Plot
No.35, Srijan Vihar Colony, Gomti Nagar,
Lucknow ij cuk, tk jgs Hkou ds fuekZ.k ls
lEcaf/kr [kpksZa ds fy, Jh uhysanz ik.Ms; D;k dHkh
uxn esa Hkh iSls nsrs Fks\

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tkus ij Jh uhysanz ik.Ms; uxn esa Hkh iSls ns
fn;k djrs FksA dqy feykdj 'kk;n 15 yk[k
:i;k uxn esa fn;k gksxkA

-------

iz'u20% d`i;k crk,a fd Plot
No.35, Srijan Vihar Colony, Gomti Nagar,
Lucknow
ij
Hkou
dk
fuekZ.k
fdlds
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mRrj% Plot No. 35, Srijan Vihar
Colony, Gomti Nagar, Lucknow ij cu jgs
Hkou dk vlyh LokfeRo Jh bUnzef.k f=ikBh dk
gS] rFkk ;g Hkou Jh bUnzef.k f=ikBh ds mi;ksx
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iz'u21% Plot No. 35, Srijan Vihar
Colony, Gomti Nagar, Lucknow ij cu jgs
Hkou ds fuekZ.k ds nkSjku Hkou ds Lokeh ds :i
esa fuEkkZ.kk/khu Hkou dks ns[kus dkSu dkSu vkrs Fks\

mRrj% egksn;] Hkou ds fuekZ.k ds
nkSjku Jherh oRlyk f=ikBh fuekZ.kk/khu Hkou dks
ns[kus vkrh FkhA^^

13. A perusal of the statement clearly
shows that Sri Krishna Kumar Dubey,
Partner of M/s.Vishnu Mitra Buildcon has
not given any basis or reason as to how he
believes that the original owner of the
constructions is respondent no.5 and even
the department has not put a single question
to Sri Krishna Kumar Dubey with regard to
the basis of his knowledge. In support of
his statement Sri Krishna Kumar Dubey
has not provided any documentary or other
evidence. Similarly, the department has
also not referred to any other evidence in
the show cause notice to support the said
statement.

14. Section 24 (1) of the Benami
Transactions Act states that "where the
Initiating Officer, on the basis of material
in his possession, has reason to believe".
Thus, there are two pre-conditions to the
issuance of the notice under Section 24(1)
of the Benami Transactions Act; (i) The
Initiating Officer should have material in
his possession and; (ii) the material should
be sufficient to cause a reason to believe. It
goes without saying that while interpreting
a taxing statute, the principle of strict
interpretation is to be applied.

15. As per record, in the present case
a mere statement of the contractor without
any substantial supportive evidence is made
the basis of the entire proceedings. Such a
mere statement without any supportive
evidence cannot under law be held to be a
sufficient material in possession of an
Initiating Officer to arrive at a reason to
believe that constructions are benami.
There has to be sufficient material in
possession of the Initiating Officer on the
basis of which he can come to a logical
conclusion that can be called a reason to
believe for initiating proceedings.

16. In the case of Indra Prastha
Chemicals (P) Ltd. Vs. CIT (2005) UPTC
53, a Division Bench of this Court held:-

"........... the 'reason to believe
under Section 147, must be held in good faith
and should have a rational connection and
relevant bearing on the formation of the
belief and should not be extraneous or
irrelevant. Further, this Court in proceedings
under Article 226 of the Constitution of India
can scrutinize the reasons recorded by the AO
for initiating the proceedings under Sections
147/148 of the Act. The sufficiency of the
material cannot be gone into but relevancy
certainly be gone into."
1010 INDIAN LAW REPORTS ALLAHABAD SERIES

17. In the present case except for an
oral statement of a contractor, who has not
given any reason for making such a
statement, and from whom the department
has also not even asked as to on what basis
he is making the said statement, the entire
proceedings are initiated. There is not even
an iota of material placed by the
department before this Court, referred to in
the show cause notice, on the basis of
which the Court could believe the said bare
statement and conclude that a reason to
believe can be arrived at.

18. Admittedly, the petitioner has
already submitted her Income Tax Returns
for the relevant period and the said
proceedings are not yet completed. As
such, in the absence of the same the
department also cannot claim that her
earnings for the relevant year are beyond
her known sources of income.

19. The department-respondents while
making its submissions tried to rely upon
the statement made by an Architect Sri
Sanjay Mathur dated 16.01.2023; a jeweler
namely Sri Vishal Gupta, proprietor of the
firm M/s. Shiv Nath Traders recorded dated
24.01.2023 and the statement of Khazan
Chandra dated 25.1.2023. The department
has also placed reliance upon certain
material collected from the mobile data of
Sri Krishan Kumar Dubey. All the said
statements and data collected are not
referred to in the show cause notice and are
of later date to the show cause notice dated
5.1.2023. The said statements and data
cannot be referred to or relied upon by the
department while defending the impugned
notice dated 5.1.2023, as all the said
evidences are collected by the department
after the notice is issued and cannot be
included in the material in possession of the
Initiating Officer for forming the reason to
believe for issuance of the impugned
notice. It is also not disputed by the
department that an amount of Rs.95.00
lakhs is transferred from the Bank account
of the petitioner to the account of the
construction firm while the construction is
underway and thus nearly the entire amount
is already spent by the petitioner on
constructions from her own account.

20. While interpreting the term
"reason to believe" Courts in Calcutta
Discount Co. Ltd. Vs. Income Tax
Officer & others; (1961) 41 ITR 0191,
CST Vs. Bhagwan Industries (Pvt.) Ltd.
1973 (31) STC 293 (Para9,10, &11),
Madhya Pradesh Industries Ltd Vs. ITO
(1965) 57 ITR 0637 (Paras 3,6), has time
and again held that the words "reason to
believe" are stronger than the words "is
satisfied" or "reason to suspect" and the
Constitutional Courts have consistently
held that the Officer cannot record his
satisfaction for "reason to believe" on an
arbitrary or irrational basis. The same has
to be recorded based upon reasons
supported by relevant material.

21. So far as the issue of maintainability
of the petition, raised by the respondents is
concerned, the Constitutional Courts have
repeatedly held that the basis of a notice
cannot be a mere pretence but must be
supported by sufficient reasons and material.
It is open for the Courts to examine whether
the reasons for the belief have a rational
connection or relevant bearing to the
formation of belief and are not extraneous or
irrelevant.

22. Suffice is to refer the judgment of
Supreme Court in Johri Lal (HUF) Vs.
Commissioner of Income Tax; (1973) 88
ITR 0439, the relevant paragraph no.5
reads as follows:-
4 All. Smt. Meera Pandey Vs. U.O.I. & Ors.
1011

"Before
proceedings
under
Section 34(1)(a) could be validly initiated
the Income-tax Officer must have reasons
to believe that, by reason of the omission or
failure on the part of the assessee to make a
return of his income under Section 22 for
any year or to disclose fully and truly all
material facts necessary for his assessment
for that year, income, profits and gains
chargeable to Income-tax, have escaped
assessment for that year, or have been
unassessed, or assessed at too low a rate,
or have been made a subject matter of the
excessive relief under the Act, or excessive
loss or depreciation allowance have been
computed. The formation of the required
opinion by the Income-tax Officer is a
condition precedent. Without formation of
such an opinion he will not have
jurisdiction to initiate proceedings under
Section 34(1)(a). The fulfilment of this
condition is not a mere formality but it is
mandatory. The failure to fulfil that
condition
would
vitiate
the
entire
proceedings. As held by this Court in Sheo
Nath
Singh
v.
Appellate
Assistant
Commissioner of Income-tax, (Central),
Calcutta , the Income-tax Officer would be
acting without jurisdiction if the reason for
his belief that the conditions are satisfied,
does not exist or is not material or relevant
to the belief -required by this Section. It is
true that the Courts will not go into the
sufficiency of the reasons which persuaded
the
Income-tax
Officer
to
initiate
proceedings under Section 34(1)(a) of the
Act. But the Courts will examine the
relevancy of the reasons which persuaded
the Income-tax Officer to take proceedings
under Section 34(1)(a). The formation of
the required belief is not the only
requirement. The Income-tax Officer is
further required by Section 34 to record his
reasons for taking action under Section
34(1)(a) and obtain the sanction of the
Central
Board
of
Revenue
or
the
Commissioner, as the case may be."
(emphasis added)

23. Thus, in the aforesaid facts &
circumstances, this Court has no hesitation
in holding that there was no material in
possession of the Initiating Officer which
could be held to be sufficient for holding a
reason to believe that the petitioner is a
Benamidar of respondent no.5, her son-inlaw, with regard to the constructions in
question for initiating proceedings under
Section 24(1) of the Benami Transactions
Act.

24. As regards, the order of
provisional attachment under Section 24(3)
of
the
Benami Transactions Act
is
concerned, Section 24(3) requires that
Initiating Officer is of the opinion that the
person in possession of the property held
Benami may alienate the property during
the period specified in the notice. Without
such a satisfaction the property can not be
attached by the Initiating Officer.

25. In the present case, no such
material has been referred to by the
Initiating
Officer
in
the
impugned
attachment order or placed before this
Court which could demonstrate that the
property is likely to be sold and thus
require him to resort to Section 24(3) for
provisional attachment. Thus, the order of
provisional attachment is also without any
basis.

26. In view of the aforesaid, it is held
that
the
show
cause
notice
dated
05.01.2023 issued under 24(1) of the
Benami Transactions Act, is issued without
any relevant material in possession of the
Initiating Officer which would cause him to
have reason to believe to initiate such
1012 INDIAN LAW REPORTS ALLAHABAD SERIES
proceedings and similarly the order of
provisional attachment dated 05.01.2023 is
also held to be without any basis.

27. Thus, the impugned show cause
notice dated 05.01.2023 issued under 24(1)
of the Benami Transactions Act and also
the provisional attachment order dated
05.01.2023 issued under Section 24(3) of
the Act, are hereby set aside. All the
consequential orders and proceedings on
the basis of aforesaid show cause notice
dated
5.1.2023
and
the
provisional
attachment order dated 5.1.2023, stand
non-est and void.

28. The writ petition is allowed.
----------
(2024) 4 ILRA 1012
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.03.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Sales/Trade Tax Revision No. 549 of 2013

The Commissioner, Commercial Tax, U.P.
Lucknow ...Applicant
Versus
S/S. Raj Kumar Amit Kumar,
Jahangeerabad ...Opposite Party

Counsel for the Applicant:
S.C.

Counsel for the Opposite Party:
Sri Suyash Agarwal, Sri R.R. Agarwal (Sr.
Adv.)

Civil Law - Central Sales Tax Act, 1956 -
Section 5(3) - U.P. Value Added Tax Act,
2008 - Sales/Trade Tax Revision - Revisionist
challenged Tribunal's order granting exemption
under Section 5(3) for paddy sales, claiming they
were "sale for export" rather than "sale in the
course of export." Court held: (1) Tribunal's finding
that sales were in the course of export was
supported by certificates of foreign buyers,
purchase orders, bills of lading, and Form-H,
establishing an inseverable link between the sale
and export (St. of Karn. Vs Azad Coach Builders
Pvt. Ltd., (2010) 9 SCC 524). (2) Section 5(3)
exemption applies when sale and export are
inextricably linked, requiring intention to export,
obligation to export, and actual export, which were
satisfied in this case (Babu Kalika Prasad Traders
Vs Commissioner Commercial Tax, 2012 N.T.N.
Vol-49, p. 218). (3) Revisional jurisdiction under
UPVAT Act is limited to correcting jurisdictional
errors or egregious legal mistakes, not reevaluating
factual
findings
unless
perverse;
Tribunal's findings were based on evidence and not
perverse (Hindustan Petroleum Corporation Ltd. Vs
Dilbahar Singh, (2014) 9 SCC 78). (4) First
Appellate Authority erred in ignoring factual
evidence of export linkage, while Tribunal correctly
applied
legal
principles.
Revision
dismissed;
Tribunal's order upheld. (Paras 7-14)

Revision Petition Dismissed.

List of Cases cited:

1. St. of Karn. Vs Azad Coach Builders Pvt. Ltd.,
(2010) 9 SCC 524 (Para 4, 9)

2. Babu Kalika Prasad Traders Vs Commissioner
Commercial Tax, 2012 N.T.N. Vol-49, p. 218
(Para 4)

3. Hindustan Petroleum Corporation Ltd. Vs
Dilbahar Singh, (2014) 9 SCC 78 (Para 13)

4. Mohd. Inam Vs Sanjay Kumar Singhal, (2020)
7 SCC 327 (Para 13)

5. The Commissioner, Commercial Tax U.P. Vs
M/s Godfrey Philips India Ltd., 2024:AHC:22365
(Para 13)

(Delivered by Hon'ble Shekhar B. Saraf, J.)

(Judgement dictated in Open Court)

1. Heard Sri Bipin Kumar Pandey,
learned counsel appearing on behalf of the
revisionist and Sri R.R. Agarwal, learned