HC sets aside relief to suspected benami firm

A division bench of Justice R Mahadevan and Justice Mohammed Shaffiq passed the order on allowing the batch of appeal petitions by the Adjudicating Authority under the Prohibition of Benami Property Transactions Act, 1988 and the Income Tax Department challenging the order of a single judge dated 09.04.2021 that allowed a batch of writ petitions by Anuttam Academic Institutions, a firm of MARG group.

M Sheela, counsel, Income Tax department submitted that the very contention of the original writ petitioners (respondents in this case) before the single judge is non-maintainable as they wanted a direction to quash the show cause notice issued by the department after a search on their premises.

“The IT had issued the show cause notice based on the documents recovered. The show cause was why they should not be attached as the benamidars of Marg group of companies. However, they had challenged the show cause notice on grounds of limitations,” IT standing counsel Sheela argued.

The bench held that the single judge without going into the question of maintainability of the writ petitions, travelled into the case on the ground of limitation raised by the respondents/writ petitioners, as prescribed under Section 26 (7) of the Prohibition of Benami property transactions Act, 1988 and rendered a finding on the same.

“Therefore, this court has to necessarily test the said order under appeal in the light of the provisions of the Act and the applicable legal principles. Accordingly, this court has reached the firm conclusion that the orders passed by the first appellant do not suffer from infirmity on the ground of alleged violation of Section 26 (7) of the Act,” the bench ruled.