CHONARI KAMMUKUTTY, vs. THE ASSISTANT COMMISSIONER OF INCOME TAX,

WP(C)/2595/2020HC KeralaKLHC01007321202017 January 2023Author: HONOURABLE MR. JUSTICE GOPINATH P.41 pages
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What were the facts?

These writ petitions were filed by various individuals, including Shri. Chonari Kammukutty, Shri. Siddique K.K., Shri. Swalih K.K., Shri. Younus Salim, and Shri. P.M. Sharjith. The petitioners challenged actions taken by the Assistant Commissioner of Income Tax (Benami Prohibition Unit) and the Adjudicating Authority under the Benami Property Transactions Act, 1988. The petitions were filed in the High Court of Kerala at Ernakulam. The matters were heard along with connected cases on January 17, 2023. The core of the dispute revolves around the application of the Benami Property Transactions Act, 1988, and its amendments.

What did the High Court hold?

The High Court held that the issues raised in these writ petitions are covered by the judgment of the Supreme Court in Union of India & Anr. v. M/s. Ganpati Dealcom Pvt.Ltd.; 2022 LiveLaw (SC) 700. Following the Supreme Court's decision, the High Court declared that Section 3(2) of the unamended 1988 Act and Section 3(2) of the 2016 Act are unconstitutional. It was also held that the in rem forfeiture provision under Section 5 of the unamended Act of 1988 was unconstitutional. The Court found that the 2016 Amendment Act prescribed substantive provisions and that the in rem forfeiture provision under Section 5 of the 2016 Act, being punitive, can only be applied prospectively. Consequently, authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to October 25, 2016. All such proceedings initiated for pre-2016 transactions shall stand quashed. The Court also noted that questions concerning the constitutionality of independent forfeiture proceedings under the 2016 Act on other grounds were left open for adjudication in appropriate proceedings. The amended provisions of the Prohibition of Benami Property Transactions Act, 1988, will apply only if the transactions were entered into on or after October 25, 2016.

What were the issues?

1. Whether Section 3(2) of the unamended Benami Property Transactions Act, 1988, and Section 3(2) of the Benami Property Transactions Act, 2016, are unconstitutional for being manifestly arbitrary and violative of Article 20(1) of the Constitution. 2. Whether the in rem forfeiture provision under Section 5 of the unamended Benami Property Transactions Act, 1988, was unconstitutional for being manifestly arbitrary. 3. Whether the Benami Property Transactions Act, 2016, was merely procedural or prescribed substantive provisions. 4. Whether the in rem forfeiture provision under Section 5 of the Benami Property Transactions Act, 2016, being punitive in nature, can only be applied prospectively and not retroactively. 5. Whether concerned authorities can initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the Benami Property Transactions Act, 2016 (i.e., prior to October 25, 2016). Assessee's Contention: The petitioners implicitly argued that the provisions of the Benami Property Transactions Act, 1988, as amended, should not be applied retrospectively to transactions entered into before the amendments, particularly before October 25, 2016. They relied on the Supreme Court's judgment in Union of India & Anr. v. M/s. Ganpati Dealcom Pvt.Ltd. Revenue's Contention: The judgment does not explicitly record the revenue's arguments, but their actions of initiating proceedings suggest they were seeking to apply the Act and its amendments to the transactions in question.

Which sections of the Income-tax Act were involved?

Section 3(2),Section 5

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. TUE AY, THE 17TH DAY OF JANUARY 2023 / 27TH POUSHA, 1944 WP(C) NO. 2577 OF 2020 PETITIONER: SHRI.CHONARI KAMMUKUTTY, AGED 66 YEARS, S/O.KUNCHIPOCKER, ARODIYIL HOUSE, TWINS PALACE, CHEMMAD, T ALAPARA ROAD, MUNNIYOOR, THIRURANGADI, MALAPPURAM DISTRICT-676 306. BY ADVS. M.P.SHAMEEM AHAMED HARISH R. MENON CYRIAC TOM RESPONDENTS: 1 THE ASST. COMMISSIONER OF INCOME TAX (BENAMI PROHIBITION UNIT ), GROUND FLOOR, POORNIMA BUILDING, NEAR MANORAMA JUNCTION, PANAMPILLY NAGAR, KOCHI-682 036. 2 THE ADJUDICATING AUTHORITY UNDER THE BENAMI PROPERTY TRANSACTIONS ACT, 1988, ROOM NO.26, 4TH FLOOR, JEEVAN DEEP BUILDING, PARLIAMENT STREET, NEW DELHI-110 001. 3 UNION OF INDIA (REPRESENTED BY FINANCE SECRETARY), MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, ROOM 46, NORTH BLOCK, NEW DELHI0110 00. *4 ADDL.R4. FEROS V.P., SALEENA MANZIL, CALICUT UNIVERSITY P.O, MALAPPURAM DISTRICT, PIN 673635. (ADDL.R4 IS IMPLEADED AS PER ORDER DATED 15/09/2021 IN IA.NO.1/2021 IN WP(C)2577/2020) BY ADVS. K.P.SATHEESAN (SR.) P.MOHANDAS (ERNAKULAM) S.K.ADHITHYAN SABU PULLAN GOKUL D. SUDHAKARAN

W.P.(C)No.2577/2020 & Con.cases

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