RAKESH CHANDULAL MEHTA vs. ASSISTANT COMMISSIONER OF INCOME TAX

C/SCA/14329/2020 ORDER DATED: 14/09/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 14329 of 2020 ============================================= RAKESH CHANDULAL MEHTA Versus ASSISTANT COMMISSIONER OF INCOME TAX ============================================= Appearance: PARIMALSINH PARMAR(7296) for the Petitioner(s) No. 1 MR MR BHATT SR. ADVOCATE for M R BHATT & CO.(5953) for the Respondent(s) No. 1 NOTICE SERVED for the Respondent(s) No. 2,3 ============================================= CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI

Date : 14/09/2022

ORAL ORDER (PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR) 1. We have heard of Mr. Parilamsinh Parmar, learned advocate appearing on behalf for the petitioner, Mr. M.R. Bhatt, learned Senior Advocate appearing for respondent No.1 namely the Initiating Officer as defined under Section 2(19) read with Sections 18(1), 24 of the Prohibition of Benami Property Transactions Act, 1988 (for short ‘the Act’) and Mr. Devang Vyas, learned Additional Solicitor General of India appearing for respondent Nos.2 Adjudicating Authority as defined under Section 2(1) read with Sections 18(1)(d) and 24(3) of the Act. Page 1 of 4

C/SCA/14329/2020 ORDER DATED: 14/09/2022 Perused the records. 2. Petitioner has prayed for quashing of the attachment order passed under Section 24(3) of the Benami Transactions (Prohibition) Amendment Act, 2016 and the all consequential proceedings initiated pursuant thereto. 3. In this petition, essentially petitioner is seeking for writ of certiorari to declare the provisions of Benami Transactions (Prohibition) Amendment Act, 2016 being prospective and consequently the notices issued to the petitioner and quashing of the orders passed pursuant to the same. 4. Having heard the learned advocates appearing for the parties, we are of the considered view that aforesaid issue is no more res integra in view of the judgment of the Hon’ble Apex Court rendered in Civil Appeal No.5783 of 2022 dated 23.8.2022 where-under Hon’ble Apex Court after considering the contentions raised thereunder as well as relevant provisions of the Act pressed into service, has arrived at the following conclusion: “18.1 In view of the above discussion, we hold as under: Page 2 of 4

C/SCA/14329/2020 ORDER DATED: 14/09/2022 a) Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution. b) In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary. c) The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. d) In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively. e) Concerned authorities 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. f) 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. As could be seen from the aforesaid judgment, it has been clearly held by the Hon’ble Apex Court that authorities cannot initiate or continue criminal prosecution or confiscation Page 3 of 4

C/SCA/14329/2020 ORDER DATED: 14/09/2022 proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016 and as a consequence thereof, all such prosecutions and confiscation proceedings which had been initiated came to be quashed. 6. In that view of the matter, we are of the considered view prosecution and initiation of proceedings in the instant case being pursuant to the Amendment Act the declaration made by the Hon’ble Apex Court in paragraph 18(e) would squarely be applicable and as such, impugned attachment order stands quashed and all consequential proceedings initiated thereto. We also make it clear that question which has been kept open by the Hon’ble Apex Court in paragraph 18.1(f), would squarely be applicable to the facts on hand also. 7. With aforesaid observation, Special Civil Application stands allowed and we make no order as to costs. (ARAVIND KUMAR,CJ) (ASHUTOSH J. SHASTRI, J) phalguni Page 4 of 4