Supreme Court holds the Benami Transactions (Prohibition) Amendment Act, 2016 to be prospective
On 23 August 2022, the Supreme Court, in the case of UOI v Ganpati Dealcom Pvt. Ltd., held that the Benami Transactions (Prohibition) Amendment Act, 2016 (2016 Act) prescribes substantive provisions and would therefore apply prospectively.
In this case, a show cause notice under the 2016 Act was issued to the assessee-company, proposing to treat it as a benamidar for an alleged benami property purchased in 2011. The assessee–company responded to the notice denying the allegations. However, the adjudicating authority rejected these submissions and passed an order under the 2016 Act provisionally attaching the property.
Aggrieved, the assessee-company filed a writ petition before the High Court of Calcutta. A single judge bench passed an order directing the adjudicating authority to conclude the matter within 12 weeks. The assesseecompany thereafter filed an appeal against the order. The High Court quashed the show cause notice on the basis that the provisions of the 2016 Act do not have a retrospective application and would, therefore, not apply to a transaction undertaken in 2011.
Aggrieved by the order of the High Court, the Union of India approached the Supreme Court. The Supreme Court, after analysing the history of benami transactions in India, the framework of Prohibition of Benami Property Transactions Act, 1988 (1988 Act) and the 2016 Act held that the provisions of the 2016 Act are not procedural in nature. The amendments made by the 2016 Act are substantive and would thus apply prospectively. The key observations of the Supreme Court were:
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