A landmark ruling confirms that the Income Tax (I-T) department can seize properties under the anti-benami law even if the actual owner is unknown. The judgment, related to properties worth Rs 3.47 crore in Lucknow, highlights the law’s power to act against assets bought with unaccounted cash, even when the person funding the purchase is untraceable. This decision reinforces the government’s crackdown on benami transactions, especially in the real estate sector, and sets a strong precedent for future cases.
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UP: In an important judgment, a quasi-judicial body has confirmed that the Income Tax (I-T) department can seize properties under the anti-benami law even if the real owner is not identified. This decision came from the Adjudicating Authority established under the Prohibition of Benami Property Transactions (PBPT) Act, 1988.
The ruling emphasizes that the law allows the attachment of properties even when the actual owner or the person funding the property cannot be traced.
The case concerns a situation where the Lucknow unit of the I-T department, in 2023, attached properties in the Kakori area of Lucknow worth over Rs 3.47 crore. These properties were purchased using unaccounted cash by real estate groups, which is a common indicator of benami transactions.
In such transactions, properties are registered under one person’s name (referred to as the “benamidar“) but are actually owned by someone else.
The PBPT Act aims to prevent transactions where assets are purchased in another person’s name but funded secretly by a different individual. During its investigation, the I-T department discovered that the land parcels in question were bought with unaccounted money.
Even though the true beneficiary of the transactions could not be identified at the time, the department proceeded to issue an attachment order for these properties.
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In its decision, the Adjudicating Authority upheld the I-T department’s right to attach five land parcels in Kakori. The ruling clarified that the absence of the real owner’s name does not invalidate the attachment. This case is significant because it highlights how the anti-benami law empowers authorities to act against properties acquired with concealed funds, even if the individual behind the purchase remains untraceable or fictitious.
The law allows the I-T department to attach properties involved in benami transactions, typically specifying the names of both the “benamidar” and the real owner. However, in this instance, the provisional order did not name the actual owner, which raised questions about its legitimacy. The court clarified that under Section 2(9)(D) of the PBPT Act, properties can be attached when the source of funds is untraceable or fictitious.
In this case, the department applied Section 2(9)(A) of the Act, which is usually used when the real owner is identifiable. Even if the incorrect section was invoked, the court stated that the attachment remains valid.
It also referred to a 2009 Supreme Court ruling, which established that an order is not invalidated simply because the cited legal section was incorrect, provided the authority had the power to act.
Ravi Kumar and His Role in the Case
The land parcels were registered under the name of Ravi Kumar, an office boy employed by Excella, a real estate company. The department had also named Pintail Real Estate LLP, Excella Premioinfra LLP, and an individual, Shiv Kumar, as interested parties in the case.
However, the court ruled that there was insufficient evidence against these entities and removed their names from the attachment order.
Ravi Kumar was confirmed as the benamidar, and his connection to the properties was upheld. Additionally, the court identified Haresh Kumar Mishra as an “abettor” in the case and instructed the I-T department to investigate other assets that might have been acquired in Ravi Kumar’s name.
Crackdown on High-Value Benami Transactions
This judgment highlights the I-T department’s increasing focus on high-value benami transactions, especially in the real estate sector.
Despite difficulties in identifying real owners in some cases, the department is intensifying efforts to combat the use of benami properties to hide illicit wealth and evade taxes.
Apart from the Kakori properties, the Lucknow Benami Prohibition Unit has attached five more land parcels in Mohanlalganj worth over Rs 5.68 crore, which are also suspected to involve benami transactions.
Implications for Future Cases
The ruling sets a strong legal precedent for future cases involving benami properties. It establishes that properties can be seized under the PBPT Act even if the true owner is unidentifiable.
This provision will likely be invoked more frequently in similar cases, reinforcing the government’s commitment to tackling benami transactions.
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For property buyers, developers, and investors, this serves as a warning about the serious legal risks of participating in benami deals, especially in sectors like real estate where such practices are more common. The government’s firm stance on eliminating shadow ownership structures continues to strengthen with each new judgment.
“An incorrect reference to a legal section does not invalidate an order if the authority has the power to act.”
This ruling reiterates the government’s resolve to uphold the anti-benami law and signals the growing strength of its enforcement efforts.
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