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Setback to IT dept: SC dismisses plea opposing High Court decision on retro implementation of Benami Act

Supreme Court has dismissed a Special Leave Petition (SLP) filed by the Income Tax Department that Delhi High Court’s decision disallowing retrospective applicability of Benami Transactions (Prohibition) Amendment Act 2016.
The High Court’s decision had followed a Supreme Court ruling on August 23, 2022 (Union of India vs Ganpati Dealcom). In the August 2022 decision, a three-judge bench led by then Chief Justice of India, N V Ramana had declared “unconstitutional and manifestly arbitrary” amendments introduced in the benami law in 2016, which apply retrospectively and can send a person to prison for three years even as it empowers the Centre to confiscate “any property” subject to a benami transaction.
The Income Tax Department filed a review petition against 2022 ruling, which is pending before the Chief Justice of India. The Tax Department used this in its argument against another assesses in the High Court. The High Court dismissed their plea. The Tax Department then moved the apex court but did not get ruling in its favour from the division bench of Justices B.V. Nagarathna and Dipankar Datta.
According to Amit Maheshwari, Tax Partner, AKM Global, the bench held that amended benami proceedings cannot apply retrospectively and accordingly, prosecution and forfeiture action was invalidated. The High Court had followed the Supreme Court’s judgements in Ganpati Dealcom Case.
Calling August 22 judgement a “breakthrough”, Maheshwari said that it had brought much needed clarity to the cases where benami proceedings were initiated against parties for the transactions entered before benami law amendment. “The consistent stand of Supreme Court against retrospective applicability of amended Benami law is a major blow to the tax department. The tax department has all eyes set now on the final decision on the review petition,” he said.
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