Telangana High Court
Tatikonda Mahender Reddy vs The Union Of India on 2 May, 2025
Author: P.Sam Koshy
Bench: P.Sam Koshy
THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE NARSING RAO NANDIKONDA
WRIT PETITION NO.12916 OF 2025
ORDER:
(per Hon'ble Sri Justice Narsing Rao Nandikonda)
This Writ Petition is filed under Article 226 of the
Constitution of India seeking to declare the action of the
respondent No.2 in invoking the provisions of the Prohibition of
Benami Property Transactions Act, 1988 (for short, the Act,
1988) and thereby passing the impugned order, dated
22.02.2025 under Section 24 (4)(b)(i) of the Act, 1988, as
arbitrary, illegal, unconstitutional and without jurisdiction and
consequently, to set aside the same.
2. Heard Sri N.Naveen Kumar, learned counsel for the
petitioners, Sri Gadi Praveen Kumar, learned Deputy Solicitor
General of India, appearing for respondent Nos.1 and 3 and
Ms.K.Mamata, learned Senior Standing Counsel, appearing for
respondent Nos.2 and 4. Perused the record.
3. The brief facts of the case are that during the
process of election to the State Legislative Assembly of the State
of Telangana for the year 2023, criminal proceedings were
initiated against the petitioners vide FIR No.1323 of 2023 on
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the file of Hayathnagar Police Station, Rachakonda
Commissionerate, for the offences punishable under Sections
188, 171-B read with 171-E of the Indian Penal Code, 1860 and
Section 123 (1) (A) of the Representation of Peoples Act, 1951
alleging that on 22.11.2023, when the Inspector of Police,
Hayathnagar Police Station during routine vehicle inspection on
the National Highway 65, intercepted the vehicle i.e., Hyundai
i20 Car bearing No.AP-23-AG-3719, in which petitioner Nos.1,
2 and 4 were travelling, and seized cash amounting to
Rs.2,00,00,000/- to hand over the same to the contesting MLA
candidate i.e., Sri Komatireddy Rajagopala Reddy from
Munugodu Assembly Constituency for Election purpose.
Petitioner Nos.3 and 5 were travelling in Innova Car bearing
No.TS-13-G T/R 7153. Aggrieved by registration of said FIR,
the petitioners filed Crl.P.No.4033 of 2024 before this Court
seeking to quash the proceedings in the said F.I.R. The said
Criminal Petition is pending for adjudication. The learned
Junior Civil Judge-cum-XIV Additional Metropolitan Magistrate,
Hayathnagar, District, vide order, dated 02.05.2024, in
Crl.M.P.No.310 of 2024 in C.C.No.548 of 2024 was pleased to
direct the Investigation Officer to deposit FD of
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Rs.2,00,00,000/- before the Principal Director of Income Tax,
Hyderabad. Pursuant to the warrant, dated 26.06.2024 under
Section 132A of the Income Tax Act, 1961 (for short, 'the Act,
1961') issued by the Principal Director of Income Tax
(Investigation), panchanama was conducted and the alleged
amount was deposited into the account of the Principal Director
of Income Tax, Hyderabad.
4. According to the respondents, the subsequent
investigation was conducted by the Director of Income Tax
(Investigation) Hyderabad. During the course of investigation
summons under Section 131 of the Act, 1961 were issued to
the petitioners to furnish sources of cash of Rs.2.00 crores
seized by the Hayathnagar Police from their possession. None of
them appeared nor furnished any information about sources of
said cash. On receipt of information as it is a potential benami
transaction, approval under Section 23 of the Act, 1988 was
sought from the approving authority for conducting further
enquiry. Accordingly summons under Section 19 of the Act,
1988 were issued to the petitioners on 28.10.2024 and asked
them to appear before the respondent authorities on
04.11.2024. On the said date, none appeared for the petitioners
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and no documents were filed to establish the ownership of
seized cash. Again summons were issued on 07.11.2024
asking the petitioners to appear in person on 8.11.2024. On
that date also, none appeared for the petitioners so also even as
per the bank statements and income tax returns, the sources of
income were insufficient to justify the possession of Rs.2.00
crores by the petitioners. After due enquiry and sufficient
opportunity being provided to the petitioners, a show cause
notice, dated 15.11.2024 was issued under Section 24 (1) of the
Act, 1988 for complying the same on or before 09.12.2024 and
also asking the petitioners to explain as to why the seized cash
found in their possession, and subsequently deposited with the
Principal Director of Income Tax (Investigation), Hyderabad,
should not be treated as 'benami property' under Section 2 (10)
of the Act, 1988. Despite issuance of summons and show
cause notice, there was no response or supporting documents
were submitted by any of the petitioners within the stipulated
period. The details of notices issued/served on the petitioners
are extracted as under:
Sl. Type of Notice DIN/ Date of Mode of Status Remarks
No. /Communication Reference Service Service
Number
1. Summons under Section 19 1.ITBA/COM/F/ 28.10.2024 Registered Not 1.Sri Sampathi
of PBPT Act 17/204- Post/Email complied Shiva Kumar
(1) 2. Sri Tatikonda
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2.ITBA/COM/F/ Mahender Reddy
17/2024-
25/1069982272 3. Sri Nimma
(1) Vinay Kumar
3.ITBA/COM/F/ Reddy
17/2024-
25/1069982539 4. Sri Nimma
(1) Vinay Kumar
4.ITBA/COM/F/ Reddy
17/2024-
25/1069982762 5. Sri Surakanti
(1) Mahender Reddy
5.ITBA/COM/F/
17/2024- failed to appear
25/1069983189 on 04.11.2024
2. Summons under Section 19 1.ITBA/COM/F/ 07.11.2024 Registered Not 1.Sri Sampathi
of PBPT Act 17/2024- Post/Email complied Shiva Kumar
(1) 2. Sri Tatikonda
2.ITBA/COM/F/ Mahender Reddy
17/2024-
25/1070161212 3. Sri Nimma
(1) Vinay Kumar
3.ITBA/COM/F/ Reddy
17/2024-
25/1069982539 4. Sri Nimma
(1) Vinay Kumar
4.ITBA/COM/F/ Reddy
17/2024-
25/1069982762 5. Sri Surakanti
(1) Mahender Reddy
5.ITBA/COM/F/
17/2024- failed to appear
25/1069998318 on 18.11.2024
9 (1)
3. Show cause notice under ITBA/COM/F/1 15.11.2024 Registered Not 1.Sri Sampathi
Section 24 (1) of PBPT Act 7/2024- Post/Email complied Shiva Kumar
(1) 2. Sri Tatikonda
Mahender Reddy
3. Sri Nimma
Vinay Kumar
Reddy
4. Sri Nimma
Vinay Kumar
Reddy
5. Sri Surakanti
Mahender Reddy
failed to appear
on 09.12.2024
4. Show cause notice under ITBA/COM/F/1 27.12.2024 Registered Not 1.Sri Sampathi
Section 24 (1) PBPT Act 7/2024- Post/Email complied Shiva Kumar
(1) 2. Sri Tatikonda
Mahender Reddy
3. Sri Nimma
Vinay Kumar
Reddy
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4. Sri Nimma
Vinay Kumar
Reddy
5. Sri Surakanti
Mahender Reddy
failed to appear
on 06.01.2025
As there was no response from the petitioners within the
stipulated period mentioned in the show cause notice,
respondent No.2 has no option except to proceed with passing
of an ex parte order relying on the evidence available on record.
The beneficiary of seized cash remains unknown and in the
absence of credible information, respondent No.2 came to the
conclusion that it is a 'benami property' as defined under
Section 2 (9) (D) of the Act, 1988.
5. Learned counsel for the petitioners contended that
respondent No.2 passed the impugned order, dated 22.02.2025
under Section 24 (4) (b)(i) of the Act, 1988 declaring the
petitioners to be 'Benamidars' as per Section 2 (10) of the Act,
1988. With regard to the provisions and purport of the Act,
1988, he further submits that the existence of benami property
has not been established by the respondent authorities and
they have not been linked to the alleged seized cash to 'benami
property', which could ultimately give the transaction a benami
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color. He further submitted that without establishing the
existence of 'benami property' or the factum of benami
transaction in relation to a Benami property, respondent No.1
has illegally classified the petitioners as 'Benamidars.'
6. Learned counsel further submitted that the
impugned order suffers from patent illegality as respondent
No.2 failed to disclose the material particulars of the
transactions on the basis of which the petitioners were declared
as "Benamidars." He further contended that the said
unclaimed cash of Rs.2.00 crores cannot itself be considered as
'benami property', in the absence of fictitious transaction, so as
to invoke the provisions of the Act, 1988. He further contended
that the seized amount would not come within the definition of
'benami property' and learned counsel for the petitioners tried
to point out the definition of 'benami property' under Section 2
(8) of the Act, 1988, which means any property which is the
subject matter of a benami transaction, which includes the
proceeds from such property. He also pointed out to Section 2
(10) 'Benamidar' as per whichmeans 'a person or a fictitious
person, as the case may be, in whose name the benami property
is transferred or held and includes a person who lends his
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name' and Section 2 (26) defines the 'property' means 'broadly
as assets of any kind, whether movable or immovable, tangible
or intangible, corporeal or incorporeal and includes any right or
interest in the property, as well as legal documents or
instruments evidencing title or interest in the property.'
Learned counsel for the petitioners also tried to impress upon
this Court that the said cash which is said to have been seized
does not come within the meaning of 'benami property.' In
support of his contentions he placed reliance on the following
judgments in T.Raja v. K.Visakh 1 , Jaydayal Poddar
(Deceased) through L.Rs and another v. MST Bibi Hazra and
others 2 , Mangathai Ammal (Died) through legal
representatives and others v. Rajeswari and others 3 ';
Communication and Consultants and another v. Surendra
Kerdile 4 , Niharika Jain and others v. Union of India and
others 5 ; Calcutta Discount Co.Ltd v. Income Tax Officer,
Companies District I Calcutta and another 6 and PHR Invest
Educational Society v. UCO Bank and others 7
(2018) 100 Taxmann.com 256 (PBPTA-AT)
(1974) 1 Supreme Court Cases 3
(2020) 17 Supreme Court Cases 496
(2020) 16 Supreme Court Cases 411
2019 SCC Online Raj 1640
(1961) 41 ITR 191
(2024) 6 Supreme Court Cases 579
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7. On the other hand, Senior Standing Counsel for
respondent Nos.2 an 4, appearing for the Department
submitted that there is no error committed by respondent No.2
in passing the impugned order and that before passing the
impugned order, the petitioners were given ample opportunity
to appear before the authorities concerned for adjudication as
to whether the seized cash comes under 'benami property' and
the petitioners can be termed as 'benamidars'. As the
petitioners did not choose to appear before the concerned
authority though sufficient opportunity was given, respondent
No.2 passed the impugned order and there are no grounds to
interfere with the same and hence, she prays to dismiss the
Writ Petition.
8. Admittedly, the petitioners are not claiming right or
ownership over the seized cash. He also contended that the
petitioners do not even know the owner of the said cash or
sources of the said cash. Admittedly, the word 'beneficial
owner' defined under Section 2 (12) of the Act 1988 was
mentioned as 'unknown'. Though as per record, notices under
Section 19 of the Act, 1988 were issued to the petitioners, none
of them appeared before the concerned authority i.e., the
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Deputy Commissioner of Income Tax & Initiating Officer under
the Prohibition of Benami Property Transactions Act, 1988.
Since petitioners did not choose to appear on any of the dates
mentioned in the notices, respondent No.2 has no other option
and he was forced to pass the impugned order and came to the
conclusion that the transaction is 'benami' and said cash seized
is a 'benami property.' Further, it is also not the case of the
petitioners that they are not being provided any opportunity to
put up their case or the respondents have committed any
breach of non compliance of principles of natural justice.
Admittedly, the petitioners disown the said property seized and
also did not choose to place before the authorities as to the
details of ownership of the said property.
9. A perusal of the record would clearly show that the
petitioners were given ample opportunity before passing the
impugned order, as such under Article 226 of the Constitution
of India, this Court cannot sit over the impugned order passed
by respondent No.2 as an appellate authority and so also to
adjudicate upon the provisional attachment order passed by
respondent No.2, as respondent No.3, being the Adjudicating
Authority, which is competent to sit over the matter and
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adjudicate upon the contentions of the petitioners. On perusal
of the entire material placed before this Court, this Bench is of
the considered opinion that though petitioners were granted an
opportunity, they do not even choose to respond to the notices
or appear before the respondents to put up their case. Even to
substantiate their contentions that they do not come within the
meaning of 'benamidars.' In the absence of the same, this
Court is of the opinion that there is no violation of principles of
natural justice and as such nothing is there to interfere with
the impugned order passed by respondent No.2. It is for the
petitioners to seek appropriate remedies before Adjudicating
Authority, which is appropriate authority to decide over the
facts whether the petitioners are 'benamidars' and the property
under possession is 'benami property' or not. Further the
judgments relied upon by the petitioners are relating to
attachment of salary, bank account; purchase of property;
availment of loan from the respondent-Bank by mortgaging the
properties and borrower defaulted in payment of loan, the said
bank initiated proceedings under SARFAESI, Act, 2002 and
auction sale notice was served. Therefore, the judgments relied
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upon by the petitioners are not applicable to the present facts
of the case.
10. Having regard to the submissions made by learned
counsel on either side and taking into consideration the facts
and circumstances of the case, this Bench is of the opinion that
no substantial ground is made out by the petitioners to seek
indulgence of this Court to interference with the impugned
order, dated 22.02.2025, passed by respondent No.2.
11. Accordingly, the Writ Petition is dismissed. There
shall be no order as to costs.
Miscellaneous petitions, if any, pending in this writ
petition shall stand closed.
_________________________________
JUSTICE P.SAM KOSHY
__________________________________________
JUSTICE NARSING RAO NANDIKONDA
Date:02.05.2025
YVL
