The benami show-cause notice came from an Initiating Officer in a city where neither the property nor my client sits. Does that matter?
It is fatal to the notice. The Appellate Tribunal held that an Initiating Officer may act only where one of the three limbs — the benami transaction or property, the benamidar, or the beneficial owner — falls within the territorial jurisdiction assigned to him by the CBDT's notification S.O. 1621(E) dated 18 May 2017. The Mumbai Initiating Officer had none of them, so the notice and everything built on it went, and the adjudication order was set aside without any finding on the merits.
Decided by the ITAT (Justice Manmohan Singh, Chairman, and G.C. Mishra, Member) on 2019-09-11, reported as FPA-PBPT-464/MUM/2019; FPA-PBPT-470/MUM/2019; FPA-PBPT-722/MUM/2019; FPA-PBPT-723/MUM/2019; FPA-PBPT-724/MUM/2019. It bears on section Benami s.3(1), section Benami s.24(1), section Benami s.24(3), section Benami s.24(4), section Benami s.24(5), section Benami s.26(3), section Benami s.28(2), section Benami s.59 of the Income Tax Act 1961, in Appeals and Evidence & Burden of Proof matters.
Territorial jurisdiction is a threshold point that disposes of the whole proceeding without arguing whether the transaction was benami. It is also easily missed, because the information that starts a benami case often comes from an investigation wing in a different city from the property and the parties.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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Divine Spirit Infra Projects Private Limited put Rs. 43,79,29,306 into real estate projects of four Ace group companies in financial year 2015-16, the companies having common shareholders and directors, with the money traced through intermediate entities said to have no genuine business. The Initiating Officer at Mumbai acted on information received on 27 October 2017 from the ADIT (Investigation), Unit-2(2), Mumbai. The properties were in Noida and Greater Noida in Uttar Pradesh, and the benamidar's registered office had moved from Mumbai to Ghaziabad in April 2017, before the show-cause notice was issued. The Adjudicating Authority confirmed the attachment and the appellants came to the Tribunal.
The appeals were allowed on the single ground of the territorial jurisdiction of the Initiating Officer who issued the show-cause notice, and the impugned order was set aside, with liberty to a competent Initiating Officer having jurisdiction to initiate proceedings in accordance with law and no order as to costs. The Tribunal recorded expressly that it had decided nothing on the merits or on any other issue.
The CBDT's notification S.O. 1621(E) dated 18 May 2017 fixed the territorial jurisdiction of Initiating Officers, and on that notification the Mumbai officer's jurisdiction ran to Greater Mumbai and Navi Mumbai while Ghaziabad fell to Kanpur (para 11). The properties were undisputedly at Ghaziabad and the benamidar's address at the date of the show-cause notice was also Ghaziabad, which lies in the Kanpur charge (para 12). Para 4 of the Standard Operating Procedure requires that at least one of the three limbs — the benami transaction or property, the benamidar, or the beneficial owner — fall within the officer's assigned territorial jurisdiction before he can proceed (para 14). None of those criteria was satisfied, so the Mumbai Initiating Officer ought not to have issued the show-cause notice (para 15).
I.O., Mumbai ought not to have issued show cause notice
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Handle my notice → Ask a CA on WhatsAppIt is fatal to the notice. The Appellate Tribunal held that an Initiating Officer may act only where one of the three limbs — the benami transaction or property, the benamidar, or the beneficial owner — falls within the territorial jurisdiction assigned to him by the CBDT's notification S.O. 1621(E) dated 18 May 2017. The Mumbai Initiating Officer had none of them, so the notice and everything built on it went, and the adjudication order was set aside without any finding on the merits. This was decided by the ITAT (Justice Manmohan Singh, Chairman, and G.C. Mishra, Member) and bears on section Benami s.3(1), section Benami s.24(1), section Benami s.24(3), section Benami s.24(4), section Benami s.24(5), section Benami s.26(3), section Benami s.28(2), section Benami s.59 of the Income Tax Act 1961. It is reported as FPA-PBPT-464/MUM/2019; FPA-PBPT-470/MUM/2019; FPA-PBPT-722/MUM/2019; FPA-PBPT-723/MUM/2019; FPA-PBPT-724/MUM/2019. Territorial jurisdiction is a threshold point that disposes of the whole proceeding without arguing whether the transaction was benami. It is also easily missed, because the information that starts a benami case often comes from an investigation wing in a different city from the property and the parties. If it applies to you, the first step is this: Pin down the three limbs on the date of the show-cause notice: where the property is, where the benamidar is, and where the beneficial owner is.
Divine Spirit Infra Projects Private Limited put Rs. 43,79,29,306 into real estate projects of four Ace group companies in financial year 2015-16, the companies having common shareholders and directors, with the money traced through intermediate entities said to have no genuine business. The Initiating Officer at Mumbai acted on information received on 27 October 2017 from the ADIT (Investigation), Unit-2(2), Mumbai. The properties were in Noida and Greater Noida in Uttar Pradesh, and the benamidar's registered office had moved from Mumbai to Ghaziabad in April 2017, before the show-cause notice was issued. The Adjudicating Authority confirmed the attachment and the appellants came to the Tribunal. The matter was decided on 2019-09-11 by the ITAT (Justice Manmohan Singh, Chairman, and G.C. Mishra, Member). On those facts the ITAT held as follows. The appeals were allowed on the single ground of the territorial jurisdiction of the Initiating Officer who issued the show-cause notice, and the impugned order was set aside, with liberty to a competent Initiating Officer having jurisdiction to initiate proceedings in accordance with law and no order as to costs. The Tribunal recorded expressly that it had decided nothing on the merits or on any other issue.
The CBDT's notification S.O. 1621(E) dated 18 May 2017 fixed the territorial jurisdiction of Initiating Officers, and on that notification the Mumbai officer's jurisdiction ran to Greater Mumbai and Navi Mumbai while Ghaziabad fell to Kanpur (para 11). The properties were undisputedly at Ghaziabad and the benamidar's address at the date of the show-cause notice was also Ghaziabad, which lies in the Kanpur charge (para 12). Para 4 of the Standard Operating Procedure requires that at least one of the three limbs — the benami transaction or property, the benamidar, or the beneficial owner — fall within the officer's assigned territorial jurisdiction before he can proceed (para 14). None of those criteria was satisfied, so the Mumbai Initiating Officer ought not to have issued the show-cause notice (para 15). In the words reproduced by the source cited on this page: "I.O., Mumbai ought not to have issued show cause notice"
It was decided by the ITAT on 2019-09-11 and is reported as FPA-PBPT-464/MUM/2019; FPA-PBPT-470/MUM/2019; FPA-PBPT-722/MUM/2019; FPA-PBPT-723/MUM/2019; FPA-PBPT-724/MUM/2019. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section Benami s.3(1), section Benami s.24(1), section Benami s.24(3), section Benami s.24(4), section Benami s.24(5), section Benami s.26(3), section Benami s.28(2), section Benami s.59, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeals were allowed on the single ground of the territorial jurisdiction of the Initiating Officer who issued the show-cause notice, and the impugned order was set aside, with liberty to a competent Initiating Officer having jurisdiction to initiate proceedings in accordance with law and no order as to costs. The Tribunal recorded expressly that it had decided nothing on the merits or on any other issue. It arises in Appeals and Evidence & Burden of Proof matters, on section Benami s.3(1), section Benami s.24(1), section Benami s.24(3), section Benami s.24(4), section Benami s.24(5), section Benami s.26(3), section Benami s.28(2), section Benami s.59 of the Income Tax Act 1961, and was decided by Justice Manmohan Singh, Chairman, and G.C. Mishra, Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Read those against the territorial jurisdiction assigned to the Initiating Officer by CBDT notification S.O. 1621(E) dated 18 May 2017 and check the Standard Operating Procedure's para 4 test. Watch the address of the benamidar at the date of the notice, not at the date of the transaction — a shift of registered office between the two moves jurisdiction. Take the point at the adjudication stage and keep it alive in the grounds of appeal; the Tribunal decided nothing else in this case. Expect the Department to start again before the correct officer — the Tribunal expressly left that open, so preserve the merits arguments.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision applying, affirming, doubting or overruling this order was located. The Appellate Tribunal's own site carries no searchable index of its orders that can be worked through from outside, and the order does not appear on the general case-law databases, so the absence of later treatment reflects how hard this Tribunal's output is to search rather than a settled position. The CBDT notification the order turns on, S.O. 1621(E) dated 18 May 2017, should be checked for later amendment before the point is taken. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This is the Appellate Tribunal under SAFEMA at New Delhi — the tribunal constituted under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act 1976, which also hears appeals under s.46 of the Prohibition of Benami Property Transactions Act 1988. It is NOT the Income-tax Appellate Tribunal. The `itat` tier is used only because the library's vocabulary has no separate value for this Tribunal, and the entry should not be read as an ITAT decision. The order was read on the Tribunal's own site. Para 9 records that the respondent cited the Supreme Court's decision in Chandrabhai K. Bhoir v. Krishna Arjun Bhoir, Civil Appeal No. 6575 of 2018; the Tribunal did not adopt it in its own reasoning, and it is therefore not recorded as followed. The order refers to a Standard Operating Procedure on benami proceedings whose text is not reproduced in the order; para 4 of that SOP is quoted only to the extent set out above. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were allowed on the single ground of the territorial jurisdiction of the Initiating Officer who issued the show-cause notice, and the impugned order was set aside, with liberty to a competent Initiating Officer having jurisdiction to initiate proceedings in accordance with law and no order as to costs. The Tribunal recorded expressly that it had decided nothing on the merits or on any other issue.
TaxSphere, “Ace Infracity Developers v Initiating Officer, BPU-1, Mumbai”, https://taxnotice.vittsphere.com/caselaw/case/ace-infracity-developers-v-initiating-officer-benami-24-territorial-jurisdiction/ (validity last checked 2026-09-16)
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The Initiating Officer has issued a s.24 notice and attached my accounts on the strength of a spreadsheet found in someone else's search. Will the High Court interfere now?
I bought a property from a company that is now said to have held it benami, and the attachment came without any notice to me. Can I get it lifted?
The High Court stopped the Adjudicating Authority from passing its order. Does the one-year limit in s.26(7) run out while the stay is on?
The Appellate Tribunal allowed my benami appeal years ago. After the Ganpati Dealcom recall it has reopened the matter on the Department's review. Can it do that?
