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?
No. On this clarification application the Delhi High Court directed that the period during which its interim order of 21 December 2020 continues to operate shall be excluded in computing the period of limitation under s.26(7) of the Prohibition of Benami Property Transactions Act. A coordinate Bench had earlier clarified in similar circumstances that the Explanation to s.26(7) applies, so the one-year period does not expire on the expiry of a year from the end of the month in which the s.24(5) reference was received.
Decided by the High Court (Sanjeev Sachdeva J) on 2022-02-15, reported as W.P.(C) 9841/2019 with CM APPL. 8249/2022 (High Court of Delhi). It bears on section Benami s.24(5), section Benami s.26(7) of the Income Tax Act 1961, in How Tax Law Is Read and Appeals matters.
A party who has obtained a stay of the adjudication cannot assume the reference lapses while the stay holds. This is the order to have in hand when the department seeks to resume adjudication after a long interim restraint, and equally when a party argues the reference has died of limitation.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
In a writ petition by the Initiating Officer, the Delhi High Court had by order dated 21 December 2020 directed that the Adjudicating Authority might continue the proceedings but shall not pass the final adjudication order. Respondent no. 2 applied for clarification of that order, its senior counsel submitting that the restraint continued to date and that the Adjudicating Authority had accordingly not passed the final order (paras 1 and 2). Notice was issued and accepted by counsel for the petitioner and for respondent no. 3 (para 3). Counsel referred to an order dated 10 September 2021 of a coordinate Bench in the writ petition filed by the petitioner, in which, in similar circumstances, it had been clarified that the Explanation to s.26(7) applies and that the limitation period under s.26(7) would not expire on the expiry of one year from the end of the month in which the reference under s.24(5) was received (para 4).
It was directed that the period during which the interim order dated 21 December 2020 continues to operate shall be excluded for the purposes of computing the period of limitation as envisaged under s.26(7) of the Prohibition of Benami Property Transactions Act 1988 (para 5). The application was disposed of in those terms and the order was given dasti (paras 6 and 7).
The order proceeds on the coordinate Bench order of 10 September 2021 in the same petitioner's writ petition, which had clarified in similar circumstances that the Explanation to s.26(7) applies with the consequence that the one-year period does not expire merely on the expiry of one year from the end of the month in which the s.24(5) reference was received (para 4). On that footing the Court excluded the period of its own interim restraint (para 5). There is no independent construction of s.26(7) or of its Explanation in this order.
the period during which the interim order dated 21.12.2020 continues to operate shall be excluded
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppNo. On this clarification application the Delhi High Court directed that the period during which its interim order of 21 December 2020 continues to operate shall be excluded in computing the period of limitation under s.26(7) of the Prohibition of Benami Property Transactions Act. A coordinate Bench had earlier clarified in similar circumstances that the Explanation to s.26(7) applies, so the one-year period does not expire on the expiry of a year from the end of the month in which the s.24(5) reference was received. This was decided by the High Court (Sanjeev Sachdeva J) and bears on section Benami s.24(5), section Benami s.26(7) of the Income Tax Act 1961. It is reported as W.P.(C) 9841/2019 with CM APPL. 8249/2022 (High Court of Delhi). A party who has obtained a stay of the adjudication cannot assume the reference lapses while the stay holds. This is the order to have in hand when the department seeks to resume adjudication after a long interim restraint, and equally when a party argues the reference has died of limitation. If it applies to you, the first step is this: Work out the s.26(7) date from the end of the month in which the Adjudicating Authority received the reference under s.24(5), then subtract any period of court-ordered restraint.
In a writ petition by the Initiating Officer, the Delhi High Court had by order dated 21 December 2020 directed that the Adjudicating Authority might continue the proceedings but shall not pass the final adjudication order. Respondent no. 2 applied for clarification of that order, its senior counsel submitting that the restraint continued to date and that the Adjudicating Authority had accordingly not passed the final order (paras 1 and 2). Notice was issued and accepted by counsel for the petitioner and for respondent no. 3 (para 3). Counsel referred to an order dated 10 September 2021 of a coordinate Bench in the writ petition filed by the petitioner, in which, in similar circumstances, it had been clarified that the Explanation to s.26(7) applies and that the limitation period under s.26(7) would not expire on the expiry of one year from the end of the month in which the reference under s.24(5) was received (para 4). The matter was decided on 2022-02-15 by the High Court (Sanjeev Sachdeva J). On those facts the High Court held as follows. It was directed that the period during which the interim order dated 21 December 2020 continues to operate shall be excluded for the purposes of computing the period of limitation as envisaged under s.26(7) of the Prohibition of Benami Property Transactions Act 1988 (para 5). The application was disposed of in those terms and the order was given dasti (paras 6 and 7).
The order proceeds on the coordinate Bench order of 10 September 2021 in the same petitioner's writ petition, which had clarified in similar circumstances that the Explanation to s.26(7) applies with the consequence that the one-year period does not expire merely on the expiry of one year from the end of the month in which the s.24(5) reference was received (para 4). On that footing the Court excluded the period of its own interim restraint (para 5). There is no independent construction of s.26(7) or of its Explanation in this order. In the words reproduced by the source cited on this page: "the period during which the interim order dated 21.12.2020 continues to operate shall be excluded" The decision followed or applied Order dated 10 September 2021 of a coordinate Bench of the Delhi High Court in the petitioner's writ petition - followed on the application of the Explanation to s.26(7).
It was decided by the High Court on 2022-02-15 and is reported as W.P.(C) 9841/2019 with CM APPL. 8249/2022 (High Court of Delhi). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section Benami s.24(5), section Benami s.26(7), 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 department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. It was directed that the period during which the interim order dated 21 December 2020 continues to operate shall be excluded for the purposes of computing the period of limitation as envisaged under s.26(7) of the Prohibition of Benami Property Transactions Act 1988 (para 5). The application was disposed of in those terms and the order was given dasti (paras 6 and 7). It arises in How Tax Law Is Read and Appeals matters, on section Benami s.24(5), section Benami s.26(7) of the Income Tax Act 1961, and was decided by Sanjeev Sachdeva J. 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 the Explanation to s.26(7) before arguing lapse; a stay against passing the final order is the classic case it covers. If you are seeking a stay of the adjudication, expect the period to be excluded and plan the timetable on that footing rather than on a hoped-for lapse. Where the restraint stopped only the final order and not the proceedings, say so; the interim order here allowed the Adjudicating Authority to continue proceedings and only barred the final adjudication order.
Searched for later treatment; none was found. That is not the same as a source affirming it. No decision applying, affirming, doubting or overruling this order was located from the documents opened. It is an order on a clarification application and contains no reasoning of its own on s.26(7), so its weight is limited. The order does not rest on Union of India v. Ganpati Dealcom and is not affected by the recall of that judgment on 18 October 2024 in Review Petition (Civil) No. 359 of 2023, 2024 INSC 799. 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 a short order on CM APPL. 8249/2022 in W.P.(C) 9841/2019, not a reasoned judgment, and it should be cited for what it is. The coordinate Bench order of 10 September 2021 that it follows is referred to only by date; the case number of that matter is not given on the face of this order and it could not be identified, so the underlying reasoning on the Explanation to s.26(7) has not been read. The main writ petition was not decided by this order. The document carries no neutral citation. 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.
It was directed that the period during which the interim order dated 21 December 2020 continues to operate shall be excluded for the purposes of computing the period of limitation as envisaged under s.26(7) of the Prohibition of Benami Property Transactions Act 1988 (para 5). The application was disposed of in those terms and the order was given dasti (paras 6 and 7).
TaxSphere, “Initiating Officer, ACIT (Benami Prohibition) v Appellate Tribunal”, https://taxnotice.vittsphere.com/caselaw/case/initiating-officer-v-appellate-tribunal-benami-26-7-exclusion/ (validity last checked 2026-09-16)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
The adjudication order is dated inside the one-year period in s.26(7), but the certified copy reached me weeks after it expired. Is the order time-barred?
The benami show-cause notice came from an Initiating Officer in a city where neither the property nor my client sits. Does that matter?
