Can benami proceedings be taken against me for a property bought before October 2016?
On the current position, yes, because the judgment that said otherwise has gone. In 2022 the Supreme Court held that the 2016 amendment to the Prohibition of Benami Property Transactions Act created new substantive offences and could not operate on transactions before 25 October 2016, struck down s.3(2) and s.5 of the un-amended 1988 Act, and directed pre-amendment prosecutions and confiscations to be quashed. On 18 October 2024 it recalled that judgment in its entirety, holding that constitutional validity had been decided with no lis and no contest between the parties, and restored the appeal for fresh hearing.
Decided by the Supreme Court (2022 judgment: N.V. Ramana, CJI, Krishna Murari and Hima Kohli, JJ. 2024 recall order: Dr D.Y. Chandrachud, CJI, Pamidighantam Sri Narasimha and Manoj Misra, JJ) on 2022-08-23, reported as [2022] 141 taxmann.com 389 (SC); [2022] 289 Taxman 177 (SC); [2022] 447 ITR 108 (SC); (2023) 3 SCC 315 (judgment of 23-8-2022, Civil Appeal No. 5783 of 2022). Recalled by [2024] 167 taxmann.com 525 (SC); [2024] 301 Taxman 313 (SC); [2025] 474 ITR 354 (SC) (order of 18-10-2024 in Review Petition (Civil) No. 359 of 2023). It bears on section Benami Act s.2(8), section Benami Act s.3, section Benami Act s.5, section Benami Act s.24, section Benami Transactions (Prohibition) Amendment Act 2016 of the Income Tax Act 1961, in Evidence & Burden of Proof and How Tax Law Is Read matters.
A great many replies and appeals were built on the 2022 ruling to have pre-2016 benami proceedings quashed, and that foundation has been removed; anything still pending on that ground needs rethinking. The recall was on a procedural footing rather than a rejection of the prospectivity reasoning, so the substantive question is open rather than decided against the taxpayer. Until the restored appeal is heard, the safest assumption is that pre-25 October 2016 proceedings are live.
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The company bought property in its own name from various sellers on 2 May 2011. Its shareholding was later acquired by other companies at a discounted price, and two of its directors were also directors of the purchasing company. The Initiating Officer invoked s.24(1) as amended in 2016, issued notice treating the property as benami and the company as a benamidar within s.2(8), and provisionally attached the property under s.24(4)(b)(i). The Calcutta High Court held that the 2016 Amendment Act was new legislation which, absent an express provision, could not reach contraventions at an earlier point of time, and quashed the proceedings. The Union appealed. The only question framed for decision was whether the 1988 Act as amended in 2016 has prospective effect; no party challenged the constitutional validity of the un-amended provisions.
In 2022 the Court affirmed the Calcutta High Court and, at para 127, concluded: s.3 of the un-amended 1988 Act was unconstitutional for being manifestly arbitrary, and s.3(2) of the 2016 Act was unconstitutional as violative of Article 20(1); the in rem forfeiture provision in s.5 of the un-amended Act was unconstitutional for being manifestly arbitrary; the 2016 Amendment Act was not merely procedural but prescribed substantive provisions; the in rem forfeiture provision in s.5 of the 2016 Act, being punitive, can apply only prospectively; and the authorities could not initiate or continue criminal prosecution or confiscation proceedings for transactions entered into before 25 October 2016, all such proceedings standing quashed. The constitutionality of the independent forfeiture proceedings under the 2016 Act on other grounds was expressly left open (para 127.6). On 18 October 2024 the Court allowed the Union's review, recalled that judgment, and restored the civil appeal for fresh adjudication before a Bench to be nominated by the Chief Justice, granting liberty to any aggrieved party to seek review of other proceedings that had been disposed of relying on the recalled judgment (paras 6 and 7 of the recall order).
The 2022 reasoning was that s.3 read with ss.2(a) and 5 of the un-amended 1988 Act, dealing with criminal consequences, were overly broad, disproportionately harsh and operated without adequate safeguards, and being a still-born law never in fact used, were unconstitutional from their inception; it followed that the 2016 amendments did not merely supply procedure for an existing scheme but created new provisions and new offences, so the criminal provisions could operate only prospectively and not for transactions before 25 October 2016 (paras 15.22, 17.3 and 18). In 2024 the Court took a narrower and prior point. The only question framed in 2022, set out at para 3 of that judgment, was whether the amended Act was prospective; it was not disputed on review that there had been no challenge to the constitutional validity of the un-amended provisions, and the recorded submissions of the parties had not squarely addressed the issue. A challenge to constitutional validity cannot be adjudicated in the absence of a lis and contest between the parties, so the judgment was recalled in its entirety and the appeal restored (paras 4 to 6 of the recall order).
A challenge to the constitutional validity of a statutory provision cannot be adjudicated upon in the absence of a lis and contest between the parties.
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Handle my notice → Ask a CA on WhatsAppOn the current position, yes, because the judgment that said otherwise has gone. In 2022 the Supreme Court held that the 2016 amendment to the Prohibition of Benami Property Transactions Act created new substantive offences and could not operate on transactions before 25 October 2016, struck down s.3(2) and s.5 of the un-amended 1988 Act, and directed pre-amendment prosecutions and confiscations to be quashed. On 18 October 2024 it recalled that judgment in its entirety, holding that constitutional validity had been decided with no lis and no contest between the parties, and restored the appeal for fresh hearing. This was decided by the Supreme Court (2022 judgment: N.V. Ramana, CJI, Krishna Murari and Hima Kohli, JJ. 2024 recall order: Dr D.Y. Chandrachud, CJI, Pamidighantam Sri Narasimha and Manoj Misra, JJ) and bears on section Benami Act s.2(8), section Benami Act s.3, section Benami Act s.5, section Benami Act s.24, section Benami Transactions (Prohibition) Amendment Act 2016 of the Income Tax Act 1961. It is reported as [2022] 141 taxmann.com 389 (SC); [2022] 289 Taxman 177 (SC); [2022] 447 ITR 108 (SC); (2023) 3 SCC 315 (judgment of 23-8-2022, Civil Appeal No. 5783 of 2022). Recalled by [2024] 167 taxmann.com 525 (SC); [2024] 301 Taxman 313 (SC); [2025] 474 ITR 354 (SC) (order of 18-10-2024 in Review Petition (Civil) No. 359 of 2023). A great many replies and appeals were built on the 2022 ruling to have pre-2016 benami proceedings quashed, and that foundation has been removed; anything still pending on that ground needs rethinking. The recall was on a procedural footing rather than a rejection of the prospectivity reasoning, so the substantive question is open rather than decided against the taxpayer. Until the restored appeal is heard, the safest assumption is that pre-25 October 2016 proceedings are live. If it applies to you, the first step is this: Review every pending matter in which relief was sought or obtained on the strength of the 2022 judgment, because that ground no longer stands.
The company bought property in its own name from various sellers on 2 May 2011. Its shareholding was later acquired by other companies at a discounted price, and two of its directors were also directors of the purchasing company. The Initiating Officer invoked s.24(1) as amended in 2016, issued notice treating the property as benami and the company as a benamidar within s.2(8), and provisionally attached the property under s.24(4)(b)(i). The Calcutta High Court held that the 2016 Amendment Act was new legislation which, absent an express provision, could not reach contraventions at an earlier point of time, and quashed the proceedings. The Union appealed. The only question framed for decision was whether the 1988 Act as amended in 2016 has prospective effect; no party challenged the constitutional validity of the un-amended provisions. The matter was decided on 2022-08-23 by the Supreme Court (2022 judgment: N.V. Ramana, CJI, Krishna Murari and Hima Kohli, JJ. 2024 recall order: Dr D.Y. Chandrachud, CJI, Pamidighantam Sri Narasimha and Manoj Misra, JJ). On those facts the Supreme Court held as follows. In 2022 the Court affirmed the Calcutta High Court and, at para 127, concluded: s.3 of the un-amended 1988 Act was unconstitutional for being manifestly arbitrary, and s.3(2) of the 2016 Act was unconstitutional as violative of Article 20(1); the in rem forfeiture provision in s.5 of the un-amended Act was unconstitutional for being manifestly arbitrary; the 2016 Amendment Act was not merely procedural but prescribed substantive provisions; the in rem forfeiture provision in s.5 of the 2016 Act, being punitive, can apply only prospectively; and the authorities could not initiate or continue criminal prosecution or confiscation proceedings for transactions entered into before 25 October 2016, all such proceedings standing quashed. The constitutionality of the independent forfeiture proceedings under the 2016 Act on other grounds was expressly left open (para 127.6). On 18 October 2024 the Court allowed the Union's review, recalled that judgment, and restored the civil appeal for fresh adjudication before a Bench to be nominated by the Chief Justice, granting liberty to any aggrieved party to seek review of other proceedings that had been disposed of relying on the recalled judgment (paras 6 and 7 of the recall order).
The 2022 reasoning was that s.3 read with ss.2(a) and 5 of the un-amended 1988 Act, dealing with criminal consequences, were overly broad, disproportionately harsh and operated without adequate safeguards, and being a still-born law never in fact used, were unconstitutional from their inception; it followed that the 2016 amendments did not merely supply procedure for an existing scheme but created new provisions and new offences, so the criminal provisions could operate only prospectively and not for transactions before 25 October 2016 (paras 15.22, 17.3 and 18). In 2024 the Court took a narrower and prior point. The only question framed in 2022, set out at para 3 of that judgment, was whether the amended Act was prospective; it was not disputed on review that there had been no challenge to the constitutional validity of the un-amended provisions, and the recorded submissions of the parties had not squarely addressed the issue. A challenge to constitutional validity cannot be adjudicated in the absence of a lis and contest between the parties, so the judgment was recalled in its entirety and the appeal restored (paras 4 to 6 of the recall order). In the words reproduced by the source cited on this page: "A challenge to the constitutional validity of a statutory provision cannot be adjudicated upon in the absence of a lis and contest between the parties." The decision followed or applied The 2022 judgment affirmed Ganpati Dealcom (P.) Ltd. v. Union of India [2019] 112 taxmann.com 367/[2020] 269 Taxman 489/421 ITR 483 (Cal.); The 2024 order recalls the 2022 judgment.
It was decided by the Supreme Court on 2022-08-23 and is reported as [2022] 141 taxmann.com 389 (SC); [2022] 289 Taxman 177 (SC); [2022] 447 ITR 108 (SC); (2023) 3 SCC 315 (judgment of 23-8-2022, Civil Appeal No. 5783 of 2022). Recalled by [2024] 167 taxmann.com 525 (SC); [2024] 301 Taxman 313 (SC); [2025] 474 ITR 354 (SC) (order of 18-10-2024 in Review Petition (Civil) No. 359 of 2023). Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section Benami Act s.2(8), section Benami Act s.3, section Benami Act s.5, section Benami Act s.24, section Benami Transactions (Prohibition) Amendment Act 2016, 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 cuts both ways and is cited by both sides. In 2022 the Court affirmed the Calcutta High Court and, at para 127, concluded: s.3 of the un-amended 1988 Act was unconstitutional for being manifestly arbitrary, and s.3(2) of the 2016 Act was unconstitutional as violative of Article 20(1); the in rem forfeiture provision in s.5 of the un-amended Act was unconstitutional for being manifestly arbitrary; the 2016 Amendment Act was not merely procedural but prescribed substantive provisions; the in rem forfeiture provision in s.5 of the 2016 Act, being punitive, can apply only prospectively; and the authorities could not initiate or continue criminal prosecution or confiscation proceedings for transactions entered into before 25 October 2016, all such proceedings standing quashed. The constitutionality of the independent forfeiture proceedings under the 2016 Act on other grounds was expressly left open (para 127.6). On 18 October 2024 the Court allowed the Union's review, recalled that judgment, and restored the civil appeal for fresh adjudication before a Bench to be nominated by the Chief Justice, granting liberty to any aggrieved party to seek review of other proceedings that had been disposed of relying on the recalled judgment (paras 6 and 7 of the recall order). It arises in Evidence & Burden of Proof and How Tax Law Is Read matters, on section Benami Act s.2(8), section Benami Act s.3, section Benami Act s.5, section Benami Act s.24, section Benami Transactions (Prohibition) Amendment Act 2016 of the Income Tax Act 1961, and was decided by 2022 judgment: N.V. Ramana, CJI, Krishna Murari and Hima Kohli, JJ. 2024 recall order: Dr D.Y. Chandrachud, CJI, Pamidighantam Sri Narasimha and Manoj Misra, JJ. 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. Do not cite the 2022 declaration that s.3(2) and s.5 of the un-amended 1988 Act are unconstitutional, since the recall wiped it out. If prospectivity is still the best point, plead it properly as a challenge with a live contest, given that the recall turned on there having been no challenge, lis or adversarial contest on the point. Track the restored civil appeal before advising a client on pre-amendment exposure.
Overruled. The judgment of 23 August 2022 no longer holds the field. On the Union's review petition the Supreme Court recalled it on 18 October 2024 — Union of India v. Ganpati Dealcom (P.) Ltd. [2024] 167 taxmann.com 525/301 Taxman 313 (SC)/[2025] 474 ITR 354 (SC) — because the constitutional validity of the un-amended ss.3 and 5 had been decided although no party had challenged it and there was no lis or contest on the point. Civil Appeal No. 5783 of 2022 stands restored for fresh adjudication, so the prospectivity question is reopened. Strictly the judgment was recalled rather than overruled by a later Bench; the status field carries no separate value for a recall. That finding was checked against a published source, which is linked on this page, on 2026-08-25. 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 case under the Prohibition of Benami Property Transactions Act, 1988 and its 2016 amendment, not under the Income-tax Act, 1961, even though the proceedings are run by income-tax authorities and the reports carry it in the income-tax series. Sections 2(8), 3, 5 and 24 here are Benami Act provisions and have nothing to do with the identically numbered provisions of the Income-tax Act; no provision of the 1961 Act is in issue, so this entry carries no income-tax section tag. The recall order is dated 18 October 2024; reports giving 21 October are wrong. Two further points from the documents themselves: the 2022 Court left open at para 127.6 the constitutionality of the independent forfeiture proceedings under the 2016 Act on other grounds, and para 7 of the recall order lets a party aggrieved by an order made in reliance on the recalled judgment seek a review of it. The outcome of the restored Civil Appeal No. 5783 of 2022 was not traced; nothing later than the recall order of 18 October 2024 was found on it. 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.
In 2022 the Court affirmed the Calcutta High Court and, at para 127, concluded: s.3 of the un-amended 1988 Act was unconstitutional for being manifestly arbitrary, and s.3(2) of the 2016 Act was unconstitutional as violative of Article 20(1); the in rem forfeiture provision in s.5 of the un-amended Act was unconstitutional for being manifestly arbitrary; the 2016 Amendment Act was not merely procedural but prescribed substantive provisions; the in rem forfeiture provision in s.5 of the 2016 Act, being punitive, can apply only prospectively; and the authorities could not initiate or continue criminal prosecution or confiscation proceedings for transactions entered into before 25 October 2016, all such proceedings standing quashed. The constitutionality of the independent forfeiture proceedings under the 2016 Act on other grounds was expressly left open (para 127.6). On 18 October 2024 the Court allowed the Union's review, recalled that judgment, and restored the civil appeal for fresh adjudication before a Bench to be nominated by the Chief Justice, granting liberty to any aggrieved party to seek review of other proceedings that had been disposed of relying on the recalled judgment (paras 6 and 7 of the recall order).
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