An Initiating Officer has issued a s.24(1) notice calling my client a beneficial owner and attached three properties the same day - what do I answer, and does it matter that two of them were bought before November 2016?
The client is an individual, a partner in a textile processing firm, assessed at a circle in Surat. A search under s.132 on the group in March 2026 threw up a ledger and a set of bank statements in an accountant's hands. On 3 August 2026 an Initiating Officer at Ahmedabad issued a notice under s.24(1) of the Prohibition of Benami Property Transactions Act naming the client as beneficial owner in respect of three properties: a residential plot at Vesu, Surat, bought on 14 August 2014 for Rs 62,40,000 in the sole name of the client's elder brother; a flat at Adajan bought on 22 January 2016 for Rs 41,80,000 in the name of the client's wife; and agricultural land bought on 9 September 2019 for Rs 1,14,00,000 in the name of the client's Hindu undivided family, of which he is karta. The same day, with the Approving Authority's approval, the Initiating Officer passed an order under s.24(3) provisionally attaching all three properties and two savings accounts of the brother, one of which holds Rs 7,30,000 of salary credits. The notice recites that the material shows the consideration for all three purchases moved out of the client's accounts. Twenty-one days were given to reply. The file holds the three sale deeds, bank statements from 2014 to 2019, the wife's returns and capital account, and the HUF's returns since 2011.
Build one date sheet and one consideration table before a word of the reply is drafted. The date sheet runs from the date the s.24(1) notice was issued, through the last day of that month, to the ninetieth day after it and the fifteen days that follow, because the Initiating Officer's power over this file expires on those dates whether or not anyone argues about them. The consideration table sets out, property by property, who paid, from which account, on which date, and which exception in s.2(9)(A)(b) is being claimed for it. Everything else in this matter is argument about one of those two documents.
Two of the three properties were bought before the 2016 Amendment Act came into force on 1 November 2016, so the temporal question decides them. The Supreme Court judgment of 23 August 2022 that held the amended provisions prospective, and directed pre-amendment s.24 proceedings to be quashed, was recalled in its entirety on 18 October 2024 on the Union's review petition. The appeal stands restored and undecided. An argument built on it today is built on a judgment that no longer exists. The library's own entry for the judgment records the recall on its face and carries the review petition number. What the library does hold are two High Court judgments that reached prospectivity on their own reasoning and not on Ganpati Dealcom: the Telangana High Court in March 2022, holding ss.2(9)(A) and 2(9)(C) substantive and offence-creating rather than machinery provisions and the Amendment Act effective only from 1 November 2016, and the Rajasthan writ batch which framed the question directly on facts like these. Run the point on those and on Article 20(1).
An Initiating Officer may act only where one of three limbs falls within the territory assigned to him by the CBDT's notification S.O. 1621(E) dated 18 May 2017 - the benami transaction or property, the benamidar, or the beneficial owner. The Appellate Tribunal has held the defect fatal to the notice where neither the property nor the person sat in the officer's territory. Here the three properties and both named persons are at Surat and the notice issued from Ahmedabad, so the assignment has to be produced and read. Benami Prohibition Units cover several stations and the Ahmedabad unit may well carry Surat, which is why the question is asked rather than asserted. Ask for the notification entry and the jurisdiction order in the first letter, so that an absence of answer is on the record before the reply on merits goes in.
Section 24(1) requires the Initiating Officer to have material in his possession and to record in writing his reason to believe that the person is a benamidar. The Appellate Tribunal has set aside a provisional attachment holding that the officer must satisfy himself of four distinct matters before attaching under s.24(3), and that a person whose title document is on the record is entitled to notice under s.24(1). On the other side, the Delhi High Court in November 2025 refused to interfere where the officer had written out his reasons in detail - spreadsheets recovered in a search, corroborated by statements of the beneficial owner - and relegated the petitioner to the statutory route. The practical test is whether the reasons deal with each property separately or recite one conclusion across all three. A single recital covering a 2014 purchase in a brother's name, a 2016 purchase in a wife's name and a 2019 HUF purchase is the weakness, because the three raise different questions and the exceptions differ.
A provisional attachment under s.24(3) runs for a period not exceeding ninety days from the last day of the month in which the s.24(1) notice was issued. The notice issued on 3 August 2026, so the period runs from 31 August 2026 and expires on 29 November 2026. Within that same ninety days the officer must under s.24(4) either pass an order continuing the attachment with the Approving Authority's prior approval or revoke it. Under s.24(5) he must then draw up a statement of the case and refer it to the Adjudicating Authority within fifteen days of the attachment order, which on these dates is 14 December 2026. Put both in the diary now. The attachment is what is actually hurting the client, its statutory life is fixed, and the approval under s.24(3) and s.24(4) is a separate document to be called for.
The definition excludes four holdings: property held by a karta or member of a Hindu undivided family for the family, from known sources of the family; property held in a fiduciary capacity; property held in the name of a spouse or child from known sources; and property held jointly with a brother, sister or lineal ascendant or descendant, from known sources and where the individual appears as a joint owner. The agricultural land goes to the first limb and needs the HUF's returns, its bank account and the source of the family's funds. The wife's flat goes to the third and needs her return, her capital account and the money trail. The brother's plot goes to the fourth, and that is the one that fails: the client is not shown as a joint owner in any document. The Rajasthan High Court has held that the joint-holding limb requires the individual to be shown as a joint owner in some document, and that a general power of attorney authorising him to deal with the property does not answer it.
The burden of proving that a purchase is benami rests throughout on the person asserting it, and the source of the purchase money has never been the sole test. The Supreme Court has held that what decides the question is the intention of the person who found the money, drawn from the relationship of the parties, the motive, the possession, the custody of the title deeds and the conduct afterwards, of which the source is only the first circumstance. Financial assistance from a relative, standing alone, does not make a purchase benami. The Appellate Tribunal has held to the same effect that the initial burden is on the Initiating Officer. Where the recorded reasons rest only on a trail out of the client's accounts, say so and put the trail in its place: a source point the officer must build on, not a finding he may assume.
The Act allows attachment of benami property in the hands of the benamidar or the beneficial owner. It does not allow property to be attached because it happens to be in the hands of someone the Department calls an abettor, without a finding that the property itself is benami - the Appellate Tribunal so held in April 2026 and released property that had been kept under attachment after the Adjudicating Authority recast the person as an abettor. A savings account fed by the brother's salary is not the property named in the notice and is not traceable to the consideration for any of the three purchases. Independent verification is what wins this sort of point: in another matter the Tribunal had attached jewellery checked against the jeweller's own hallmarking and sales records and only four of sixty-six packets survived the check. Produce the salary credits, the employer's certificate and the brother's Form 26AS with the reply.
No order under s.26(3) may be made after the expiry of one year from the end of the month in which the reference under s.24(5) was received. If the reference goes in on 14 December 2026, that year ends on 31 December 2027. The Madras High Court has held that the order is made on the date it is passed and entered in the Authority's registers, not on the date a certified copy is prepared or despatched, so a late copy does not make a timely order time-barred - and the corollary is that the date on the order has to be tested against the register if the point is to be taken at all. The appeal to the Appellate Tribunal under s.46 runs forty-five days from receipt of the order. Where a party went to the High Court instead and was relegated, the Delhi High Court held the time the writ petition was pending liable to be excluded under s.14 of the Limitation Act and fixed a date by which the appeals were to be filed.
The HUF land usually comes out, because the family's returns and its bank account answer the known-sources condition on paper. The wife's flat comes out where her own capital and the trail support it and stays in where the money is simply the client's, routed through her. The brother's plot is the one usually lost on the exception, because the joint-owner document does not exist - which is why the temporal question is now the only real defence to it, and why the recall matters so much on these facts. The salary account is more often released or remanded than kept. At the Adjudicating Authority stage the commonest outcome is an order holding one or two of the three properties benami, with the real contest moving to the Appellate Tribunal. Very few of these end at the writ stage; the High Courts have been relegating them to the statutory route.
