Income Tax Can Seize Properties Without Real Owner’s Identification, Court Rules

The Income Tax (I-T) department has been given the authority to seize properties under the Prohibition of Benami Property Transactions (PBPT) Act, 1988, even if the actual owner or financier of the property cannot be identified. This was confirmed by a recent ruling from the Adjudicating Authority, highlighting the law’s strength in combating benami transactions.

Properties Seized in Kakori Case

In a significant case, the I-T department’s Lucknow unit seized land parcels in Kakori worth over ₹3.47 crore in 2023. These properties were linked to real estate firms that allegedly used unaccounted cash for purchases—a key indicator of benami transactions.

Understanding the PBPT Act

The PBPT Act prohibits buying property in someone else’s name (benamidar) using money from an unknown source, often to hide the real owner. The Act allows the I-T department to attach such properties, even if the real owner remains untraceable or fictitious.

Court Ruling Supports Property Attachments

In the Kakori case, the Adjudicating Authority upheld the attachment of 5 properties despite the absence of a named beneficial owner. The court cited Section 2(9)(D) of the PBPT Act, which allows seizures when the source of payment is unknown or fictitious.

Even though the department initially invoked Section 2(9)(A), which applies when the owner is known, the court ruled that the error did not invalidate the attachment, referencing a 2009 Supreme Court judgment.

Key Individuals and Real Estate Firms

One of the properties was registered under Ravi Kumar, an office assistant for Excella, a real estate company. While some firms and individuals initially linked to the case were cleared due to insufficient evidence, Ravi Kumar was deemed the benamidar. Haresh Kumar Mishra was identified as an accomplice, prompting further investigations into other assets linked to Kumar.

Crackdown on High-Value Transactions

The I-T department is intensifying its efforts to uncover and seize high-value benami assets, particularly in the real estate sector. In addition to the Kakori case, land worth ₹5.68 crore in Mohanlalganj was also seized for similar violations.

Legal Precedent and Caution for Investors

This ruling sets a critical precedent, showing that the absence of an identifiable owner won’t prevent the attachment of benami properties. Investors and property buyers are advised to steer clear of such transactions to avoid legal troubles as the government continues its crackdown on illicit ownership schemes.

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