Direct Tax Amicus, May 2026

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Article

Interplay between Sections 24 and 26 of the Benami Act: Scope of expansion of reference

By Tanmay Bhatnagar, Shivam Gupta and Aman Malhotra

One of the important, yet relatively, unexplored issues arising under the Prohibition of Benami Property Transactions Act, 1988 (‘Benami Act’) concerns the extent to which the Adjudicating Authority (‘AA’) can alter, expand or modify the reference made by the Initiating Officer (‘IO’), particularly in relation to addition of properties or persons during the pendency of adjudication proceedings before it. The article in this issue of Direct Tax Amicus examines the statutory framework governing such powers and analyses the extent to which the reference before the AA can be altered without violating the jurisdictional architecture embedded under the Benami Act. According to the authors, a harmonious reading of the statutory scheme suggests that Sections 26(5) and 26(6) of the Benami Act merely expand the scope of jurisdiction validly assumed in terms of a reference under Section 24 and do not create an entirely new and independent jurisdiction of AA dehors that of the reference.

Notifications and Circulars 

• MoU between India and Japan for assistance in collection of taxes notified
   

Ratio Decidendi 

• DDT whether qualified as tax for benefit of DTAA – Issue before Supreme Court for authoritative determination; High Courts to stay proceedings in similar issue – Supreme Court
• Jurisdiction for reassessment – JAO vs. FAO – SC remands disputes to High Courts after retrospective legislative change – Supreme Court
• Buyback of shares is not taxable under Section 56(2)(x) of the IT Act, 1961 – Delhi High Court
• Leave encashment exemption u/s 10(10AA) depends on nature of benefit, not status of employer at time of retirement – ITAT Bengaluru
• Automatic reinvestment of dividend income does not result in ‘undisclosed foreign assets’ under Black Money Act – ITAT Mumbai
• Penalty u/s 43 of BMA is not automatic, AO required to exercise discretion based on facts – ITAT Bengaluru