Creditworthiness Of Lender Can Be Challenged Under Income Tax Act And Not Under PBPT Act: Allahabad High Court Stays Benami Proceedings

The Allahabad High Court has stayed the benami proceedings and was of the prima facie view that Creditworthiness Of Lender Can Be Challenged Under Income Tax Act And Not Under Prohibition of Benami Property Transaction Act (PBPT).

The bench of Chief Justice Arun Bhansali and Justice Kshitij Shailendra while listing the matter on 04/08/2025 stayed the benami proceedings.

The petitioner contended that the issuance of notice under Section 24 of the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act) is ex facie without jurisdiction inasmuch as the petitioner has already been assessed under Section 69 of the Income Tax Act, 1961 qua the same amount.

The petitioner contended that as the property in question is cash, the same does not fall within the definition of ‘benami transaction’ under Section 2(9) of the PBPT Act.

The case of the department is that the cash in question belongs to the petitioner and in those circumstances, the petitioner does not fall within the definition of ‘benamidar’ under Section 2(10) of the PBPT Act.

The court held that the matter requires consideration.

Case Details 

Case Title: Arpit Jagga V/s Deputy Commissioner of Income Tax (Benami

Prohibition Unit), Kanpur

Counsel for Petitioner: Sankalp Malik, Tanmay Sadh

Counsel for Respondent: Gaurav Mahajan, Manu Ghildyal

Read More: CBI arrests Deputy Registrar of Mumbai NCLT for Demanding Bribe