Supreme Court to Decide on Retrospective Applicability of Section 5 of Amended Benami Property Act
The Supreme Court will hear on 11 August 2025 a plea on whether Section 5 of the Amended Benami Property Act applies retrospectively.
The Supreme Court will again look at the important question of whether Section 5 of the Prohibition of Benami Property Transactions Act, 1988, as changed in 2016, can be used for transactions that happened before the change came into force. A new case before the Supreme Court, filed on 17 July 2025 by the Deputy Commissioner and Additional Commissioner of Income Tax in Chennai against...
The Supreme Court will again look at the important question of whether Section 5 of the Prohibition of Benami Property Transactions Act, 1988, as changed in 2016, can be used for transactions that happened before the change came into force.
A new case before the Supreme Court, filed on 17 July 2025 by the Deputy Commissioner and Additional Commissioner of Income Tax in Chennai against M/s Marg Limited, is set for hearing on 11 August 2025.
This follows a major development on 18 October 2024, when the Court agreed to review its own earlier decision in the case of Union of India versus Ganapati Dealcom Private Limited.
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In that August 2022 ruling, the Court had said that the confiscation provision under Section 5 was a punishment and could only be applied from 25 October 2016 onwards, the date when the amendment started. It also said that any prosecution or confiscation proceedings for deals before that date had to be stopped.
The Union of India later filed a review petition in January 2023. It argued that the earlier decision had gone into the constitutional validity of the unamended law even though no one had directly challenged it in that case. The government said such a decision should not be made unless both sides had argued about it in detail.
The Supreme Court accepted this point. It allowed the review, cancelled its 2022 judgment, and restored the case so that it could be heard again by another bench. The Court also said that in other cases where its earlier Ganapati Dealcom decision had been relied upon, parties could ask for a review in light of this change.
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One case directly affected is the Madras HighCourt’s decision from 11 December 2023 in the matter of Navrang Infrastructure Private Limited. The High Court had followed the 2022 Supreme Court ruling to decide in favour of the company and against the Income Tax Department’s argument for applying Section 5 to older transactions. The High Court had said that the department could act again if the Supreme Court later changed its view.
The outcome of the fresh hearing on Section 5 will have a big impact on this and many other cases across India.
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