Section 26 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 26 is the decision stage. After the Initiating Officer refers a case under section 24(5), the Adjudicating Authority issues notices, hears the persons concerned and decides whether the property is benami, within one year from the end of the month in which it received the reference.
As per the consolidated text consulted, on receiving a reference the Adjudicating Authority must issue notice within thirty days, giving not less than thirty days to reply. After considering the reply and inquiring, it hears the benamidar, the Initiating Officer and any person claiming to be owner, and passes an order either holding the property not benami and revoking attachment or holding it benami and confirming attachment. No order can be passed after one year from the end of the month in which the reference was received.
How section 26 came in
Section 26 is in Chapter IV (Attachment, Adjudication and Confiscation). It was inserted by the Benami Transactions (Prohibition) Amendment Act, 2016 and the text is checked against the Gazette of India copy of that Act (assent 10 August 2016). The 2016 changes were brought into force by notification; the date is not in the sources consulted.
If you have been named in a reference, the thirty-day reply period is short in practice, and a legal dispute resolution review of the reference and your papers should start as soon as the notice arrives.
Sub-section (1): notice by the Adjudicating Authority
"On receipt of a reference under sub-section (5) of section 24", the Adjudicating Authority "shall issue notice, to furnish such documents, particulars or evidence as is considered necessary on a date to be specified therein", on four sets of persons:
- (a) the person specified as a benamidar in the reference;
- (b) any person referred to as the beneficial owner therein or identified as such;
- (c) any interested party, including a banking company; and
- (d) any person who has made a claim in respect of the property.
Two provisos fix the time. The first: the Authority "shall issue notice within a period of thirty days from the date on which a reference has been received". The second: the notice "shall provide a period of not less than thirty days to the person to whom the notice is issued to furnish the information sought". So thirty days is both the ceiling for the Authority to send the notice and the floor for the recipient's time to reply.
Sub-section (2): joint holders
Where the property is held jointly by more than one person, the Authority "shall make all endeavours to serve notice to all persons holding the property". The proviso says that if notice is served on any one of them, the service "shall not be invalid on the ground that the said notice was not served to all the persons holding the property". For service by the Initiating Officer in the earlier stage, see our article on sections 25 and 63.
Sub-section (3): hearing and order
The Authority shall, after:
- (a) considering the reply, if any, to the notice;
- (b) making or causing to be made such inquiries and calling for such reports or evidence as it deems fit; and
- (c) taking into account all relevant materials,
"provide an opportunity of being heard to the person specified as a benamidar therein, the Initiating Officer, and any other person who claims to be the owner of the property", and, thereafter, pass an order:
| Order | Wording |
|---|---|
| (i) | "holding the property not to be a benami property and revoking the attachment order" |
| (ii) | "holding the property to be a benami property and confirming the attachment order, in all other cases" |
So the outcome is binary: not benami and attachment revoked, or benami and attachment confirmed. The hearing is owed to the benamidar, the Initiating Officer and any other person claiming to be the owner. Section 27 deals with confiscation after an order holding property benami; see our article on section 27.
Sub-section (4): part of a property
Where the Authority is satisfied that some part of the properties referred to it is benami, but is not able to specifically identify that part, it shall record a finding as to which part of the properties is held benami, according to its own judgment. The practical point is that the Authority can decide on a part where it cannot pin down the exact part, and it makes the call on its own judgment.
Sub-section (5): other property found in the course of the case
If, in the course of proceedings, the Authority "has reason to believe that a property, other than a property referred to it by the Initiating Officer is benami property, it shall provisionally attach the property", and the property "shall be deemed to be a property referred to it on the date of receipt of the reference under sub-section (5) of section 24". Read with sub-section (7), which counts the one year from the receipt of the reference, the deeming date appears to mean that the new property shares the same one-year period.
Sub-section (6): parties
At any stage, on an application of any party or on its own motion, the Authority may "strike out the name of any party improperly joined or add the name of any person whose presence before the Adjudicating Authority may be necessary to enable him to adjudicate upon and settle all the questions involved in the reference".
Sub-section (7): the one-year limit
"No order under sub-section (3) shall be passed after the expiry of one year from the end of the month in which the reference under sub-section (5) of section 24 was received."
For a worked reading: if a reference is received on 12 June, the month ends on 30 June, and one year from that date is 30 June of the next year. The text does not say anything about extension or exclusion of any period, and this article adds nothing on that point.
Sub-section (8) and the Explanation: who may appear
"The benamidar or any other person who claims to be the owner of the property may either appear in person or take the assistance of an authorised representative of his choice to present his case."
The Explanation says an "authorised representative" means a person authorised in writing, being:
- a person related to the benamidar or such other person in any manner, or a person regularly employed by the benamidar or such other person;
- any officer of a scheduled bank with which the benamidar or such other person maintains an account or has other regular dealings;
- any legal practitioner entitled to practise in any civil court in India;
- any person who has passed any accountancy examination recognised in this behalf by the Board; or
- any person who has acquired such educational qualifications as the Board may prescribe for this purpose.
"Board" is the Central Board of Direct Taxes under section 2(13). The educational qualifications under item 5 are left to the Board, and no qualification is stated in the sources consulted. The same representation right is repeated for the Appellate Tribunal; see our article on sections 47 and 48.
Time limits at a glance
| Stage | Limit in the text |
|---|---|
| Authority issues notice | Within thirty days from receipt of the reference |
| Time given to reply | Not less than thirty days |
| Order under sub-section (3) | Not after one year from the end of the month in which the reference was received |
Practical example
A reference about a farmhouse near Gurugram is received by the Adjudicating Authority on 8 March. It issues notice to the person named as benamidar, Tarun Chadha, to the beneficial owner named in the reference, to a bank that holds a charge over the property and to a person who has claimed the property, within thirty days of 8 March. Tarun is given at least thirty days to reply and chooses to be assisted by a chartered accountant who holds an accountancy qualification of the kind the Board recognises. After the hearing, the Authority holds the property to be benami and confirms the attachment. The order must be passed by 31 March of the following year, the end of March being the end of the month in which the reference came in, plus one year.
Other laws and later amendments
Section 26 names no other law apart from the Board, whose constitution under the Central Boards of Revenue Act, 1963 is in section 2(13). Check the current law for the corresponding provisions. Later amendments to the Act are not in the sources consulted; check them.
Need help in an adjudication under section 26?
The thirty-day reply period, the hearing and the one-year limit all turn on dates. If you want a reference, a notice or a draft reply reviewed, our legal dispute resolution team can go through them with you.
Key takeaways
- The Authority issues notice within thirty days of the reference, and the notice gives not less than thirty days to reply.
- Notice goes to the benamidar, the beneficial owner, any interested party including a bank, and any claimant.
- The Authority hears the benamidar, the Initiating Officer and any other claimant before passing an order.
- The order is either not benami with attachment revoked, or benami with attachment confirmed.
- No order may be passed after one year from the end of the month in which the reference was received.
Read next
- Section 24: show-cause notice and provisional attachment
- Section 27: confiscation and vesting of benami property
- Sections 45 and 46: civil court bar and appeal to the Appellate Tribunal
- Overview of the Benami Transactions Prohibition Act
Disclaimer: Based on a third-party consolidated text of the Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016, checked against the Gazette of India copy of that amending Act (11 August 2016), as consulted on 2 October 2026. The commencement notification, the rules and later amendments should be checked. This article is general information, not legal advice; check the official text before acting.