2024 (8) TMI 679 - AT - Benami Property

Benami property transaction - appellant Directorate attached 29 immovable properties - beneficial owner - provisional attachment orders - property purchased in the name of Kapuri Devi were excluded on the ground that both her sons and husband were working so the property could be purchased in her name - description of each property has been given by the appellant which otherwise has been left by the Adjudicating Authority for confirmation in case of Somendra Dhariwal HELD THAT - The finding recorded by the Adjudicating Authority is without reference to the facts of the case referred earlier while referring the arguments of the appellant. The Adjudicating Authority shifted the burden on I.O. to show that the beneficial owner has provided the consideration of the properties though the detailed facts in that regard were submitted and has been narrated in this order also, thus, a perverse finding has been recorded going against the record and the material referred earlier. The finding has been recorded even going against the definition of benami transaction given under section 2(9)(A) despite satisfaction of both the limbs of the definition. It was a case where the property was transferred or held by a person of which consideration was provided or paid by another person. It is the case where wife and sons were not having sufficient means to acquire properties of the value given by the appellant and also that acquisition of property was for immediate or future benefit of the persons who provided consideration i.e. the father. It was found that the appellant Shobharam Dhariwal while in service could earn an amount of Rs. 63,95,140/- towards salary and if no part of it has been spent on the livelihood, he could not have acquired the property in name of his wife and son worth of Rs. 4 crore, 58 lacs and odd. The property was acquired for a value of a sum more than the earning. It was out of the illicit income of Shobharam Dhariwal while in service of the agriculture department. The unaccounted amount was used to acquire the property in the name of wife and sons for his own benefit and therefore it becomes a case of benami transaction‟ but the Adjudicating Authority has recorded superficial finding to deny confirmation to the attachment even for the properties at item no. 20 to 28 in Table A,properties at Sr. No. 15 to 19 in Table B, properties at Sr. No. 5 and 6 in Table C and movable properties in Table C (I). It has erroneously shifted the burden to prove the allegation on the appellant though it remains successful to prove it by bringing all the facts and relevant material on record and has been referred by us in the earlier paras of the order. The reference of Income Tax Returns (ITRs) and the source of one‟s earning apart from the description of the property acquired by the respondents has been given in those paras where Shri Shobharam used illegitimate earning for acquisition of property and in fact if the order of the Adjudicating Authority is allowed to stand, it would advance the cause of corruption in the hands of employees and would be fatal to the system. The Authority has considered the case even after taking into consideration of the income of two sons and the wife of one son to find out the benami transaction. In view of the above, we allow the appeal by causing interference in the order in following terms 1. The attachment of property from item no. 1 to 19 and 29 in Table- A, properties at Sr. no. 1 to 14 given in Table-B and properties at Sr. no. 1 to 4 given in table C would remain subject to final outcome of the review petition pending before the Apex Court. The appellant Directorate would be at liberty to seek review of this order in reference to those immovable properties apart from 5 movable properties in Table-A (1) and 3 movable properties in Table- B (1) after the judgement of the Apex Court on the Review Petition. 2. So far as immovable properties at item 20 to 28 in Table-A, properties at Sr. No. 15 to 19 given at Table-B, properties at Sr. No. 5 and 6 given in Table-C and movable properties at Sr. No. 1 to 3 given in Table-C (1) are concerned, the impugned order is set aside with confirmation of the attachment for the detailed reasons given above. It would be for immovable property as well other than 5 movable properties in Table-A (1) and 3 movable properties in Table-B(1) left by Adjudicating Authority.

Summary

Issues Involved:
1. Legitimacy of property acquisitions under the Prohibition of Benami Property Transactions Act, 1988.
2. Applicability of the amended Act of 2016 to transactions prior to 25.10.2016.
3. Determination of beneficial ownership and benami transactions.
4. Confirmation of provisional attachment orders.

Detailed Analysis:

1. Legitimacy of Property Acquisitions:
The case involves the acquisition of various immovable properties by a government employee in the names of his family members. The properties were allegedly acquired using unaccounted income far exceeding the known legitimate earnings of the family members.

- Facts: Properties worth Rs. 4,58,04,376/- were acquired in the names of the employee's wife and two sons, who were minors or non-earning at the time of acquisition. The employee's known income from his service was Rs. 63,95,140/-.
- Findings: The Adjudicating Authority found that the properties were acquired using unaccounted income, but refused to confirm the attachment for properties acquired before 25.10.2016, citing the Supreme Court's judgment in Ganpati Dealcom Pvt. Ltd.

2. Applicability of the Amended Act of 2016:
The amendment to the Prohibition of Benami Property Transactions Act, 1988, effective from 01.11.2016, was a significant point of contention.

- Supreme Court Judgment: The Apex Court in Union of India vs. M/s Ganpati Dealcom Pvt. Ltd. held that the amended provisions do not apply retrospectively to transactions before 25.10.2016.
- Adjudicating Authority's Decision: Based on this judgment, the authority refused to confirm the attachment of properties acquired before 25.10.2016.

3. Determination of Beneficial Ownership and Benami Transactions:
The core issue was whether the properties were benami transactions under Section 2(9)(A) of the Act.

- Definition: A benami transaction involves property held by one person for which consideration is paid by another, and the property is held for the benefit of the person providing the consideration.
- Evidence: The employee's sons and wife were found to have insufficient legitimate income to acquire the properties. The properties were acquired for the benefit of the employee, who provided the consideration from unaccounted income.
- Adjudicating Authority's Contradiction: The authority acknowledged the unaccounted income but shifted the burden of proof to the Initiating Officer (IO) to show that the beneficial owner provided the consideration, which was already established by the evidence.

4. Confirmation of Provisional Attachment Orders:
The Tribunal reviewed the attachment orders for various properties and bank accounts.

- Properties Acquired Before 25.10.2016: The Tribunal upheld the Adjudicating Authority's decision to not confirm the attachment for these properties, making it subject to the final outcome of the review petition pending before the Supreme Court.
- Properties Acquired After 25.10.2016: The Tribunal found the Adjudicating Authority's refusal to confirm the attachment for these properties to be perverse and contradictory. It confirmed the attachment for properties acquired after 25.10.2016, as the evidence showed they were benami transactions.

Conclusion:
The Tribunal allowed the appeal, confirming the attachment of properties acquired after 25.10.2016 and making the attachment of properties acquired before 25.10.2016 subject to the outcome of the Supreme Court's review petition. The decision highlights the importance of scrutinizing the source of funds in property transactions to prevent the misuse of unaccounted income.