2025 (2) TMI 694 - AT - Benami Property

Prohibition of Benami Property Transaction - Initiating Officer (IO) had provisionally attached property - purchase of gold for which the amount was transferred through RTGS - Whether the transaction involving the transfer of Rs. 1 Crore for the purchase of gold constitutes a benami transaction under PBPTA? HELD THAT - Appellant has admitted in his statement that the gold was not delivered directly to Smt. Suman Dua from whose account RTGS transfer of Rs. 1 Crore was received in the account of M/s Harsh Bullion wherein he was a partner with Shri Anoop Kumar Agrawal. The copy of the identification documents of Smt. Suman Dua was received by the Appellant through Shri Mahendra Pal Malhotra to whom gold was admittedly delivered along with the invoice thereof. Appellant believes that having received copy of the invoice signed by Smt. Suman Dua from Shri Mahendra Pal Malhotra was sufficient as proof of his delivery of gold worth Rs.1 Crore to Smt. Suman Dua. We observe that such belief is neither corroborated by normal business practice nor supported by the fact that the transaction involved gold sale of Rs.1 Crore. While it established that the funds were transferred from the account of Smt. Suman Dua the Appellant failed to establish the delivery to the person from whose account the amount of Rs.1 Crore was transferred to his firm M/s Harsh Bullion. Appellant has claimed that M/s Harsh Bullion is a bonafide business entity yet no convincing argument has been made as to why it closed the Punjab Sind Bank account Janakpuri Bareilly on 20.06.2017 and transfer the closure proceeds to M/s Bankey Bihari Bullion another firm of the Appellant wherein Shri Mahendra Pal Malhotra is also a partner. The argument of the Appellant that M/s Harsh Bullion had conducted a number of transactions of Rs.10 Lakh and more in the FY 2016-17 is good enough ground as not to regard transfer of Rs.1 Crore by Smt. Suman Dua as strange is not acceptable. The transfer is not strange because of its high value but because of the circumstances in which it occurred. The initiation of the transfer of funds in the name of Smt. Suman Dua in the presence of Shri Mahendra Pal Malhotra from the branch in which Shri Malhotra had an account appears suspicious. It is all the more strange that Smt. Suman Dua did not have an account in the same branch. She is supposedly to have deposited Rs.1 Crore in cash which was accepted by the Chief Manager of the said branch in spite of her not being an account holder in the same branch. Appellant went on to deliver gold to Shri Malhotra. The Appellant was sure of having delivered it to Smt. Suman Dua because the invoice was signed by Smt. Dua that too in the absence of the Appellant and to accept the signed invoice received from Shri Malhotra as a token of receipt of gold worth Rs.1 Crore make the transaction strange and inexplicable. Appellant cannot maintain that he acted in good faith. Shri Mahendra Pal Malhotra is also a partner in his other firm of M/s Bankey Bihari Bullion to which the closure proceeds of the account of M/s Harsh Bullion were transferred on 20.06.2017. The inconsistencies pointed out by the Appellant in the statements of Smt. Suman Dua cannot wipe out the circumstances under which the said transaction occurred. Appeal dismissed.

Summary

The Appellate Tribunal under SAFEMA at New Delhi considered the Appeal No. FPA-PBPT-712/LKW/2019 filed by Shri Pradeep Kumar Agarwal against the Order dated 24.04.2019 passed by the Ld. Adjudicating Authority under Section 26(3) of the Prohibition of Benami Property Transaction Act, 1988 (PBPTA) in Reference No. R-752/2018. The Adjudicating Authority had confirmed the Order passed by the Initiating Officer under Section 24(4)(b)(i) of PBPTA, which provisionally attached properties worth Rs. 1 Crore. The properties included land, plots, and a bank account related to various individuals and entities.Issues Presented and Considered:1. Whether the transaction involving the transfer of Rs. 1 Crore for the purchase of gold constitutes a benami transaction under PBPTARs. 2. Whether the Appellant's involvement in the gold transaction was in good faith and not benamiRs. 3. Whether the statements and actions of the parties involved support the claim of a genuine transaction or a benami arrangement?Issue-wise Detailed Analysis:The Appellant argued that the transaction was genuine, involving the purchase of gold for which the amount was transferred through RTGS by Smt. Suman Dua. The Appellant contended that the sale was bona fide, with all legal formalities completed, including VAT payment. The Respondent argued that the transaction was benami, pointing to inconsistencies in statements and the involvement of third parties with undisclosed motives.Significant Holdings:The Tribunal noted that Smt. Suman Dua, a beautician with limited means, deposited Rs. 1 Crore in her bank account, which was subsequently transferred to M/s Harsh Bullion for the purchase of gold. The Tribunal found discrepancies in the delivery of gold directly to Smt. Dua and the involvement of Shri Mahendra Pal Malhotra in facilitating the transaction. The closure of the bank account and transfer of funds to another firm linked to the Appellant raised suspicions of a benami transaction. The Tribunal concluded that the transaction was not genuine and dismissed the Appeal.Core Principles Established:- The Tribunal scrutinized the source of funds, delivery of goods, and the parties involved to determine the nature of the transaction.- Inconsistencies in statements and actions of the parties can raise doubts about the legitimacy of a transaction.- The Tribunal emphasized the need for transparency and direct involvement of parties in financial transactions to avoid benami arrangements.Final Determinations:The Tribunal upheld the Adjudicating Authority's decision, ruling that the transaction involving the transfer of Rs. 1 Crore for the purchase of gold was a benami transaction. The Appeal was dismissed for lack of merit, highlighting the importance of genuine and transparent transactions in financial dealings.Overall, the Tribunal's analysis focused on unraveling the complexities of the transaction, considering the statements and actions of the parties involved to determine the true nature of the transaction and uphold the principles of the Prohibition of Benami Property Transaction Act.