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Benami Property - Case Laws
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2024 (11) TMI 625
Benami Property Transactions - attachment and the reference made by the Initiating Officer (IO) - allegation against the appellant was for acquisition of benami properties while he was employee of Piyush Gupta, the defendant No.2 before the Adjudicating Authority. The appellant was getting meagre salary of Rs. 15,000/- per month. However, during the course of search and seizure, it was found that the appellant Mohd. Farooq made investment of Rs.1,41,37,500/- - HELD THAT:- We find that the appellant could not produce any document worth acceptance to prove the source of income for purchase of properties for the total value of Rs.1,41,37,500/- which includes the property at Item No.8 of Table `A’ but even for the properties mentioned at Item Nos. 1 to 7, the appellant failed to prove the source for its acquisition.
Appellant has tried to make out a case for disclosure of source of income by submitting the documents along with the rejoinder but they have not been accepted in absence of application for taking additional documents on record at the appellate stage and otherwise it was not pressed by the appellant. We otherwise find that the assessment order for the block period 2011-12 to 2021-22 is subsequent to the impugned order and cannot support the appellant. The perusal of the assessment order otherwise shows the conduct of the appellant as he could not show source to acquire the properties while his statements were recorded under Section 19 of the Act but submitted I.T. return subsequent to it.
The addition of income can be acceptable under the Income-Tax Act but it cannot be used for adjudication under the Act of 1988 and otherwise if the practice adopted by the appellant is accepted, every benamidaror beneficial owner get the assessment of block years by one order after paying the income tax and penalty without submission of proof of income before the IO or the Adjudicating Authority. We have made comment in reference to the assessment order though a serious objection of the document has been taken and as such we have not recorded our finding going deep in the assessment order but touching the legal background under which assessment of income by the Income-tax authority has been made vis-à-vis the adjudication under the Act of 1988.
The detailed finding recorded by the Adjudicating Authority rather disclosed as to how the benami properties came in the name of the appellant benamidar. The finding in regard to each benami property has been recorded. The payment to acquire the property said to have been made largely in cash without disclosing the source for acquiring the cash. The Adjudicating Authority has made detailed discussion for purchase of each property vis-à-vis the source of income.
Thus, finding that the appellant failed to submit the material to prove the source of income before the Adjudicating Authority and even while filing the appeal, no document was submitted to prove the source for acquisition of property. The documents submitted along with rejoinder were without permission of the appellate court and were not relied later on by the counsel. The learned counsel for the appellant referred to the judgment of the Apex Court in the case of GanpatiDealcom [2022 (8) TMI 1047 - SUPREME COURT] and more specifically reference of Paras 67,68,124 and 125 has been given.
The fact, however, remains that the Apex Court has recalled its judgment in the case of GanpatiDealcom (supra) by the order [2024 (10) TMI 1120 - SC ORDER (LB)] Thus, argument raised by the appellant in reference to the aforesaid judgment no more holds field. We have otherwise analyzed the case to find out the source to acquire the property by the appellant and finding no material favourable to the appellant, the appeal would fail and is dismissed.
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2024 (11) TMI 624
Prohibition of Benami Property Transaction - attachment order of gold and silver articles from lockers - identification of beneficial locker holders - HELD THAT:- The conduct of the parties speaks for itself. If the things would have been bona fide, the SVPL should have disclosed that lockers in the name of Shiv Daga belongs to the appellant and could have produced the request letter for change of name at the time of investigation by the I.O. SVPL has shown it to be their bona fide mistake for non disclosure but, other than the aforesaid lame excuse, no other justification could be given.
The excuse was not acceptable not only for the reason that when search and seizure was made in reference to few lockers, the onus was on the SVPL and also on the appellant to immediately submit the true facts if it was true and not to cook up the story subsequently. The facts on record show how the things changed when the SVPL try to come to rescue of the appellant. The Company is equally responsible for the benami transaction because they did not take KYC documents despite the fact that it became mandatory in the year 2016 and continued the locker in the name of Shiv Daga. This highlights the conduct of SVPL.
The fact now remains about the request letter given by the appellant to change the name from Shiv Daga to Shiv Narayan Baheti starting from the year 2013. The reminder was given even in the year 2015. It ishowever a fact that name was changed subsequent to the search and seizure. The only reason for delaying the change of the name was in absence of the payment which is shown to have been paid in the year 2019 without putting any documents as to show what was the arrangement between appellant and the SVPL for operation of lockers and what was the rent decided amongst them.
We have already highlighted the conduct of SVPL who is trying to support the appellant because their mis-doings are also highlighted for not taking KYC in the year 2016, otherwise the things would have been settled in the year 2016 itself. To cover up the defaults, they said to have accepted the payment. The appellant has not placed on record even the agreement between him and the SVPL to justify delay in change of the name. In fact the appellant and SVPL were hand in glove to mis-lead the respondent.
In any case, the fact further remains that the appellant argued the case at length but failed to disclose the source of acquisition of gold and silver and in absence of it, the view cannot be taken in favour of the appellant. The appellant was under obligation not only to prove that lockers were belonging to him but to prove ownership of the gold and silver to disclose the means for acquisition of it, but there is total failure of the appellants to do so.
Thus, we are unable to take a view favourable to the appellant on the facts.
Whether no notice under section 24 (1) of the Act of 1988 was given to the appellant and thus the entire proceeding would vitiate? - As we have gone through the record and find that notice under section 24 (1) was given to Shiv Daga and 24 (2) was given to SVPL. On the service of show cause notice, the SVPL disclosed that lockers belong to the appellant. When information aforesaid given in the midstof the proceedings, the appellant was summoned who not only appeared but also made the written submission.
No violation of section 24 (1) because purpose of issuance of the notice is to call upon the reply and in fact it was given to the appellant if he claims to be Shiv Daga by himself. It is not that respondent did not issue notice under section 24 (1) rather it was sent in the name of Shiv Dagaat the address of the appellant and if the name of the appellant is Shiv Narayan Baheti alias Shiv Daga then the compliance of section 24 (1) was made and otherwise the appellant made representation of his case before the IO. Thus, the attachment followed by reference cannot be held to be illegal. It is more so when the appellant was given full opportunity of hearing before the Adjudicating Authority to canvas his case but the order of the confirmation was made when appellant failed to make out a case. Thus, full opportunity of hearing was provided to the appellant and thereby the proceeding would not vitiate on the ground taken by him. Appeal dismissed.
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2024 (11) TMI 623
Prohibition of Benami Properties Transaction - attachment order - applicability of the amended provisions of the Act of 1988 by the Amending Act of 2016 - as argued property purchased by the appellant was not out of the benami transaction and otherwise the purchase of the property was much prior to the amendment in the Act of 1988 by the Amending Act of 2016 with effect from 01.11.2016.
HELD THAT:- The facts on record shows attachment of one agricultural land having area of 0.610 hectare of khasra number 526/3 in village Girdava of Saharanpur, UP. said to have been effected by the benami transaction. It is not in dispute that the I.O. could not identify the beneficial owner and therefore the order has been passed against the benamidar.
Adjudicating Authority has taken note of the fact that the transaction in question is prior to the amendment by the Amending Act, 2016 but finding has been recorded adverse to the appellant by treating amending provision to have retrospective application.
Though, now the position is clear in the light of the judgement of “Union of India & Anr. Versus M/s. Ganpati Dealcom Pvt. Ltd.” [2022 (8) TMI 1047 - SUPREME COURT] that it has prospective application. Therefore, we need not to refer detailed facts of the case regarding the purchase of the property and source disclosed by the appellant being a transaction prior to 01.11.2016 and is not falling u/s 2 (9A) of the amended provision.
We find that the impugned order has been passed while considering the facts of the case but treating it to be a case u/s 2 (9) (A) of the Amending Act though the person alleged to have provided the consideration for purchase of the property is not known.
Adjudicating Authority in the discussion part recorded that transaction fall under section 2 (9) (A) in ignorance of the fact that beneficial owner has not been identified. In fact, it was through out considered to be a case falling u/s 2 (9B) of the Act of 1988 as amended by the Amending Act of 2016. The conclusions have not been specifically drawn in reference to section 2 (9 )(A) but it has been referred in discussion part.
Amended provisions would not apply retrospectively rather it would have prospective application and thereby the transfer prior to 01.11.2016 not falling in the definition of the benami transaction under the section 2 (9) (A) of the Amending Act, 2016 would be squarely covered by the judgement of “Union of India & Anr. Versus M/s. Ganpati Dealcom Pvt. Ltd.”.
The exception may be if a case is falling under section 2 (9) (A) of the amended definition of benami transaction for which a detailed judgement has been given by the Tribunal in the case of M/s. Prism Scan Express Pvt. Ltd. [2024 (1) TMI 203 - APPELLATE TRIBUNAL FOR SAFEMA AT NEW DELHI].
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2024 (11) TMI 217
Benami transaction - Plaintiff seeking a mandatory injunction in respect of property Restraining the defendants from creating any third-party interest qua the suit property - plaintiff further seeks a permanent injunction against the defendants restraining them from dispossessing the plaintiff from the suit property and interfering/or obstructing with the plaintiff’s possession, occupation and enjoyment of the suit property - plaintiff is a permanent resident of Canada as well as naturalized Canadian citizen.
HELD THAT:- In the facts of this case, it is apparent that late Sardar Nirmal Singh as an extended family member was permitted by late Sh. Raghbir Singh to occupy a portion of the suit property as a licensee. In ordinary course, owners permit extended family members to use and occupy immovable properties out of love and affection on the reasonable belief that the property will be vacated by the family member when called upon by the owner. To permit late Sardar Nirmal Singh or his family member to contend that the evidence of their possession in the suit property without payment of rent or licence fee would entitle them to raise a claim of ownership would be putting premium on a dishonest plea and would also be an abuse of the exception provided in proviso 2(ii) to Section 2 (9) (A) of the Benami Act.
In the facts of this case, upon perusal of the averments made in the plaint and the documents annexed with the plaint, this Court is of the considered opinion that the plaintiff has failed to prove that late Sh. Raghbir Singh held the suit property in a fiduciary capacity qua Sardar Nirmal Singh.
This Court finds that the suit lacks a cause of action. Furthermore, the plea of ownership raised is barred under Section 4 of the Benami Act.
The judgment of the Supreme Court in Pankaja [2004 (8) TMI 716 - SUPREME COURT] relied upon by the plaintiff in support of their amendment application, is misplaced. The ratio which flows form the said judgement is that an amendment of pleadings must not be disallowed merely on the ground that the relief sought is barred by limitation which does not apply to the facts of the present case. Accordingly, the suit is rejected under Order VII Rule 11(a) and 11(d) of the CPC.
The suit property comprises of a superstructure comprising ground floor, first floor, second floor and terrace on a plot admeasuring 250 sq. yds. The plaintiff asserts that he is in actual physical possession of the entire second floor along with terrace; and is in constructive possession of the remaining floors which are in the physical possession of the tenants.
Issuance of mandatory injunction to the plaintiff to handover peaceful and vacant possession to the defendant no. 1 - Keeping in view, the judgments of the Supreme Court in Maria Margadia Sequeria Fernandes v. Erasmo Jack De Sequeria [2012 (3) TMI 594 - SUPREME COURT] judgment of Division Bench of this Court in Liberty Sales Services v. Jakki Mull & Sons [1997 (2) TMI 601 - DELHI HIGH COURT] and Nathu Ram v. DDA [2022 (2) TMI 1479 - DELHI HIGH COURT] this Court hereby passes a decree of mandatory injunction directing the plaintiff herein to handover the vacant physical possession of the portion occupied by him in the suit property to the defendant no. 1 within four (4) weeks from today having come to this conclusion that he is in illegal and unauthorised possession of the suit property. The order for payment of mesne profits for the continued illegal possession w.e.f. 01.05.2022 is being passed.
Accordingly, the reliefs sought by the plaintiff are dismissed in the aforesaid terms along with all pending application and a mandatory injunction is passed against the plaintiff and in favour of defendant no. 1.
Award of actual costs in favour of the defendant - This Court is of the considered opinion that this suit filed by the plaintiff is an abuse of process. The Supreme Court in Ramrameshwari Devi & Others v. Nirmala Devi [2011 (7) TMI 1305 - SUPREME COURT] has opined that uncalled for litigation gets encouragement because Courts do not impose realistic costs.
Keeping in view the Section 35 (2) of CPC, Rules 1 (i) & 2 of Chapter XXIII of Delhi High Court (Original Side) Rules, 2018 and the judgment of Ramrameshwari Devi (Supra), this Court deems it appropriate to impose actual costs on the plaintiff and payable to the defendants. For the purpose of determining the actual cost incurred by the defendants to be paid by the plaintiff herein, the Taxing Officer of this Court is directed to take appropriate steps in accordance with the provisions of Delhi High Court (Original Side) Rules, 2018 (‘Original Side Rules, 2018’).
List before the Taxing Officer/concerned Joint Registrar on 03.12.2024.
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2024 (10) TMI 1120
Constitutional validity of the Prohibition of Benami Property Transactions Act, 1988 - Scope of the unamended provisions - whether the Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 has a prospective effect? - HELD THAT:- The Court has declared Section 3(2) of the unamended provisions of the Prohibition of Benami Property Transactions Act 1988 as unconstitutional for being manifestly arbitrary and as violative of Article 20(1) of the Constitution. The provisions of Section 5 of the unamended Act, prior to the Amendment of 2016, have been declared to be unconstitutional on the ground that they are manifestly arbitrary.
It is not disputed that there was no challenge to the constitutional validity of the unamended provisions. This is also clear from the formulation of the question which arose for consideration before the Bench which has been extracted above. In the submissions of parties which have been recorded in the judgment, the issue of constitutional validity was not squarely addressed.
A challenge to the constitutional validity of a statutory provision cannot be adjudicated upon in the absence of a lis and contest between the parties. We accordingly allow the review petition and recall the judgment [2022 (8) TMI 1047 - SUPREME COURT] dated 23 August 2022. Civil Appeal No 5783 of 2022 shall stand restored to file for fresh adjudication before a Bench to be nominated by the Chief Justice of India on the administrative side.
Where any other proceedings have been disposed of by relying on the judgment of this Court in Ganpati Dealcom Private Ltd [2022 (8) TMI 1047 - SUPREME COURT] liberty is granted to the aggrieved party to seek a review in view of the present judgment.
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2024 (10) TMI 298
Benami transaction - Statements were recorded u/s 132(4) of the Income Tax Act during search, wherein appellant had accepted purchase of the assets which includes the chit funds by Rajesh in his name - Whether the properties and assets in question were acquired through benami transactions? - HELD THAT:- There are catena of judgment of the Hon’ble Apex Court to deny reliance on a sworn statement recorded u/s 108 of Custom Act or it may be Section 132(4) of the Income Tax Act for conviction of a person. Those judgments of the Hon’ble Apex Court operate on the prosecution case against the accused but would not apply to the proceedings, which does not involve conviction of the person rather is taken up on revenue side. The marked difference between two types of proceedings has to recognized. For conviction of a person there would be necessity to apply the process given under CrPC and even under Evidence Act which is not mandated for the proceedings by the Revenue for attachment or for imposition of penalty. In the light of the aforesaid, we are unable to accept first argument raised by the appellant.
Since we have decided the first issue against the appellant and thereby sworn statement u/s 132(4) of Income Tax Act can be relied even in the proceedings under the Act of 1988. The respondents were not under obligation to record separate statement by holding enquiry. In fact, the Initiating Officer had taken up issues while passing the order and appeal before the Adjudicating Authority, all the issues raised by the Appellants were threshold decided.
The argument of Appellant is that even the chits in the name of the Appellant were out of the sources disclosed by him while it is a fact that in the statement recorded u/s 132(4) of the Income Tax Act it was admitted that chit fund was operated at the instance of Rajesh of M.R. Traders. The arguments have been raised against the sworn statement of the Appellant and others to prove the case. It is apart from the fact that the appellant failed to produce a document to prove income from poultry or agriculture while the certificate of VEO was submitted. It is said to be based on the enquiry and not in reference to revenue record. VEO is custodian of revenue record and could have certified the agricultural activities on the land, but the certificate issued by him was based on the information and not the revenue record. Thus, the Adjudicating Authority rightly clarified the position aforesaid to hold it to be case of benami transaction.
Statement of Rajesh and other were relevant to substantiate the fact that chits were out of benami transaction. The appellant, however, referred to the Bank Account in South Indian Bank to fortify his income and source for putting money in chits. The aforesaid was also analysed and found that it was out of cheque and were from Fortune Wheat Products, which is a business concern of Mr. Rajesh. It is necessary to indicate that other than the certificate and few documents, the appellants failed to produce any material to substantiate his plea of earning of money out of poultry or agriculture. At this stage, it would further be necessary to indicate that the maturity amount out of the chit has also been taken note of by the Adjudicating Authority.
No explanation for transfer of the said amount to the firm belonging to Mr. Rajesh has been given. The aforesaid was also taken as clinching evidence to prove a case of benami transaction. It is also a fact that total area of the land is shown to be 0.5160 acres, but nothing has been mentioned about other land of Survey No.325/6 in his certificate. The appellant has shown income out of agriculture land, which was otherwise deposited through cash and source could not be proved. The critical analysis of it has also been made by the Adjudicating Authority and it has not been questioned.
No explanation for transfer of the said amount to the firm belonging to Mr. Rajesh has been given. The aforesaid was also taken as clinching evidence to prove a case of benami transaction. It is also a fact that total area of the land is shown to be 0.5160 acres, but nothing has been mentioned about other land of Survey No.325/6 in his certificate. The appellant has shown income out of agriculture land, which was otherwise deposited through cash and source could not be proved. The critical analysis of it has also been made by the Adjudicating Authority and it has not been questioned.
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2024 (9) TMI 720
Benami transaction - Provisional Attachment Order u/s 24(4) of the Prohibition of Benami Property Transactions Act, 1988 - events of transaction pre- amendment and the post - HELD THAT:- It is even by giving illustration that even if the property has been purchased prior to the amendment w.e.f. 01.11.2016, then it would be subject to the decision of the Apex Court in the case of Ganpati Delcom [2022 (8) TMI 1047 - SUPREME COURT]
It is, however, with the clarification that if such a property is transferred prior to the amendment but heldeven after the amendment by the Benamidar, then initiation of action under the amended provision would not be invalid. The significance of the word `held‟ given under Section 2(9)(A) has been elaborately discussed which word was not existing in the earlier definition of Benami transaction (pre-amendment).
In the instant case, the Company in whose name the property was purchased i.e. M/s Seasons Warehousing Pvt. Ltd. had no capacity to purchase the property worth of Rs. 01 Crore because as per the annual return submitted with the ROC, it was having worth of around 7 lakhs and that too in the Financial Year 1998-99. It is also a fact that the ITR for the Assessment Year 2020-21 filed by M/s Voltamp Controls Pvt. Ltd. reflected the address of the said property.
Adjudicating Authority ignored the definition of “Benami transaction” given under the amending Act of 2016 while passing the order. The property in question was purchased in the name of M/s Seasons Warehousing Pvt. Ltd. – Respondent No. 1 whereas it was not having means to pay consideration. M/s Voltamp Controls (I) Pvt. Ltd. – Respondent No. 2 was holding the property in the name of M/s Seasons Warehousing Pvt. Ltd.
Respondents did not contest the factual issues. It may be for the reason that the purchase of the property in the name of M/s Seasons Warehousing Pvt. Ltd. is for a sum of Rs. 01 Crores whereas the Company was not having sufficient funds to purchase the property worth of Rs. 01 Crores. It was thus held by M/s Voltamp Controls (I) Pvt. Ltd. and the address of the property was given even in the Income-tax return. Accordingly, the consideration of the property was paid by M/s Voltamp Controls (I) Pvt. Ltd but it was using the name of M/s Seasons Warehousing Pvt. Ltd. in whose name the Registered Deed was executed.
We find reasons to cause interference in the impugned order.
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2024 (9) TMI 719
Benami transaction - beneficial owner of the currency seized from Bikky Kumar Singh - as argued no evidence could be produced by the respondent to prove appellant to be beneficial owner of the currency seized from Bikky Kumar Singh - HELD THAT:- The statement initially recorded un/s 132(4) of the Income Tax Act have been corroborated by the Bikky Kumar Singh. The statement aforesaid has been quoted in the impugned order to show involvement of the appellant. The elaborate discussion on the issue has been made but now appellant has disowned the currency notes and pleading to this effect has been made in the appeal. The counsel for the appellant could not clarify that if the currency notes does not belongs to the appellant, how he is aggrieved by the attachment of the aforesaid amount which was seized from the possession of Bikky Kumar Singh. In fact, filing the appeal would show interest of the appellant in the currency and would be only when it belongs to him and not otherwise.
In any case, we do not find any substance in the argument of the appellant to state that no evidence or material has been produced by the respondents to prove case against him. Rather, the material available on record was considered by the Adjudicating Authority and elaborate finding was recorded thereupon. It is based on the material. Thus, we are unable to accept the first argument raised by the appellant.
First statement u/s 132(4) was recorded on 06.02.2017 by the Income Tax Authority while the subsequent statement under section 19(1)(b) of the Act of 1988 was recorded on 17th and 18th January, 2018, i.e. with the delay of almost eleven months - Appellant however failed to refer to any provision which mandates that statement should be recorded within the specific period and otherwise as such there is no variance in the two statements of Bikky Kumar Singh recorded under section 132(4) of the Income Tax Act and the subsequent statement under section 19(1)(b) of the Act of 1988. Thus, even second argument raised by the appellant cannot be accepted in absence of a statutory provision to mandate recording of the statement within the specific period.
Adjudication of benami property - impugned order that 25.04.2019 was passed after one year after the date of reference which is 26.03.2018 -Section 26(7) mandates order under sub-section 3 of section 26 within a period of one year from the end of the month in which reference under sub-section (5) of section 24 was received. The learned counsel for the appellant has ignored the word “received” rather it was taken to be the “date of reference”. In fact, no pleading has been made to plead the order was passed beyond a period of one year from the date of receipt of the reference. Though, the issue aforesaid is mixed question of facts and law. In any case, it was clarified by the respondent that reference dated 26.03.2018 was received by the Adjudicating Authority in the month of April 2018 who then caused show cause notice to Bikky Kumar Singh with a copy to the appellant in the month of April 2018 and the order was passed within one year from the date of receipt of the reference. In fact, from the end of the month of the receipt of the reference, the impugned order was passed within one year. Thus, the third issue raised by the appellant is also not made out though was not even pleaded in the appeal.
Notice and attachment of property involved in benami transaction - As provision of section 24(2) of the Act of 1988 its not mandate issuance of notice in the name of beneficial owner rather what is required is a copy of the notice to the beneficial owner. In the instant case, a copy of the notice was sent to the appellant and perusal of the pleading of the appeal would show not only its receipt but reply to the notice by the appellant. It could not have been, if the copy of the notice would not have been served on the appellant. In fact, the appellant has admitted service of the copy of the notice as per section 24(2) of the Act though it is to be given to the benamidar but copy was given to beneficial owner. Thus, the argument in reference to section 24(2) is also not made out.
Approval required under section 24(4)(A)(i) - We find that approval aforesaid was granted by the Competent Authority and was a part of the record. For the compliance, the respondent was directed to place on record the order of the approval which was submitted with the copy to the appellant.
In view of the above even the last issue raised by the appellant in reference to the requirement of approval under section 24(4)(a)(i) is concerned, the compliance of the aforesaid also exist. It was for continuing the provisional attachment of the property.
Appeal dismissed.
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2024 (9) TMI 718
Benami transaction - reliance on sworn statement u/s 32(4) to make out a case of benami transaction - reference of the meaning of “fiduciary capacity” - appellant would submit that the cash with the alleged benamidars was not in the capacity of trustee, executor, partner or a Director of the Company, thus would not fall in one of the exception given under sub-clause (ii) - HELD THAT:- The fiduciary capacity cannot be used as an exception in all the circumstances which may include transfer of property for or is held for illegal purpose. It cannot be even when there is a concluded contract which pass on the title to others then keeping the property by the person on whose favour title gets transferred would not keep it in “fiduciary capacity” rather with the transfer of the title, the relationship would also change and those cases would not fall in the sweep of the exception of fiduciary capacity. It would be simpliciter in those cases where the money has been kept with other person on trust for safe custody. It would not apply even in the cases where a conflict exist in regard to the relationship and the fiduciary should not be to make profit. It can be illustrated further but looking to the limited issue involved in the present case and as there is no allegation against the respondents for putting the money with the employees against any of the principle laid down by the Supreme Court [2015 (12) TMI 1775 - SUPREME COURT] RBI Vs. Jayanti Lal N. Mistry the elaborate discussion is not made however, this order would apply in the case where a person stand in the fiduciary capacity towards others simpliciter.
As statement of the witnesses have been analyzed by the Adjudicating Authority at length and for that even the statements have even been quoted. The fact remains that the alleged benamidar did not claim right and ownership on the property and at the same time alleged beneficial owner did not disown the cash found with the alleged benamidar rather claimed it to be their. The Income Tax Assessment was made adding the amount in the income of the beneficial owners which obviously was not shown in the books of accounts and therefore only the addition was made in the Income Tax Assessment. This fact also supports the respondent.
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2024 (9) TMI 130
Benami transaction - Adjudicating Authority refused to confirm the provisional attachment order passed u/s 24(4)(a)(i) of the Act of 1988 - on a search conducted by the Income Tax Department u/s 132 of the Income Tax Act, cash and gold was found with the non-appellants and accordingly their statements apart from the statement of Sh. Nagarajan were recorded
HELD THAT:- On a search conducted by the Income Tax Department under section 132 of the Income Tax Act, cash and gold was found with the non- appellants and accordingly their statements apart from the statement of Sh. Nagarajan were recorded.
The exception in the definition of “benami transaction” given under section 2(9)(A) would exclude it from benami transaction. It is on the peculiarity of the facts available on record.
At this stage, it needs to be clarified that holding of the property may be as trustee, executor, partner etc. referred under sub-clause (ii) but it is not inclusive definition rather illustrative in nature. In this case, property was held for safe custody and thus would fall in the exception to the definition of “benami transaction.”
The transaction in question would fall under one of the exception to section 2(9)(A) of the Act of 1988.
However, we cannot endorse the finding of the Adjudicating Authority for denial of confirmation to the reference. In fact we have not taken this a case to be of benami transaction in reference to one of the exception given under sub-clause (ii) of section 2(9)(A) of the Act of 1988, otherwise the transaction involves not only transfer and holding of the property but also the consideration of it was paid by other person.
Even after the aforesaid, the property was kept by the alleged benamidar for safe custody and as per their statement, they did not claim ownership of the property, rather it was shown to be of the alleged beneficial owner, i.e. Sh. Nagarajan. Thus, while not agreeing with the reasons given by the Adjudicating Authority, we have recorded our own reasoning for not endorsing the reference for the attachment of the properties rather the references are rejected for the reason recorded by us.
Thus, while disagreeing with the reasoning given by the Adjudicating Authority, we do not find reference can be answered favourable to the appellant, rather it is rejected and accordingly attachment of the properties cannot be confirmed which was otherwise assessed by the Income Tax Department and passed an order in favour of non- appellant, Sh. Nagarajan, though it is subsequent to the search and attachment. However, reference of the assessment order has been made to show that cash and gold belonging to Sh. Nagarajan and has been assessed by the Income Tax Department followed by an Assessment Order - The appeal preferred by the Deputy Commissioner, Income Tax is accordingly dismissed.
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2024 (8) TMI 1070
Summoning order passed in Criminal Complaint Case u/s 53 and 3 of the Prohibition of Benami Property Transaction Act, 1988 - Acting upon the assumption that the cash was the beneficial property of the applicant, who accumulated cash out of illegal gratification by misuse of official possession, it was attached under Section 24(4) of the PBPT Act
HELD THAT:- Hon'ble Supreme Court of India in the case of Lalankumar Singh [2022 (10) TMI 1135 - SUPREME COURT] has specifically held that the order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not.
Hon'ble Supreme Court of India in the case of Pepsi Foods Ltd. [1997 (11) TMI 518 - SUPREME COURT] has held that summoning of an accused in a criminal case is a serious matter and criminal law cannot be set into motion as a matter of course
Ld' court below has simply summarized the contents of the complaint, fact that sanction order was passed and the court had jurisdiction to entertain the matter and thereafter without recording any reason or without examining the nature of allegation made in the complaint the evidence regarding truthfulness of the allegation or any reason whatsoever as to why the cognizance is being taken and the accused is summoned has straightaway passed the cognizance and summoning order, even prima facie satisfaction or reasons for taking cognizance or proceedings against the petitioner has not been recorded while passing the impugned order dated 27.2.2024, thus, the impugned summoning order dated 27.2.2024 is contrary to the law laid down by Hon'ble Supreme Court of India in the cases of Lalankumar Singh, Pepsi Foods Ltd. [supra] and Mehmood UL Rehman [2015 (3) TMI 1349 - SUPREME COURT]
Considering the above, the application is disposed of.
The impugned summoning order passed by learned IXth Additional Sessions Judge, Lucknow in Criminal Complaint Case is set aside.
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2024 (8) TMI 679
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.
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2024 (7) TMI 427
Scope of amendment of Benami Transactions (Prohibition) Act, 1988 - HELD THAT:- As parties reached to a consensus. It is agreed that the amendment became part of statute book of Benami Transactions (Prohibition) Act, 1988 with effect from 01.11.2016 and in all these cases, the subject matter is for a period between 2011-2015 i.e., prior to the amendment. Thus, it is agreed that in the light of judgment of Supreme Court in Union of India and Another v. M/s. Ganpati Dealcom Pvt. Ltd. [2022 (8) TMI 1047 - SUPREME COURT] the impugned orders in all these petitions may be set aside.
In view of consensus arrived at, the impugned orders in all these petitions are set aside.
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2024 (6) TMI 1045
Benami transactions - attachment of the properties of the non appellants - Adjudicating Authority refused to confirm the order of attachment mainly on the grounds that the funds came to the beneficiaries as a loan or advances and were released by M/s Danodia Investments & Finance Ltd. through bank or proper banking channel - HELD THAT:- The Bank account of the transaction was supporting the aforesaid and thereby it cannot be said that M/s Danodia Investments & Finance Ltd was a non-existing Company and otherwise the loan or advances was not by way of benami transaction.
The finding aforesaid is in ignorance of the benami transaction. The Adjudicating Authority conveniently ignored as to how the fund came to M/s Danodia Investments & Finance Ltd. The Adjudicating Authority even failed to analyse how the shares were issued at the premium of Rs. 990/- by a Company having no business at all, rather it was existing on papers to provide accommodation entries. The fact aforesaid was conveniently ignored by the Adjudicating Authority and tried to focus only on the period subsequent to the benami transaction by which money was injected in the accounts of M/s Danodia Investments & Finance Ltd.
We find that the subsequent transaction was out of the benami property defined under section 2 (8) of the Act of 1988, and was otherwise out of the benami transaction of M/s Danodia Investments & Finance Ltd.
Adjudicating Authority conveniently ignored the fact regarding non-existence of 79 entities or it was on papers and pumped in the money in the accounts of M/s Danodia Investments & Finance Ltd. The funds came even subsequently in the year 2014-15 also by way of benami transactions and therefore only despite the notice, 79 entities did not respond to the notice.
We find that the impugned order is based on surmises and conjectures. And thereby the Adjudicating Authority had ignored all the relevant facts available on record and even referred in the impugned order.
Affidavit filed by the non-appellant which is common for majority of the entities. It is of Mr. Somnath Samanta who submitted the supporting affidavit for majority of the non-appellant Companies which includes M/s Danodia Investments & Finance Ltd and even for few Square Four Group Companies and other entities. The exception may be for M/s Mahi Trading Private Limited and Micro Network Private Ltd. etc. For Square Four Assets Management, no separate contest has been made, rather the arguments and the representation is common. The affidavits otherwise reverberates the same and it would be relevant that said Mr. Somnath Samanta had filed the affidavit even for Square Four Housing & Infrastructure and at the same time for M/s Danodia Investments & Finance Ltd. His affidavit is seen even for Square Four Residency Private Limited.
The only argument made now be in reference to section 2 (9) (D) defining the benami transaction as amended by the notification of 2016 with effect from 01.11.2016 - The facts available on record shows that transaction or the arrangement in this case is by non traceable or fictitious entities because 79 entities were found either on paper or not traceable, leaving few. The money was pumped in by layering or cash deposit by those entities which were not found traceable or were having no source to pump the money in the account of M/s Danodia Investments & Finance Ltd. It is however to clarify that mere reference of a provision different than applicable would not wash the effect of other provision, if applicable.
For all the reasons given above, we find force in the argument of the counsel for the appellant Department and find reason to cause interference in the impugned order, which is set aside. The order of the Adjudicating Authority is set aside and the order of provisional attachment is confirmed.
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2024 (5) TMI 1161
Benami Transaction - provisional attachment - beneficial owner of the Benami properties - SCN issued by Initiating Officer u/s 24 (1) of the Prohibition of Benami Property Transactions Act - The allegation is that there has been routing of funds from unknown sources through various companies and layering in this regard which have ultimately found a channel to the petitioners-companies through M/s Siddhi Vinayak Infra Zone.
HELD THAT:- As per statement of the concerned Directors/Partners/other Officials recorded and mentioned in the show cause notice, the original sale-deeds were not found in the office of these companies who in fact had common addresses, mostly so, nor the Director/Partners had any inkling as to the activities and source of funds of these companies of which they were Directors/Partners and they had mentioned the names of certain persons who have been mentioned as interested persons in the show cause notice who have links with other companies and LLPs. Based on the aforesaid material, the Initiating Officer has recorded his reasons to believe that the properties are result of benami transactions.
At the stage of consideration of admission and interim relief application looking into the facts and material on record, and that which we have perused, it is difficult to hold at this stage that none of the material was relevant or that it did not have a rationale connection with the transactions which are being referred as benami, however, again we do not record any conclusive opinion in this regard, as, all these issues need to be thrashed out finally.
No doubt, the argument of learned counsel for the petitioners that the transactions are based on legal documents and are permissible in law is very attractive, but, the stand of the Revenue is that these are all colourable transactions and, therefore, the opinion formed by the Initiating Officer at the stage of Section 24(1) is an opinion formed on the basis of material and it has rationale nexus with the object sought to be achieved which does not require any interference. It is trite that merely because some legal documents have been prepared and agreements have been entered into that may lead to an initial presumption about the validity of such transactions, but, then this is rebuttable and the Revenue is entitled to inquire, if there are grounds for it, as are being claimed, as to whether transactions are colourable and benami in terms of the Act 1988.
How far the transactions at hand based on material in possession of the Initiating Officer at the stage of Section 24 (1) would bring the transactions within the meaning of Section 2(9)(A) and (B) is also required to be considered, as, the jurisdictional facts envisaged in Section 24(1) have to be preexist and are prerequisites on the satisfaction of which alone the Initiating Officer has the jurisdiction to proceed in the matter.
On a perusal of records which have been produced separately before us in sealed cover, we find that the reasons and materials contained therein have been substantially discussed in the show cause notice and prima facie it is not as if the reasons and materials discussed in the impugned show cause notice and those available in these records are absolutely unrelated or alien to each other. This aspect, however, is also open for consideration at the time of final hearing as to whether the records contain relevant reason or material which is not mentioned in the show cause notice thereby rendering it defective and prejudicial.
Order of provisional attachment - Taking into consideration these facts, especially regarding sale of some of the lands/flats by Tilicho Ventures LLP which is part of the same consortium but, intriguingly has not challenged the notices before us, and, in spite of sufficient opportunities, the counsel for the petitioners did not deny this fact even orally during argument, although Mr. Parihar, learned Senior Counsel along with Ms. Radhika Singh, etc. appeared for all the seven petitioners-companies and Jitendera Prasad Verma is a Director in Tilocho Infra Developers Private Limited and also a partner in Tilocho Ventures Private LLP., whereas, Satish Kumar who has filed the affidavits in two of the petitions on behalf of the other companies is also a Director in the Tilicho Infradevelopers Private Limited, therefore, we are not inclined to stay the order of provisional attachment.
In our opinion, the following orders would serve the ends of justice at this stage:-
(I) Subject to final disposal of writ petitions and without prejudice to the rights of the petitioners herein, the proceedings under the Act 1988 may go on and the Initiating Officer shall take a considered decision under Section 24 (4) of the Act 1988 in accordance with law, accordingly.
(II) In the event the Initiating Officer revokes the provisional attachment of the property with the prior approval of the Approving Authority, then, of course, the matter would end and no further adjudication would be required before the Adjudicating Authority.
(III) However, if the Initiating Officer passes an order continuing the provisional attachment of the property with prior approval of the Approving Authority and refers the matter to the Adjudicating Authority under Section 24(5), the Adjudicating Authority may go ahead with the proceedings however, he shall not pass any final order under Section 26(3) of the Act 1988 till disposal of these writ petitions.
(IV) In the event the opposite parties herein want to withdraw the impugned show cause notices and issue them afresh in accordance with law providing the noticees with the material in the possession of the Initiating Officer, then, the pendency of these proceedings shall not come in their way. We make it clear that this is not a direction which we have issued, but, only a liberty which we have granted to the opposite parties in case they are of the opinion that this would be a better course of action, unless, of course, this is impermissible in law.
The opposite parties shall file their counter affidavit within four weeks. Two weeks thereafter shall be available to the petitioners for filing rejoinder affidavit. Considering the important issues involved herein, all these petitions shall come up for hearing in the 3rd week of July, 2024.
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2024 (5) TMI 384
Benami transaction - The applicant was found in possession of a significant amount of cash during an income tax raid - whether the bare ingredients of the offence under Section 53 read with Section 3 of PBPT Act were satisfied in the present case? - applicant submit that the applicant is an innocent person and has been falsely implicated in the present case due to enmity - whether sufficient ground for proceeding exists in the case or not? - HELD THAT:- Prosecution under Section 53 of PBPT Act can be initiated only in a case where the alleged transaction is either a Benami transaction pertaining to a Benami property or has been entered in order to defeat the provisions of any law or avoid payment of statutory dues or avoid payment to creditor whereas the complaint filed against the applicant does not make any whisper in this regard. In the absence of any allegation to the effect that the alleged transaction was entered by the applicant in order to defeat the provisions of any law or avoid payment of statutory dues or avoid payment to creditor, prosecution under Section 53 of PBPT Act could not have been initiated against the applicant, thus, the impugned summoning order dated 27.02.2024 fails on this count also.
It is also observed here that from the perusal of impugned summoning order dated 27.02.2024 it is evident that the learned trial court has not even applied its mind to the fact that whether the bare ingredients of the offence under Section 53 read with Section 3 of PBPT Act were satisfied in the present case or not. Further, this Court is of the view that summoning an accused is a very serious matter and the summoning order has to be passed after considering the legal aspects and material available on record in this regard Hon'ble Supreme Court of India has held that the order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not in the cases of Lalankumar Singh [2022 (10) TMI 1135 - SUPREME COURT], Pepsi Foods Ltd. [1997 (11) TMI 518 - SUPREME COURT], Mehmood UL Rehman [2015 (3) TMI 1349 - SUPREME COURT]
After going through the facts and circumstances of the case, this Court finds that learned trial court has not applied its judicial mind while summoning the applicant and has completely relied on the averments made in the complaint dated 27.02.2024 and also the order of summoning is a non-speaking order, therefore, in the opinion of this Court, the applicant has made out a case for interim relief. The matter requires consideration on fact and law both.
Learned Counsel for the opposite party Nos.1 and 2 prays for and is granted four weeks' time to file the counter affidavit. Two weeks' time thereafter shall be available to learned Counsel for the applicant for filing rejoinder affidavit.Accordingly, list/put up this case on 30.08.2024.
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2024 (5) TMI 84
Benami Property Transactions - Real/original owner - provisional attachment order issued u/s 24(3) of the Benami Transactions Act, 1988 - reason to believe that the petitioner is a Benamidar of respondent no.5 [her son-in-law ] - Who is original owner of the constructions? - Submission of petitioner is that the department has no evidence to prove any benami transaction or that the petitioner was a Benamidar of the constructions in question and respondent no.5 is the beneficial owner - HELD THAT:- Sri Krishna Kumar Dubey, Partner of M/s.Vishnu Mitra Buildcon has not given any basis or reason as to how he believes that the original owner of the constructions is respondent no.5 and even the department has not put a single question to Sri Krishna Kumar Dubey with regard to the basis of his knowledge. In support of his statement Sri Krishna Kumar Dubey has not provided any documentary or other evidence. Similarly, the department has also not referred to any other evidence in the show cause notice to support the said statement.
Section 24 (1) of the Benami Transactions Act states that "where the Initiating Officer, on the basis of material in his possession, has reason to believe". Thus, there are two pre-conditions to the issuance of the notice under Section 24(1) of the Benami Transactions Act; (i) The Initiating Officer should have material in his possession and; (ii) the material should be sufficient to cause a reason to believe. It goes without saying that while interpreting a taxing statute, the principle of strict interpretation is to be applied.
As per record, in the present case a mere statement of the contractor without any substantial supportive evidence is made the basis of the entire proceedings. Such a mere statement without any supportive evidence cannot under law be held to be a sufficient material in possession of an Initiating Officer to arrive at a reason to believe that constructions are benami. There has to be sufficient material in possession of the Initiating Officer on the basis of which he can come to a logical conclusion that can be called a reason to believe for initiating proceedings.
In the present case except for an oral statement of a contractor, who has not given any reason for making such a statement, and from whom the department has also not even asked as to on what basis he is making the said statement, the entire proceedings are initiated. There is not even an iota of material placed by the department before this Court, referred to in the show cause notice, on the basis of which the Court could believe the said bare statement and conclude that a reason to believe can be arrived at.
Admittedly, the petitioner has already submitted her Income Tax Returns for the relevant period and the said proceedings are not yet completed. As such, in the absence of the same the department also cannot claim that her earnings for the relevant year are beyond her known sources of income.
This Court has no hesitation in holding that there was no material in possession of the Initiating Officer which could be held to be sufficient for holding a reason to believe that the petitioner is a Benamidar of respondent no.5, her son-in-law, with regard to the constructions in question for initiating proceedings under Section 24(1) of the Benami Transactions Act.
As regards, the order of provisional attachment under Section 24(3) of the Benami Transactions Act is concerned, Section 24(3) requires that Initiating Officer is of the opinion that the person in possession of the property held Benami may alienate the property during the period specified in the notice. Without such a satisfaction the property can not be attached by the Initiating Officer.
In the present case, no such material has been referred to by the Initiating Officer in the impugned attachment order or placed before this Court which could demonstrate that the property is likely to be sold and thus require him to resort to Section 24(3) for provisional attachment. Thus, the order of provisional attachment is also without any basis.
The impugned show cause notice issued under 24(1) of the Benami Transactions Act and also the provisional attachment order issued under Section 24(3) of the Act, are hereby set aside.
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2024 (4) TMI 1049
Prohibition of Benami Transactions - provisional attachment order was confirmed - Who is the beneficial owner of property? - all the properties were purchased/ transferred prior to the amendment of 2016 in the Act of 1988 but properties were held by the benamidar even subsequent to the amendment - appellants submitted that perusal of the three tables would reveal that all those properties were purchased prior to the amendment in the Act, 1988 by the notification dated 01.11.2016 to amend various provisions of the Act of 1988.
As submitted that the appellant Sukh Lal Baiga purchased all the properties alleged to be benami from his own sources. He was working with Padam Kumar Singhania alleged to be the beneficial owner from the childhood and earning salary out of his work.
HELD THAT:- It is not in dispute that purchase of all the properties in the name of Sukh Lal Baiga is prior to the amendment of 2016 in the Act of 1988.
It is however a fact that all those properties were held by Sukh Lal Baiga even after the amendment. Holding of the properties even subsequent to the amendment of the year 2016 has a consequence and elaborately discussed in reference to the definition of “benami transaction” given under the amended provision of section 2 (9) by this Tribunal in the case of Suresh Bhageria Versus the Initiating Officer, DCIT (BPU-2), Mumbai [2024 (1) TMI 203 - APPELLATE TRIBUNAL FOR SAFEMA AT NEW DELHI]
It was held that if the benami transaction defined under section 2 (9) is to be applied, then it would be not only for transfer of the property but even its holding. The definition of benami transaction under the amended provisions was different than the un-amended provision.
The judgement quoted above deals with the first issue raised by the appellant where it has been held that if the property was purchased prior to the amendment of 2016 and is not held by the benamidar, then the judgement of the Apex Court in the case of “Union of India & Anr. Versus M/s. Ganpati Dealcom Pvt. Ltd [2022 (8) TMI 1047 - SUPREME COURT] would apply. However, if the property is held even after the amendment of 2016, then amended provision would apply. The detailed discussion of issue in the case of Suresh Bhageria (Supra) applies to the facts of this case.
In the light of the aforesaid and facts of this case, the first argument raised by the appellant cannot be accepted in the light of the detailed judgement of this Tribunal in the case of Suresh Bhageria (Supra).
Whether appellant Sukh Lal Baiga was having sufficient source to purchase the property from time to time? - The income of the appellant Sukh Lal Baiga and his further statement that all the properties referred in the schedule were purchased by Padam Kumar Singhania. The appellant Sukh Lal Baiga did not retract his statement though counsel for the appellant submitted that it has been questioned in the appeal but that cannot be taken to be a retraction. It is also a fact that the statement of different seller of the properties were also recorded and referred by the Adjudicating Authority. They have stated about payment of consideration by Padam Kumar Singhania for all the properties.
The statement of the seller have been corroborated by the evidence and the statement of Sukh Lal Baiga for purchase of property by Padam Kumar Singhania for which Sukh Lal Baiga was having no knowledge.
In the light of the facts given above, we find that material was brought by the respondents to prove a case of benami transaction for purchase of the properties.
Appellant questioned the statement of seller relied by the Adjudicating Authority without a chance of cross examination - An application to seek summoning of the witnesses to cross examination was not filed before the Adjudicating Authority. The statement of the seller was otherwise supplied to the appellant and has not been disputed. If the appellant was desirous of cross examination of those witnesses, he should have filed an application to summon them to provide an opportunity of cross examination before the Adjudicating Authority.
No such application was submitted by the appellant. The opportunity of cross examination is otherwise a part of natural justice but it is to be provided when statement of the witnesses are recorded before the Authority who is adjudicating the matter. It is not a case where the statement of witnesses were recorded by the Adjudicating Authority so as to allow cross examination of those witnesses as a course. The statement of witnesses were recorded during the course of investigation and there is no provision to provide cross examination by the Investigating Officer.
Hence, the allegation that Investigating Officer did not provide an opportunity of cross examination cannot be accepted. No one prevented the appellant to make an application to seek cross examination of the witnesses before the Adjudicating Authority. The appellant having failed to make an application to seek cross examination cannot now raise issue if the statement of witnesses have been relied after supplying a copy of those statement to the appellant.
In the light of the aforesaid, even the legal issue in reference to cross examination cannot be accepted and accordingly we do not find any force even in the third issue raised by the appellant.
We find a case for interference in the impugned order in reference to Aaditya Vikram Singhania holding him to be the beneficial owner only for the reason that he subsequently purchased benami properties in the year 2019. There is nothing on record to show that consideration of those properties was paid by Aaditya Vikram Singhania to purchase it in the name of Sukh Lal Baiga, otherwise mentioned in table C, rather the consideration was paid by Padam Kumar Singhania. Thus, for all the properties, he alone would be the beneficial owner and not Aditya Singhania.
Mere subsequent purchase of the property by Aaditya Vikram Singhania would however not affect the attachment but allegation of his being a beneficial owner of the property cannot be accepted and finding of the Adjudicating Authority to that extent is interfered and set aside with the declaration that beneficial owner of all the properties is Padam Kumar Singhania while benamidar to be Sukh Lal Baiga. The finding aforesaid would however not affect the attachment.
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2024 (3) TMI 1147
Benami transaction - Jurisdiction by the Investigating Authority or the Adjudicating Authority under the Benami Act - Benami transaction - summons issued u/s 19 of Benami Act and the provisional order of attachment as well as extension of such order passed u/s 24 of the said Act challenged - petitioner argues that the respondent-Authorities do not have any jurisdiction to initiate a proceeding under the Benami Act - HELD THAT:- The petitioner obviously acted as a conduit, being owned by shareholders which were none other than shell companies having fictitious existence, for channelizing money from undisclosed sources, shown to have been advanced by Shakambhari and others, into tangible properties by the 37 purchases which are in issue. Taking a broad view of Section 2(9)(D), the purchase of the properties through consideration which came from fictitious sources squarely attracts the said provision to the present transactions. It is to be noted that sub-clause (D) does not merely restrict itself to non-traceable sources of consideration but also to “fictitious” sources of consideration. Hence, there is sufficient prima facie material to indicate that the transactions-in-question were arrangements in respect of properties where the person providing the consideration is fictitious.
Hence, this Court does not find that there is ex facie erroneous assumption of jurisdiction by the Investigating Authority or the Adjudicating Authority under the Benami Act sufficient to displace the legitimate opinion formed in writing by the Investigating Authority, which justifies the reference to the Adjudicating Authority after issuance of notice and passing of provisional assessment order, which was continued subsequently.
For an adjudication of merits on the issues involved in the present case as indicated above, a full-fledged enquiry on factual assessments based on appreciation of evidence is required, which is entirely unwarranted at the instance of the writ court, since a comprehensive procedure is provided in Section 26 of the Benami Act, which is, as the Madhya Pradesh High Court held, in the nature of a self-contained code.
Thus, no ground to interfere with the impugned notice u/s 24 or the provisional orders passed therein, particularly, since the matter has already been referred to the Adjudicating Authority and is under consideration before it within the contemplation of Section 26 of the Benami Act. The appropriate remedy before the petitioner is to participate in the said proceedings, and to have its defence vindicated there. In any event, even thereafter, the petitioner has two stages of remedies – one, a hearing before confiscation and the other by way of an appeal under Sections 30 and 31 of the Benami Act, if aggrieved by the decision of the Adjudicating Authority.
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2024 (3) TMI 1060
Benami transaction - petitioner has called in show cause notice issued u/s 24(1) of the Prohibition of Benami Property Transactions Act, 1988 and Provisional Attachment Order issued u/s 24(3) of Act of 1988 - petitioners submits that the show cause notice and provisional attachment order are called in question mainly on the ground that the alleged benami transaction has taken place prior to 01/11/2016, the date when Act of 1988 stood amended - HELD THAT:- The ‘provisional assessment order’ as name suggests, is ‘provisional’ in nature . The ‘adjudicating authority’ is best suited to decide the question of Benami nature of the property. We find substance in the argument of learned ASG that show cause notice is a detailed notice running in several pages containing several factual basis and it is within the province of ‘adjudicating authority’ to decide whether property is ‘Benami’ in nature and whether petitioners are liable for any action under the Act of 1988.
The Division Bench declined interference against show cause notice and PAO and permitted the petitioner to raise all relevant aspects before adjudicating authority under Section 26 of the Act of 1988. We deem it proper to follow the same course. The petitioners can avail the remedies under the Act of 1988 and take all possible factual and legal grounds before the ‘adjudicating authority’.
Needless to mention that judgment of Advance Infra Developers (P) Ltd [2023 (12) TMI 620 - MADRAS HIGH COURT] and other judgments can be relied upon by the petitioners before the ‘adjudicating and appellate authority’ (if required) to impress upon it to take a different view than the view taken by Appellate Authority in M/s. Prism Scan [2024 (1) TMI 203 - APPELLATE TRIBUNAL FOR SAFEMA AT NEW DELHI] We have no doubt that if relevant grounds are taken and judgments are cited, the said authorities will consider and decide the matter on its own merits in accordance with law.
We find no reason to entertain these petitions despite availability of statutory alternative remedies. The petitioners may avail the said remedy.
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