2024 (4) TMI 1049 - AT - Benami Property

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.

Summary

Issues Involved:
1. Applicability of the Amending Act of 2016 to benami transactions.
2. Sufficiency of appellant's income to purchase properties.
3. Denial of cross-examination of witnesses.
4. Determination of beneficial ownership.

Summary:

Issue 1: Applicability of the Amending Act of 2016 to Benami Transactions
The Tribunal held that if the property was purchased prior to the amendment of 2016 and is not held by the benamidar, the judgment of the Apex Court in "Union of India & Anr. Versus M/s. Ganpati Dealcom Pvt. Ltd" would apply. However, if the property is held even after the amendment of 2016, the amended provision would apply. The Tribunal emphasized that the definition of "benami transaction" under the amended provisions includes both the transfer and holding of property. Thus, if a property is held by a person whose consideration was paid by another person even after the amendment, it would fall under the definition of "benami transaction."

Issue 2: Sufficiency of Appellant's Income to Purchase Properties
The Tribunal found that the appellant, Sukh Lal Baiga, did not have sufficient income to purchase the properties in question. The Adjudicating Authority analyzed the appellant's income and concluded that he could not have acquired funds to purchase property worth more than Rs. 11 lakh. Statements from the appellant and various sellers indicated that the properties were purchased by Padam Kumar Singhania, not by the appellant.

Issue 3: Denial of Cross-Examination of Witnesses
The Tribunal noted that the appellant did not file an application to summon witnesses for cross-examination before the Adjudicating Authority. The statements of the sellers were supplied to the appellant and were not disputed. The Tribunal held that the opportunity for cross-examination is part of natural justice but must be requested appropriately. Since the appellant failed to make such a request, the Tribunal found no merit in the argument regarding the denial of cross-examination.

Issue 4: Determination of Beneficial Ownership
The Tribunal found that the beneficial owner of the properties was Padam Kumar Singhania, not Aditya Vikram Singhania. The Tribunal noted that there was no evidence to show that Aditya Vikram Singhania paid the consideration for the properties purchased in the name of Sukh Lal Baiga. The finding of the Adjudicating Authority that Aditya Vikram Singhania was the beneficial owner was set aside, declaring Padam Kumar Singhania as the beneficial owner and Sukh Lal Baiga as the benamidar. However, this finding did not affect the attachment of the properties.

Conclusion:
The appeals were disposed of with the determination that the properties were held as benami transactions under the amended provisions of the Act of 2016, and Padam Kumar Singhania was the beneficial owner while Sukh Lal Baiga was the benamidar. The Tribunal upheld the attachment of the properties.