2024 (10) TMI 298 - AT - Benami Property

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.

Summary

Issues Involved:

1. Legality of relying on sworn statements under Section 132(4) of the Income Tax Act in proceedings under the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act).
2. Whether the properties and assets in question were acquired through benami transactions.
3. Adequacy of evidence provided by the appellant to prove legitimate sources of income for acquiring the properties.

Issue-wise Detailed Analysis:

1. Legality of Relying on Sworn Statements:

The primary legal contention raised by the appellant was the reliance on sworn statements recorded under Section 132(4) of the Income Tax Act during the proceedings under the PBPT Act. The appellant argued that such statements should only be used within the confines of the Income Tax Act and not in other statutory proceedings. The Tribunal, however, rejected this argument, citing precedents from the Andhra Pradesh High Court and the Bombay High Court, which allowed the use of sworn statements in proceedings under different statutes if they pertain to the same transaction. The Tribunal emphasized that these statements are judicial in nature and can be used against the person making them, thus validating their use in the present proceedings under the PBPT Act.

2. Benami Transactions:

The Tribunal examined the properties in question, which included vehicles, land, and chit funds, all allegedly acquired through benami transactions. The appellant had initially admitted in the sworn statement that these assets were purchased by another individual, Rajesh of M.R. Traders, in his name. Despite later retraction, the Tribunal found that the statements, corroborated by other evidence, were sufficient to establish the benami nature of the transactions. The Tribunal noted that the maturity amounts from the chit funds were transferred to business concerns associated with Rajesh, further substantiating the benami claim.

3. Evidence of Legitimate Income Sources:

The appellant attempted to prove legitimate income sources through agricultural activities and poultry farming, supported by certificates from village officers and other documents. However, the Tribunal found these documents insufficient. The certificates were not based on revenue records and lacked credibility. The appellant's bank transactions showed significant amounts deposited from entities linked to Rajesh, rather than from agricultural or poultry income. The Tribunal also noted discrepancies in the appellant's financial statements and the absence of income tax returns, despite having an income above the taxable limit. The Tribunal concluded that the appellant failed to provide credible evidence to substantiate the claimed income sources, reinforcing the benami transaction findings.

In conclusion, the Tribunal dismissed the appeals, affirming the Adjudicating Authority's order that the assets in question were acquired through benami transactions, and the reliance on sworn statements was legally permissible. The appellant's failure to provide adequate evidence of legitimate income sources further supported the Tribunal's decision.