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TMI Blog2018 (12) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted position is that the management/employer was very much traceable, his statement was recorded, the money returned by the appellants was dealt by the department. The existence of the benami transaction has to be proved by the authorities i.e. the person who alleges the transaction (Sitaram Agarwal v. Subrata Chandra, (2008 (5) TMI 718 - SUPREME COURT). The authorities have failed to discharge the burden of proof. The authority has purely gone on the premise that cash is transferred from one person to another, with an object to defeat , demonetization. This is insufficient to establish a benami transaction. The transaction where cash is paid to person in lieu of a future promise cannot be a benami transaction as there is no lending of name. There can be no benami transaction if the future benefit is due from the person who is also the holder of property. The impugned order is not sustainable as it punishes the appellants for wanting to defeat the purpose of demonetization, which has no direct nexus with the Act and is beyond the purview of the Act. X X X X Extracts X X X X X X X X Extracts X X X X ..... amount and also lent your name." 6. It was alleged that the contents of the above show cause are contrary to the factual position. It was clearly pointed out by the appellant in his sworn statement that ₹ 50,000/- received by him as salary advance was deposited in his bank account, which was subsequently withdrawn by him and consumed. 7. Knowing fully well that no such deposited amount was held by the appellant for the benefit of the alleged beneficial owner, the I.O went ahead and issued a Provisional Attachment Order under sub-section (3) of Section 24 of the Act for provisionally attaching the aforesaid Indian bank account of the Appellant by completely disregarding the facts recorded in the sworn statement of the Appellant and his reply to the show cause notice. The Provisional Attachment Order dated 25.01.2017 reads as under: - "The sum of ₹ 50,000/- is due from the Benamidhar, through Thiru Ganesh Bahadur on account of Benami transactions (Prohibitions) Amendment Act, 2016. The savings bank account held by the Benamidhar in your branch is SB A/c No. 482948206. You are hereby required u/s 24(3) of the Benami Transactions (Prohibitions) Amendment Act, 2016 to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n new currency as per his convenience." 11. The main case of the appellant is that the order passed by the I.O under sub-section (4) of Section 24 of the Act dated 13.03.2017 is wrong as it relates to a property which does not exist at all. Thus, the Approving Authority has also failed in his duties to do justice with the Appellant. 12. The Adjudicating Authority has passed the order dated 27.03.2018 under sub-section (3) of section 26 of the Act upholding the order passed by the I.O under sub-section (4) of Section 24 of the Act dated 13.03.2017 by concluding that: "The I.O has shown by sufficient material that the properties involved are benami properties. Consequently the property is declared to be a benami property in the hands of the benamidars and the attachment order is required to be confirmed and is hereby confirmed. The attachment order passed under section 4 of PBPT Act dated 13.03.2017 is hereby confirmed. The properties are declared are to be benami properties. The reference no. 3 of 2017 is allowed." 13. It is not disputed by the learned counsel for the respondent that these nine appellants who had allegedly received the said amount, have returned back/adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nology Trust. He had received an amount of ₹ 50,000/- as salary advance from the Trust on 14.11.2016 and returned back the said amount of ₹ 50,000/- to the Trust on 30.05.2017 through bank transfer. iv. Shri S. Thalapthy has mentioned in his affidavit that he is employed as Lab Assistant in St. Joseph‟s College of Engineering since 2010 and drawing salary of ₹ 19,698/- per month. The college is run by St. Joseph‟s Institute of Science & Technology Trust. He had received an amount of ₹ 50,000/- as salary advance from the Trust on 14.11.2016 and returned back the said amount of ₹ 50,000/- to the Trust on 30.03.2017. v. In his affidavit, Shri P. Shankar has stated that he is employed as a Mess Employee in St. Joseph‟s College of Engineering since 2003 and drawing salary of ₹ 19,000/- per month. The college is run by St. Joseph‟s Institute of Science & Technology Trust. He had received an amount of ₹ 50,000/- as salary advance from the Trust on 14.11.2016 and returned back the said amount of ₹ 50,000/- to the Trust on 31.03.2017 through bank transfer. vi. Shri R. Illayaraja has stated in his affidavit that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering colleges. 16. The Initiating Officer by virtue of his order dated 13.03.2017 u/s 24(4)(a)(i) of the Act has held the chairman to be the beneficial owner and 49 employees of these colleges as benamidars thereafter attaching the salary bank accounts of these employees up to the value of the alleged "benami" property. 17. A search action by the Income Tax Department commenced on 17.11.2016. During the course of this search, from the office computer of the accountant, details of disbursement of amounts to various Department Heads for further disbursements were found. 18. The statement of the Chairman was recorded during the course of search wherein he stated that salary advance was given to employees of two colleges as salary advance for their personal purposes. This was given only to interested employees, who gave their consent for the same. The employees in their statements also agreed to having received such money. He also said that he would pay tax on the entire amount mentioned in the list of disbursement, as income of the trusts. The trust accordingly honored the Chairman‟s commitment and paid taxes on income of ₹ 8.18 Crores, availing the scheme of PMGKY. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablished. The transaction in question in salary advances paid by the educational institutes through its Chairman. Mr. Babu Manoharan is neither the beneficial nor the source of the amounts disbursed. Ground 4: Property was not held for the benefit of alleged beneficial owner and hence the order passed by the Authority is liable to be set aside. The facts of the present case clearly show that the cash of ₹ 50,000/- received by the Appellant as salary. Such genuine transactions are outside the purview of the Benami Act. Ground 5: Disbursed amount belongs to the Trusts and not the alleged beneficial owner and hence the order passed by the Authority is liable to be set aside. The Adjudicating Authority while passing the order has completely ignored the fact that the amount of ₹ 8.18 crores disbursed by the two Trusts (namely St. Joseph Educational Trust and St. Joseph Institute of Science & Technology Trust) has been fully declared by the Respective Trusts under the Pradhan Mandhri Garib Kalyan Yojana (PMGKY) scheme and even appropriate taxes were paid in full, the evidence of which was submitted before the Adjudicating Authority on 15-05-2017. Ground 6: The Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 (22 of 1996) and any other person as may be notified by the Central Government for this purpose; (iii) any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual; (iv) any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendant and the individual appear as joint-owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual; or (B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or (C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership; (D) a transaction or an arrangement in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he person beneficially interested. The benamidar has the ostensible title to the property standing in his name; but the beneficial ownership of the property does not vest in him but in the real owner. 23. The Act was amended in the year 2016 with the following objects: " STATEMENT OF OBJECTS AND REASONS The Benami Transactions (Prohibition) Act, 1988 was enacted to prohibit benami transactions and the right to recover property held benami. The said Act, inter alia, provides that-(a) all the properties held benami shall be subject to acquisition by such authority in such manner and after following such procedure as may be prescribed; (b) no amount shall be payable for the acquisition of any property held benami; (c) the purchase of property by any person in the name of his wife or unmarried daughter for their benefit would not be benami transaction; (d) the securities held by a depository as registered owner under the provisions of the Depositories Act, 1996 or participant as an agent of a depository would not be benami transactions. 2. During the administration of the Benami Transactions (Prohibition) Act, 1988, it was found that the provisions of the aforesaid Act are ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct towards its commission; such an act need not be the penultimate act towards the commission of that offence but must be an act during the course of committing that offence." Thus, an "attempt to indulge" would necessarily require not only a positive "intention" to commit the offence, but also preparation for the same coupled with doing of an act towards commission of such offence with such intention to commit the offence. Respondent failed to produce any material or circumstantial evidence whatsoever, oral or documentary, to show any such „intention‟ and „attempt‟ on the part of any of the petitioners. 31) RE: KNOWINGLY ASSISTS OR KNOWINGLY IS A PARTY: In Joti Parshad v. State of Haryana: 1993 Supp (2) SCC 497 the Hon‟ble Supreme Court has held as follows- "5. Under the Indian penal law, guilt in respect of almost all the offences is fastened either on the ground of "intention" or "knowledge" or "reason to believe". We are now concerned with the expressions "knowledge" and "reason to believe". "Knowledge" is an awareness on the part of the person concerned indicating his state of mind. "Reason to believe" is another facet of the state of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benami property lying in the Bank account of the Appellant which has been attached. 33. a) In the case of Ohlson v. Hylton [1975] 1 WLR 724, the Queens Bench Division held: "This is a case in which the mischief at which the statute is aimed appears to me to be very clear. Immediately prior to the passing of the Act of 1953 the criminal law was adequate to deal with the actual use of weapons in the course of a criminal assault. Where it was lacking, however, was that the mere carrying of offensive weapons was not an offence. The long title of the Act reads as follows: "An Act to prohibit the carrying of offensive weapons in public places without lawful authority or reasonable excuse." Parliament is there recognising the need for preventive justice where, by preventing the carriage of offensive weapons in a public place, it reduced the opportunity for the use of such weapons. I have no doubt that this was a worthy objective, and that the Act is an extremely important one. If, however, the prosecutor is right, the scope of section 1 goes far beyond the mischief aimed at, and in every case where an assault is committed with a weapon and in a public place an offence under the Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation and the purposes thereof, the mischief which it intended to suppress and the other provisions of the statute, and construe the language of Section 2(d) in the light of the indications furnished by them. c) Turning first to the history of the legislation, its genesis is to be found in the Bombay Lotteries and Prize Competitions Control and Tax Act (Bom 54 of 1948). That Act was passed with the object of controlling and taxing lotteries and prize competitions within the Province of Bombay, and as originally enacted, it applied only to competitions conducted within the Province of Bombay. Section 7 of the Act provided that "a prize competition shall be deemed to be an unlawful prize competition unless a licence in respect of such competition has been obtained by the promoter thereof". Section 12 imposed a tax on the amounts received in respect of competitions which had been licensed under the Act. With a view to avoid the operation of the taxing provisions of this enactment, persons who had thereto before been conducting prize competitions within the Province of Bombay shifted the venue of their activities to neighbouring States like Mysore, and from there continued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to be passed, there cannot be any reasonable doubt that the law which the State legislatures moved Parliament to enact under Article 252(1) was one to control and regulate prize competitions of a gambling character. Competitions in which success depended substantially on skill could not have been in the minds of the legislatures which passed those resolutions. Those competitions had not been the subject of any controversy in court. They had done no harm to the public and had presented no problems to the States, and at no time had there been any legislation directed to regulating them. And if the State legislatures felt that there was any need to regulate even those competitions, they could have themselves effectively done so without resort to the special jurisdiction under Article 252(1). It should further be observed that the language of the resolutions is that it is desirable to control competitions. If it was intended that Parliament should legislate also on competitions involving skill, the word "control" would seem to be not appropriate. While control and regulation would be requisite in the case of gambling, mere regulation would have been sufficient as regards competiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, were withdrawn and that the advance was beyond the paying capacity of the lecturers and staff. 39. It is imperative that the investigating officer must form a reason to believe based on application of mind and appreciation of the material on record (ACIT v. Dhariya Construction Co.(2010)328 ITR 515&CIT v. Kelvinator India Ltd (2010) 320 ITR 561). 40. The notice shows that it is mechanical in nature and only talks about receipt of cash. In fact all notices are identical except for the amount mentioned. It shows a lack of application of mind, thus making the jurisdiction assumed under section 24 is invalid. 41. The facts of the present case are clear that the property was never held by the appellants. The amount received by them have returned/adjusted towards salaries. Even the question of any arrangement in the present case does not arise as the appellants have received only advance salary from the employer under oral contract at the asking of the respondent, the same was immediately returned. The said factual position has not been denied by the respondent. This is also not a case where the person providing the consideration was not traceable or fictitious. The admitted positi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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