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TMI Blog2024 (9) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 (Stay) FPA-PBPT-917/CHN/2019 MP-PBPT-786/CHN/2019 (Stay) FPA-PBPT-918/CHN/2019, MP-PBPT-787/CHN/2019 (Stay) FPA-PBPT-919/CHN/2019, MP-PBPT-788/CHN/2019 (Stay) FPA-PBPT-920/CHN/2019, MP-PBPT-789/CHN/2019 (Stay) FPA-PBPT-921/CHN/2019, MP-PBPT-790/CHN/2019 (Stay) FPA-PBPT-922/CHN/2019, MP-PBPT-791/CHN/2019 (Stay) FPA-PBPT-923/CHN/2019, MP-PBPT-792/CHN/2019 (Stay) FPA-PBPT-924/CHN/2019, MP-PBPT-793/CHN/2019 (Stay) FPA-PBPT-925/CHN/2019 JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN AND SHRI BALESH KUMAR MEMBER For the Appellants : Mr. Anish Dhingra, S.P.P. For the Respondents : Mr. A.K Tewary, IRS (Retd.) and Mr. A. Krishnamorrthy, FCA ORDER The batch of appeals have been preferred by the Deputy Commissioner of Income Tax (Benami Prohibition Unit) to challenge the order dated 20.06.2019 passed by the Adjudicating Authority under section 26(3) of Prohibition of Benami Property Transactions Act, 1988 (in short 'the Act of 1988') 2. By the impugned order, the Adjudicating Authority has refused to confirm the provisional attachment order dated 22.11.2018 passed under section 24(4)(a)(i) of the Act of 1988. 3. The attachment of property was made after registration of the case on an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T/Ramarajan/164 T.L. Ramarajan 25,00,00,000 -- 15 F.No.IO/PBPT/Thiyagaiya/165 T. Thiyagaiya ------ 1.00 16 F.No.IO/PBPT/Venkatraman/166 Venkatraman Rangaswamy 19,72,35,000 -- 178,42,42,200 101.0 kg 7. The perusal of the table given above not only makes a reference of the show cause notices issued to the non-appellant but also the details of the cash seized from them. The table even contains the quantity of gold recovered and seized from different persons. 8. According to the table given above, a sum of Rs. 178,42,42,200/- was seized apart from 101 KG gold. It is also a fact that during the course of the search operation at the premises of the respective persons, the individual had admitted that it belongs to Sh. Nagarajan and similarly Sh. Nagarajan had admitted that cash and gold belongs to him which said to have been given to different persons for safe custody as Sh. Nagarajan and others were involved in construction business having rotation of money. Therefore, the money was required to be kept in safe custody and accordingly the money and the gold were placed with many persons said to be benamidar while Sh. Nagarajan to be the beneficial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd even the attachment order. It is even ignoring the fact that the cash is considered to be property of the person who is possessing it and would be treated to be the owner. 13. A reference of the Judgement of the Delhi High Court in the case of Sukh Ram Vs. ACIT (2006) 285 ITR 256 was given and relevant para is quoted hereunder: It is settled that possession is evidence of ownership and the strength of the presumption of ownership arising from the fact of possession depends on the nature of property involved. This presumption is one of the strongest in case of cash found in the possession of a person since cash is one of the properties of which title is transferable by mere delivery of possession 14. The possession of cash gives the ownership and in the light of the aforesaid, it comes out to be a case of benami transaction because beneficial owner pass on the property to benamidar and the facts aforesaid are proved from bare perusal of the statements of the non-appellants. It is not that subsequent to search, if the beneficial owner declare undisclosed properties before the Income Tax Authorities followed by Assessment Order, the benami transaction would get nullified. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art from the statement of Sh. Nagarajan were recorded. Substance of the statement is that the cash and gold was given by Sh. Nagarajan to others for safe custody based on the trust. Sh. Nagarajan has not disowned ownership of the cash and the gold. In the similar manner, the possessor of the gold and the cash did not claim it to be of their ownership but shown it to be of Sh. Nagarajan. In few cases, where a third party got involved for the safe custody of cash and gold, the property was given by the person to whom it was initially given by Sh. Nagarajan. The substance of the case or facts are that the cash and gold belonging to Sh. Nagarajan has been given to other persons who were holding it at the time of the search. If the matter is considered simpliciter, it would become clear that consideration of the gold or the cash was paid by the Sh. Nagarajan and it was kept with the other person who were holding it at the time of search. The transaction simpliciter may fall within the definition of "benami transaction" given under section 2(9)(A) of the Act of 1988. The facts however remains that there are exception to the definition and if the present matter is analysed in reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by other person and accordingly, the transaction may fall within the definition of "benami transaction". To illustrate it for purchase of gold, consideration was paid by Sh. Nagarajan and it was transferred or held by other person and thereby it can be said to be a "benami transaction". The definition is however subject to exceptions and in this case, we need to give reference of sub clause (ii) of clauses (a) and (b) of section 2(9)(A). The facts on records shows that Income Tax authorities had recorded the statement which shows that cash and gold was given to the different persons for safe custody and that too on trust. In that case, it is to be taken to be holding of the property in the fiduciary capacity for the benefit of the other person. 24. It is also when subsequently, beneficial owner disclosed the cash and gold for the assessment to the income tax authorities and in pursuance to it, even the assessment was made. Thus, ultimately the cash and gold was assessed in the hand of Sh. Nagarajan with imposition of penalty under the Income Tax Act. For clarity of the amount and gold held by different persons, following statement would give complete picture and is quoted here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 bags were given to him for safe custody. (q 17) 11 N. Ravichandran 26,98,64,500 Shri Nagarajan asked me to allow him to park his car (p.97). I parked my car in his residence. (q 16) 12 Smt P. Radha 2,49,92,000 Given by Kothandaraman, brother (p 91) who confirmed that he had received from Nagarajan (p 107) Given to Shri Kothandaraman for safe custody. (q 44) 13 Shri R. Deepak Kumar 35,99,82,000 -- Shri Nagarajan parked car at my residence. My driver parked my BMW car in his residence. He did not know about cash kept in car. 14 Shri T.L.Ramarajan 25,00,00,000 -- Shri Boominathan had given for safekeeping. Given to Shri Boominathan, for safekeeping, who gave it to Ramarajan (q 44). 15 Shri T. Thiyagaiya ------- 1.00 Belongs to Shri Nagarajan (p 98) Given to him for safekeeping. (q 48) 16 Shri. Venkataraman Rangaswamy 19,72,35,000 -- Received from Shri Boominathan for safe custody (p 95) Given to him for safekeeping.(q 47) 17 Total 178,52,42,200 101.000 25. It is stated that in few cases the gold was not given directly by Sh. Nagarajan to alleged benamidars. In fact it was passed on to a person who later gave it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary capacity" was taken into consideration and following finding has been recorded in relevant paras of the judgement and are quoted hereunder. (15) The expression "fiduciary capacity" has not been defined in the 1988 Act or any other Statute for that matter. And yet there is no gainsaying that the same is an expression of known legal significance, the import whereof may be briefly examined at this stage. (16) The term "Fiduciary" has been explained by Corpus Juris Secundum as under: "A general definition of the word which is sufficiently comprehensive to embrace all cases cannot well be given. The term is derived from the civil, or Roman Law. It connotes the idea of trust or confidence, contemplates good faith, rather than legal obligation, as the basis of the transaction, refers to the integrity, the fidelity, of the party trusted, rather than his credit or ability, and has been held to apply to all persons who occupy a position of peculiar confidence toward others, and to include those informal relations which exist whenever one party trusts and relies on another, as well as technical fiduciary relations. The word 'fiduciary', as a noun, means one who holds a thing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckbroker and a customer." 19. Stroud's Judicial Dictionary explains the expression "fiduciary capacity" as under: "Fiduciary Capacity - An administrator who had received money under letters of administration and who is ordered to pay it over in a suit for the recall of the grant, holds it "in a fiduciary capacity" within Debtors Act 1869 so, of the debt due from an executor who is indebted to his testator's estate which he is able to pay but will not, so of moneys in the hands of a receiver, or agent, or Manager, or moneys due to an account from the London agent of a country solicitor, or proceeds of sale in the hands of an auctioneer, or moneys which in the compromise of an action have been ordered to be held on certain trusts or partnership moneys received by a partner." 20. Bouvier's Law Dictionary defines "fiduciary capacity" as under: "What constitutes a fiduciary relationship is often a subject of controversy. It has been held to apply to all persons who occupy a position of peculiar confidence towards others, such as a trustee, executor, or administrator, director of a corporation of society. Medical or religious adviser, husband and wife, an agent who appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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