9911796707
TMI Blog2024 (9) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 information received from DD, IT, Chennai regarding suspect benami transaction of M/s SPK Group of Companies and Firms. It was on a search under section 132 of the Income Tax Act, 1961 conducted at the Company and its firms on 16.07.2018. 4. It was found that M/s SPK Company, a partnership firm is a flagship entity of SPK Group. It is mainly involved in the execution of civil contract of road construction in State of Tamil Nadu. The partnership firm was having many partners which includes the main partner being Sh. Nagarajan Seyyadurai. 5. During the course of search proceedings, cash and gold was found available with the non-appellants and accordingly not only the statement of the person in whose possession the cash and gold was recovered but also of Sh. Nagarajan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 owner. The Department attached the cash and the gold by the provisional attachment order dated 22.11.2018. However, the Adjudicating Authority refused to confirm the order. Therefore aggrieved by the order of the Adjudicating Authority, the appeals have been preferred by the Deputy Commissioner of Income Tax, Revenue Department. 9. The learned counsel for the appellant submitted that despite a case of benami transaction, the Adjudicating Authority refused to confirm the attachment order by taking an erroneous interpretation of the provisions of the Act of 1988 and therefore the appeal has been preferred to challenge the impugned order. 10. The learned counsel for the appellant argued that the Adjudicating Authority erroneously recorded the findings that the subject properties are not involved in benami transaction and therefore attachment order dated 22.11.2018 cannot be confirmed rather the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid 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. The learned counsel for the appellant submitted that in many cases, the cash and gold in possession of a person was not given by Sh. Nagarajan but was passed on by another person to whom such cash or gold was given by Sh. Nagarajan. And therefore, once Sh. Nagarajan pass on the cash and gold to another person, it becomes benami transaction and subsequent transfer of cash and gold to third person would make another case of benami transaction where initial receiver of cash and gold from Sh. Nagarajan would become beneficial owner while the person from whom the cash or gold was recovered would become benamidar. This aspect of the matter was also ignored by the Adjudicating Authority and in the light of the aforesaid also, the impugned order deserves to be set aside. 16. The appeal has been contested by the respondents on all the grounds. The counsel for the respondents submitted that there is no illegality in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 it, the transaction involved in these matters may not fall within the definition of benami transaction . 21. To analyse the issue, it would be relevant to quote section 2(9)(A) of the Act of 1988 for ready reference and is quoted thus:- Section 2 (9) benami transaction means- (A) a transaction or an arrangement - (a) where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and (b) the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration. except when the property is held by (i) a Karta, or a member of a Hindu undivided family, as the case may be, and the property is held for his benefit or benefit of other members in the family and the consideration for such property has been provided or paid out of the known sources of the Hindu undivided family; (ii) a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 hereunder:- S. No Name of person (alleged benamidar) from whom seizure was made Amount of Cash seized (Rs) Gold bullion seized (Kgs) Gist of statement of alleged benamidar (page no of reference book) Gist of statement of alleged beneficial owner Shri Nagarajan, Managing Partner of SPK Co (question no of his statement) 1 The Managing Partner M/s Aditya Enterprises 7,99,88,500 Given for safe custody by Shri Boominathan (p.99, 104). Shri Boominathan had received the same from Shri Nagarajan. Given for safe custody(Q no 19) 2 Shri B.Gopu 3,96,00,000 Given by Shri V Ravi (p.93), who confirmed that he received from Nagarajan for safe custody. (p. 98) Given to V Raviforsafe custody. (Q no 53) 3 Shri. Bhoominathan Subramaniam 30,42,40,200 -- Given by Shri Nagarajan (2 crores) and Shri V Ravi (28 crores) for safekeeping. (p. 107). Ravi confirmed that he had received from Nagarajan. Rs 2 crores given to him directly and Rs 28 crores to V Ravi, who handed over to Boomi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on to a person who later gave it to other for safe custody. We do not find that such an arrangement would in any manner affect the finding because if the property is transferred or is held for the purpose of safe custody on the trust reposed by the alleged beneficial owner in favour of one and who thereupon pass on to other, the fact remain that ultimate custody of the gold is by the person who is not claiming his right on the property rather stated it to be of another person who has given it for safe custody in fiduciary capacity. Hence, an argument raised by the appellant in reference to it remains of no consequence. 26. 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. 27. 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. 28. In the light of the aforesaid, the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in trust for another, a trustee, a person holding the character of a trustee, or a character analogous to that of a trustee with respect to the trust and confidence involved in it and the scrupulous good faith and condor which it requires; a person having the duty, created by his undertaking, to act primarily for another s benefit in matters connected with such undertaking. Also more specifically, in a statute, a guardian, trustee, executor, administrator, receiver, conservator or any person acting in any fiduciary capacity for any person, trust or estate. 17. Words and Phrases, Permanent Edition (Vol. 16-A p. 41) defines Fiducial Relation as under: There is a technical distinction between a fiducial relation which is more correctly applicable to legal relationships between parties, such as guardian and ward, administrator and heirs, and other similar relationships, and confidential relation which includes the legal relationships, and also every other relationship wherein confidence is rightly reposed and is exercised. Generally, the term fiduciary applies to any person who occupies a position of peculiar confidence towards another. It refers to integrity and fidelity. It contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of investment, collector of city taxes who retains money officially collected, one who receives a note or other security for collection. In the following cases debt has been held not a fiduciary one; a factor who retains the money of his principal, an agent under an agreement to account and pay over monthly, one with whom a general deposit of money is made. 21. We may at this stage refer to a recent decision of this Court in Central Board of Secondary Education and Anr. v. Adiya Bandopadhyay and Ors. (2011) 8 SCC 497, where Ravindeeran, J. speaking for the Court in that case explained the term fiduciary and fiduciary relationship in the following words: 39. The term fiduciary refers to a person having a duty to act for the benefit of another, showing good faith and candour, where such other person reposes trust and special confidence in the person owing or discharging the duty. The term fiduciary relationship is used to describe a situation or transaction where one person (beneficiary) places complete confidence in another person (fiduciary) in regard to his affairs, business or transaction(s). The term also refers to a person who holds a thing in trust for another (beneficiary). T ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
