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TMI Blog2024 (9) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... s conducted under section 132/133(a) of Income Tax Act on 13.07.2020 on M/s Trigon Hotels and Resource Private Limited. During the course of search proceeding, it was found that several bank lockers were held in the name of the benamidar by the beneficial owner where a total sum of Rs. 9,94,00,000/- was found. 3. During the course of search proceeding, the statement of benamidar Jiten Pujari was recorded under section 132(4) of the Income Tax Act, 1961 on 14.07.2020 and 16.07.2020. It was stated that cash in the locker with Punjab and Sind Bank belongs to Sh. Ratan Kant Sharma, the beneficial owner. The statement of Venkatesh Shenoy was also recorded who stated that the lockers in which cash was found were under the key with Jiten Pujari belongs to Ratan Kant Sharma. 4. In another statement by Siya Ram Pandey, it was stated that cash does not belong to him but was given to him by Jiten Pujari. It was belonging to Shiv Shankar Sharma, the beneficial owner. 5. The learned counsel for the appellant submitted that the sworn statement under section 132(4) was sufficient to make out a case of benami transaction. Subsequently, various affidavits were filed where different versions were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act. The addition of the amount was made finding the cash to be un-disclosed income. It is however submitted that the books of accounts and balance sheet was not disclosing cash amount in the hands of the beneficial owners. The Adjudicating Authority chose to believe the statement of Shiv Shankar Sharma ignoring contradiction in the statement of others. It may be that addition was made in the income of Shiv Shankar Sharma under section 143(c) of the Income Tax Act but merely for that reason, the Adjudicating Authority could not have ignored the element of benami transaction and therefore the impugned order deserves to be set aside. 9. The learned counsel for the respondent made serious contest to arguments raised by the counsel for the appellant. It was submitted that the impugned order was passed by the Adjudicating Authority based on the statement of the witnesses. It was a case where the cash was given to the alleged benamidar for safe custody in fiduciary capacity. The alleged benamidar with whom the keys of the locker were found or they were holding the locker where the cash was found had not disclosed it to be belonging to them rather refer it to be of the al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 standing in a fiduciary capacity for 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 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 j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, Director of the Company etc. 16. At this stage we may refer to the Judgement of the Apex Court in the case of Sri Marcel Martins Vs M. Printer & Ors reported in AIR 2012 Supreme Court 1987. Therein, the issue regarding "fiduciary capacity" was taken into consideration and following finding has been recorded and relevant paras of the judgement 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 confiden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty to act for give advice to another on matters falling within the scope of the relationship, or (4) when there is a specific relationship that has traditionally been recognised as involving fiduciary duties, as with a lawyer and a client or a stockbroker 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and trust on the one part and good faith on the other. 17. In the judgement Supra, reference of the meaning of "fiduciary capacity" has been given elaborately. Reference of it has been made by us for the reason that "fiduciary capacity" has not been defined under the Act of 1988. It is however necessary to refer another Judgement of the Apex Court in the case of RBI Vs. Jayanti Lal N. Mistry reported in 2016, 3 SCC 525. 18. The Hon'ble Apex Court has guided the scope of fiduciary relationship which is required to be followed and for ready reference the relevant para of the judgement is quoted hereunder:- The scope of the fiduciary relationship consists of the following rules: "(i) No Conflict rule- A fiduciary must not place himself in a position where his own interests conflicts with that of his customer or the beneficiary. There must be "real sensible possibility of conflict. (ii) No profit rule- a fiduciary must not profit from his position at the expense of his customer, the beneficiary; (iii) Undivided loyalty rule- a fiduciary owes undivided loyalty to the beneficiary, not to place himself in a position where his duty towards one person conflicts with a duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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