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TMI Blog2025 (3) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery of huge cash and gold bullion of substantial amount and quantum cannot be overlooked. The seizure was made by the Appellant only of that amount of cash and the quantum of gold which was not even explained in the parallel books of account, besides, no mention thereof in the regular books of account. The reason stated by the Respondent that Shri S Nagarathinam could not have kept record of these recoveries because the Respondent undertook sand sale at many places cannot cut much ice in view of the Firm having established businesses which how could not even keep regular accounts. It is not convincing that the Firm was clueless of its business activities so as to maintain its record even in informal accounting. It cannot also be ignored that the detection and the recovery of unaccounted cash and gold bullion happened within a months‟ time of the demonetization. The rush by the Respondent as reflected in the filing of the ITRs for the seizures effected under the PBPTA on the same date for the AYs 2016-17 & 2017-18 cannot but show their attempt to bypass the provisions of the PBPTA. It, therefore, appears to us that the seized cash and gold bullion are Benami Properties f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded the unaccounted cash generated out of the business of the Respondent Firm, which was maintained by Shri S Nagarathinam, employee of the Respondent. Ld. Counsel argued that the Respondent maintained parallel set of accounts. The first set of accounts reflected the income which was reported and the second set of accounts showed the unreported income. The Initiating Officer showed that as per the cash book of parallel set of accounts, the closing balance as on 07.12.2016, i.e. the day before the day of seizure was recorded as Rs. 36,08,16,369/- and that out of this amount, an amount of Rs. 32,64,00,000/- was in new denomination of Rs. 2000/- currency notes and the balance Rs. 3,44,16,369/- was in old denominations of Rs. 500 & Rs. 1000 currency notes. The case of the Initiating Officer is that out of the total cash seizure made, only Rs. 32,64,00,000/- in new currency notes and Rs. 3,44,16,369/- in old currency notes may be attributed to the unaccounted sand sales. The balance cash seized to the tune of Rs. 98,93,34,581/- remained unexplained with respect to the source of generation and was not even been reported in the parallel (second) set of accounts. The cash book maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 2(9)(D) of the PBPTA since the Appellant had failed to prove that the Benami properties were not held by the Respondent for its own benefit. Ld. Counsel further argued that the insistence by Ld. Adjudicating Authority that in the cases of Benami Property within the import of Section 2(9)(D) of the PBPTA, while there may not be the need to show that the consideration for such property was made by the beneficial owner, the requirement for proving that such property is held for the benefit of a person other than the Benamidar (Respondent Firm) cannot be dispensed with, is incorrect reading of law. 10. Ld. Counsel argued that Ld. Adjudicating Authority wrongly relied on the Income Tax Returns ("ITRs") filed by the Respondent to reject the confirmation of the PAO dated 27.09.2017.Ld. Adjudicating Authority failed to take into account that the ITRs were filed on 04.08.2017, i.e. subsequent to the search dated 08.12.2016and the Show Cause Notice dated 29.06.2017. Ld. Counsel argued that the Respondent filed the ITRs only to escape from the rigours of the PBPTA. Ld. Counsel further argued that since the purpose of filing ITRs under the Income Tax Act, 1961is limited to assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o limit the arguments to the Written Reply dated 14.08.2019 filed by the Respondent Firm. The Respondent contended that the Ld. Adjudicating Authority issued a well-reasoned order based on proper application of mind. Ld. Adjudicating Authority was correct in concluding that the movable properties comprising of total cash of Rs 98,93,34,581/- and total gold bullion weighing 166.27 kg were not Benami Property within the import of Section 2(8) of the PBPTA. 15. The Respondent contended that it is a partnership firm which is into the business of leasing equipments on hire and purchase& sale of sand, gravel, filling sand and brick earth. The Respondent owns a large number of tippers and excavators. Hence, the Respondent generates huge amount of cash through its businesses. 16. The Respondent contended that the movable properties which are the subject matter of the present proceedings, are the unaccounted income of the Respondent Firm. The Respondent contended that it stands by the initial statement of Shri J Sekhar Reddy, Managing Director of the Respondent Firm which were recorded on 08.12.2016 & 10.12.2016. Shri Reddy had admitted that the entire cash seized was the unaccounted inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, 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 (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh and gold bullion as its income, so as to escape the rigours of the PBPTA. It is significant to note that the Respondent Firm had failed to bring on record even in its parallel set of accounts the recovered cash and gold bullion. We also note from the Table presented by Ld. Counsel for the Appellant as cited in paragraph 11 of this Order that the income reported by the Respondent for the AYs 2016-17 & 2017-18 far exceeds those reported for the previous two years. 23. The Hon'ble Supreme Court in the case of State of Karnataka Vs. Selvi J. Jayalalitha (2017) 78 Taxman.com 161 has held that: "I.T. returns and the orders passed in the IT Proceedings would not by themselves establish that such income had been from Lawful source as contemplated in the explanation to section 13(1)(e) and that independent evidence would be required to account for the same. Income-tax returns and orders would not ipso facto either conclusively prove or disapprove the charge of disproportionate assets (acquisition of assets disproportionate to known sources of income) and can at best be pieces of evidence which have to be evaluated along with the other materials on record. The court further hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of such retracted confession". 25. The Hon'ble Court has gone on to explain in paragraphs 37 and 38 of the judgment (supra), as to when to accept or reject the retracted statement as evidence. "37. With a view to arrive at a finding as regard the voluntary nature of statements or otherwise of a confession which has since been retracted, the court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such. 38. In the instant case, the investigating officers did not examine themselves. The authorities under the Act as also the Tribunal did not arrive at a finding upon application of their mind to the retraction and rejected the same upon assigning cogent and valid reasons therefor. Whereas mere retractation of a confession may not be sufficient to make the confessional statement irrelevant for the purpose of a proceeding in a criminal case or a quasi-crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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