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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 ..... 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. - FPA/PBPT/31/CHN/2018, FPA/PBPT/30/CHN/2018, FPA/PBPT/53/CHN/2018, FPA/PBPT/55/CHN/2018, FPA/PBPT/59/CHN/2018, FPA/PBPT/60/CHN/2018 AND FPA/PBPT/63/CHN/2018 - - - Dated:- 31-10-2018 - MR MANMOHAN SINGH, CHAIRMAN For The Appellants : Sh. Anirudh Bakhru and Sh. Sudhir Chandra, Advocates For The Respondent : Sh. Anish Dhingra, SPP for Initiating Officer JUDGMENT 1. By this Order, I prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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statement that ₹ 50,000/- received by him as salary advance was deposited in his bank account, which was subsequently withdrawn by him and consumed. 7.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 attach any amount due from you to or held by you or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/adjusted the remaining salary amount to the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 29.03.2017 through bank transfer. ii. In his affidavit, Shri K. Vijayakumar has stated that he is employed as Lab Assistant in St. Joseph‟s College of Engineering since 2003 and drawing salary of ₹ 19,586/- per month. The college is run by St. Joseph‟s Institute of Science Technology Trust. He had received an amount of ₹ 2,00,000/- as salary advance from the Trust on 14.11.2016 and returned back the said amount of ₹ 2,00,000/- to the Trust on 30.03.2017. iii. In his affidavit, Shri S. Praveen has stated that he is employed as bakery master in St. Joseph‟s College of Engineering since 2003 and drawing salary of ₹ 19,586/- 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 30.05.2017 through bank transfer. iv. Shri S. Thalapthy has mentioned in his affidavit that he is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Trust on 28.3.2017 through bank transfer. ix. Shri M.S. Sudeesh Kumar has stated in his affidavit that he is employed as Accounts Officer in St. Joseph‟s College of Engineering since 2003 and drawing salary of ₹ 39,940/- per month. The college is run by St. Joseph‟s Institute of Science Technology Trust. He had received an amount of ₹ 2,00,000/- as salary advance from the Trust on 14.11.2016, out of which on the insistence of Income Deptt. authorities, he returned back an amount of ₹ 1,07,000/- to the Trust on 14.11.2016. The remaining salary advance of ₹ 93,000/- was returned back by him to the Trust on 29.3.2017 through bank transfer. 15. The factual position is not denied by the respondent that St. Joseph College of Engineering and St. Joseph Institute of Technology are two colleges run by two trusts. Mr Babu Manoharan is the Chairman of boththe trusts and the engineering 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 emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order. e. There is not even a whisper or murmur in the order of any of the submissions made by the Counsels representing the IO and the Appellant. f. Benami Transaction has not been identified. The transaction in question is a genuine transaction wherein the cash was received by the appellant from her employer as a salary advance and it was never held by the Appellant for the benefit of the alleged beneficial owner. g. Benami Property has not been identified. In the show cause notice, the alleged property is the cash received. Whereas the IO has attached the bank account of the Appellant where no such cash has ever been deposited for the future benefit of the alleged beneficial owner. h. Benamidar has not been established. The Appellant has received the cash as salary advance for her personal purposes and she was never holding the alleged property of the so called beneficial owner. i. Even the owner of the property is not established. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. The definition of Section 2(5), 2(9) and 2(10) of the Benami Act is read as under: 2(5) attachment means the prohibition of transfer, conversion, disposition or movement of property, by an order issued under this Act; 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided the said consideration. 22. The characteristic of a benami transaction is that there must be a mere lending of name without any intention to benefit the person in whose name it is made i.e. a mere name lender. The mischief sought to be punished by the Act are only such transactions which have a name lending element without deriving any benefit therein i.e. benami transactions. (Para 1.5 Law Commission Report No. 57 and Statement Object and Reasons of the 1988 Act).The same read as under:- 1.5 Meaning of benami transaction‟ -Purchase or holding of properties in the name of another is known in India, as a benami transaction. This custom has been recognised by Indian Courts for a long time Literally, the word benami means without name‟. The essential legal characteristic of these transactions is that there is no intention to benefit the person in whose name the transaction is made. The name of that person, popularly known as the benamidar‟, as the Privy Council pointed out. Is simply an alias for that of the person beneficially interested. The benamidar has the ostensible title to the property standing in his name; but the beneficial ownershi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exus with the employer pertaining to any criminal activities. It is admitted by the respondent that they were employees with the Trust and highly qualified persons. Even the advance-salary received by them against the services to be provided by them. The same would have to be treated as earned money and disclosed income. It is not a case where they have received the advance salary amount and left the job. In the present cases, there is no direct or indirect evidence available on record to show that they were involved in assisting any crime. They have already paid/adjusted the entire amount towards their salaries. 26. The law in this regard is quite settled:- RE: DIRECT OR INDIRECT ATTEMPT: i) In State of Maharashtra v. Mohd.Yakub,: (1980) 3 SCC 57, the Honble Supreme Court observed that- 13. Well then, what is an attempt ? ...In sum, a person commits the offence of attempt to commit a particular offence when (i) he intends to commit that particular offence and (ii) he, having made preparations and with the intention to commit the offence, does an act towards its commission; such an act need not be the penultimate act towards the commission of that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only material present with the initiating officer were sworn statements. These statements only disclose a receipt of cash. This is insufficient to construe the existence of a benami transaction. 29. These statements would show that the money in question was no longer with the college staff and was either returned or spent and could not have been attached. 30. The Notice would show that it is mechanical in nature and only talks about receipt of cash. In fact all notices are identical except for the amount mentioned in paragraph 5 therein shows a lack of application of mind, thus making the jurisdiction assumed under section 24 invalid. 31. The Respondent could not have formed an opinion that the Appellant would alienate property knowing that the money is with the Income Tax Authorities in the absence of cogent and clear evidence. 32. It was rightly argued by Shri Anirudh Bakhru, learned counsel for the appellant that once the entire salary advance was returned back/adjusted to the Trust, the question of Appellant depositing any amount out of it in his bank account did not arise. Therefore, there was no benami property lying in the Bank account of the Appellant which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t must of course be gathered from the words actually used in the statute. That, however, does not mean that the decision should rest on a literal interpretation of the words used in disregard of all other materials. The literal construction then , says Maxwell on Interpretation of Statutes, 10th Edn., p. 19, has, in general, but prima facie preference. To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope and object of the whole Act; to consider, according to Lord Coke: (1) What was the law before the Act was passed; (2) What was the mischief or defect for which the law had not provided; (3) What remedy Parliament has appointed; and (4) The reason of the remedy . The reference here is to Heydon case [(1584) 3 Co. Rep 76 ER 637] .These are principles well settled, and were applied by this Court in Bengal Immunity Company Limited v. State of Bihar [(1955) 2 SCR 603, 633] . To decide the true scope of the present Act, therefore we must have regard to all such factors as can legitimately be taken into account in ascertaining the intention of the legislature, such as the history of the legislation and the purposes thereof, the mischief whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulate the business of running competitions within their respective borders, to the extent that it had ramifications in other States they could deal with it effectively only by joint and concerted action among themselves. That precisely is the situation for which Article 252(1) provides. Accordingly, following on the judgment of the Bombay High Court, the States of Andhra, Bombay, Madras, Orissa, Uttar Pradesh, Hyderabad, Madhya Bharat, Patiala and East Punjab States Union and Saurashtra passed resolutions under Article 252(1) of the Constitution authorising Parliament to enact the requisite legislation for the control and regulation of prize competitions. Typical of such resolutions is the one passed by the legislature of Bombay, which is in these terms: This Assembly do resolve that it is desirable that control and regulation of prize puzzle competitions and all other matters consequential and incidental thereto insofar as these matters are concerned with respect to which Parliament has no power to make laws for the States, should be regulated by Parliament by law . Having regard to the circumstances under which the resolutions came to be passed, there cannot be any reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reason to the aggrieved parties. In the facts of present appeals, even otherwise, the appellants have not held any benami property. They cannot be treated as Benamidar. The money has already been returned or adjusted against their salaries. The irony is that the respondent is neither placing on record the reasons to believe nor supplying the copy of the parties concerned. 36. Even the Adjudicating Authority has not considered the reply filed by the appellant properly. The impugned order is unsustainable 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. 37. The impugned order assumes that the object of the disbursement was to bring undisclosed amount into circulation by depositing into 3rd person accounts, who did not own the money legitimately. There is no material on record about any 3rd persons accounts. Furthermore, there is no material on record to show that the lecturers owned the money illegitimately. 38. The impugned order is also contrary to record with respect to the findings th1t the sworn statements, which were recorded, were withdrawn and that the adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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