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Benami Property - Case Laws
Showing 21 to 40 of 336 Records
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2024 (9) TMI 130
Benami transaction - Adjudicating Authority refused to confirm the provisional attachment order passed u/s 24(4)(a)(i) of the Act of 1988 - on a search conducted by the Income Tax Department u/s 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
HELD THAT:- On a search conducted by the Income Tax Department under section 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 by other person.
Even after the aforesaid, the property was kept by the alleged benamidar for safe custody and as per their statement, they did not claim ownership of the property, rather it was shown to be of the alleged beneficial owner, i.e. Sh. Nagarajan. Thus, while not agreeing with the reasons given by the Adjudicating Authority, we have recorded our own reasoning for not endorsing the reference for the attachment of the properties rather the references are rejected for the reason recorded by us.
Thus, while disagreeing with the reasoning given by the Adjudicating Authority, we do not find reference can be answered favourable to the appellant, rather it is rejected and accordingly attachment of the properties cannot be confirmed which was otherwise assessed by the Income Tax Department and passed an order in favour of non- appellant, Sh. Nagarajan, though it is subsequent to the search and attachment. However, reference of the assessment order has been made to show that cash and gold belonging to Sh. Nagarajan and has been assessed by the Income Tax Department followed by an Assessment Order - The appeal preferred by the Deputy Commissioner, Income Tax is accordingly dismissed.
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2024 (8) TMI 1070
Summoning order passed in Criminal Complaint Case u/s 53 and 3 of the Prohibition of Benami Property Transaction Act, 1988 - Acting upon the assumption that the cash was the beneficial property of the applicant, who accumulated cash out of illegal gratification by misuse of official possession, it was attached under Section 24(4) of the PBPT Act
HELD THAT:- Hon'ble Supreme Court of India in the case of Lalankumar Singh [2022 (10) TMI 1135 - SUPREME COURT] has specifically held that the order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not.
Hon'ble Supreme Court of India in the case of Pepsi Foods Ltd. [1997 (11) TMI 518 - SUPREME COURT] has held that summoning of an accused in a criminal case is a serious matter and criminal law cannot be set into motion as a matter of course
Ld' court below has simply summarized the contents of the complaint, fact that sanction order was passed and the court had jurisdiction to entertain the matter and thereafter without recording any reason or without examining the nature of allegation made in the complaint the evidence regarding truthfulness of the allegation or any reason whatsoever as to why the cognizance is being taken and the accused is summoned has straightaway passed the cognizance and summoning order, even prima facie satisfaction or reasons for taking cognizance or proceedings against the petitioner has not been recorded while passing the impugned order dated 27.2.2024, thus, the impugned summoning order dated 27.2.2024 is contrary to the law laid down by Hon'ble Supreme Court of India in the cases of Lalankumar Singh, Pepsi Foods Ltd. [supra] and Mehmood UL Rehman [2015 (3) TMI 1349 - SUPREME COURT]
Considering the above, the application is disposed of.
The impugned summoning order passed by learned IXth Additional Sessions Judge, Lucknow in Criminal Complaint Case is set aside.
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2024 (8) TMI 679
Benami property transaction - appellant Directorate attached 29 immovable properties - beneficial owner - provisional attachment orders - property purchased in the name of Kapuri Devi were excluded on the ground that both her sons and husband were working so the property could be purchased in her name - description of each property has been given by the appellant which otherwise has been left by the Adjudicating Authority for confirmation in case of Somendra Dhariwal
HELD THAT:- The finding recorded by the Adjudicating Authority is without reference to the facts of the case referred earlier while referring the arguments of the appellant. The Adjudicating Authority shifted the burden on I.O. to show that the beneficial owner has provided the consideration of the properties though the detailed facts in that regard were submitted and has been narrated in this order also, thus, a perverse finding has been recorded going against the record and the material referred earlier.
The finding has been recorded even going against the definition of “benami transaction” given under section 2(9)(A) despite satisfaction of both the limbs of the definition. It was a case where the property was transferred or held by a person of which consideration was provided or paid by another person. It is the case where wife and sons were not having sufficient means to acquire properties of the value given by the appellant and also that acquisition of property was for immediate or future benefit of the persons who provided consideration i.e. the father.
It was found that the appellant Shobharam Dhariwal while in service could earn an amount of Rs. 63,95,140/- towards salary and if no part of it has been spent on the livelihood, he could not have acquired the property in name of his wife and son worth of Rs. 4 crore, 58 lacs and odd.
The property was acquired for a value of a sum more than the earning. It was out of the illicit income of Shobharam Dhariwal while in service of the agriculture department. The unaccounted amount was used to acquire the property in the name of wife and sons for his own benefit and therefore it becomes a case of "benami transaction‟ but the Adjudicating Authority has recorded superficial finding to deny confirmation to the attachment even for the properties at item no. 20 to 28 in Table A,properties at Sr. No. 15 to 19 in Table B, properties at Sr. No. 5 and 6 in Table C and movable properties in Table C (I). It has erroneously shifted the burden to prove the allegation on the appellant though it remains successful to prove it by bringing all the facts and relevant material on record and has been referred by us in the earlier paras of the order.
The reference of Income Tax Returns (ITRs) and the source of one‟s earning apart from the description of the property acquired by the respondents has been given in those paras where Shri Shobharam used illegitimate earning for acquisition of property and in fact if the order of the Adjudicating Authority is allowed to stand, it would advance the cause of corruption in the hands of employees and would be fatal to the system. The Authority has considered the case even after taking into consideration of the income of two sons and the wife of one son to find out the benami transaction.
In view of the above, we allow the appeal by causing interference in the order in following terms:
1. The attachment of property from item no. 1 to 19 and 29 in Table- A, properties at Sr. no. 1 to 14 given in Table-B and properties at Sr. no. 1 to 4 given in table C would remain subject to final outcome of the review petition pending before the Apex Court. The appellant Directorate would be at liberty to seek review of this order in reference to those immovable properties apart from 5 movable properties in Table-A (1) and 3 movable properties in Table- B (1) after the judgement of the Apex Court on the Review Petition.
2. So far as immovable properties at item 20 to 28 in Table-A, properties at Sr. No. 15 to 19 given at Table-B, properties at Sr. No. 5 and 6 given in Table-C and movable properties at Sr. No. 1 to 3 given in Table-C (1) are concerned, the impugned order is set aside with confirmation of the attachment for the detailed reasons given above. It would be for immovable property as well other than 5 movable properties in Table-A (1) and 3 movable properties in Table-B(1) left by Adjudicating Authority.
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2024 (7) TMI 427
Scope of amendment of Benami Transactions (Prohibition) Act, 1988 - HELD THAT:- As parties reached to a consensus. It is agreed that the amendment became part of statute book of Benami Transactions (Prohibition) Act, 1988 with effect from 01.11.2016 and in all these cases, the subject matter is for a period between 2011-2015 i.e., prior to the amendment. Thus, it is agreed that in the light of judgment of Supreme Court in Union of India and Another v. M/s. Ganpati Dealcom Pvt. Ltd. [2022 (8) TMI 1047 - SUPREME COURT] the impugned orders in all these petitions may be set aside.
In view of consensus arrived at, the impugned orders in all these petitions are set aside.
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2024 (6) TMI 1045
Benami transactions - attachment of the properties of the non appellants - Adjudicating Authority refused to confirm the order of attachment mainly on the grounds that the funds came to the beneficiaries as a loan or advances and were released by M/s Danodia Investments & Finance Ltd. through bank or proper banking channel - HELD THAT:- The Bank account of the transaction was supporting the aforesaid and thereby it cannot be said that M/s Danodia Investments & Finance Ltd was a non-existing Company and otherwise the loan or advances was not by way of benami transaction.
The finding aforesaid is in ignorance of the benami transaction. The Adjudicating Authority conveniently ignored as to how the fund came to M/s Danodia Investments & Finance Ltd. The Adjudicating Authority even failed to analyse how the shares were issued at the premium of Rs. 990/- by a Company having no business at all, rather it was existing on papers to provide accommodation entries. The fact aforesaid was conveniently ignored by the Adjudicating Authority and tried to focus only on the period subsequent to the benami transaction by which money was injected in the accounts of M/s Danodia Investments & Finance Ltd.
We find that the subsequent transaction was out of the benami property defined under section 2 (8) of the Act of 1988, and was otherwise out of the benami transaction of M/s Danodia Investments & Finance Ltd.
Adjudicating Authority conveniently ignored the fact regarding non-existence of 79 entities or it was on papers and pumped in the money in the accounts of M/s Danodia Investments & Finance Ltd. The funds came even subsequently in the year 2014-15 also by way of benami transactions and therefore only despite the notice, 79 entities did not respond to the notice.
We find that the impugned order is based on surmises and conjectures. And thereby the Adjudicating Authority had ignored all the relevant facts available on record and even referred in the impugned order.
Affidavit filed by the non-appellant which is common for majority of the entities. It is of Mr. Somnath Samanta who submitted the supporting affidavit for majority of the non-appellant Companies which includes M/s Danodia Investments & Finance Ltd and even for few Square Four Group Companies and other entities. The exception may be for M/s Mahi Trading Private Limited and Micro Network Private Ltd. etc. For Square Four Assets Management, no separate contest has been made, rather the arguments and the representation is common. The affidavits otherwise reverberates the same and it would be relevant that said Mr. Somnath Samanta had filed the affidavit even for Square Four Housing & Infrastructure and at the same time for M/s Danodia Investments & Finance Ltd. His affidavit is seen even for Square Four Residency Private Limited.
The only argument made now be in reference to section 2 (9) (D) defining the benami transaction as amended by the notification of 2016 with effect from 01.11.2016 - The facts available on record shows that transaction or the arrangement in this case is by non traceable or fictitious entities because 79 entities were found either on paper or not traceable, leaving few. The money was pumped in by layering or cash deposit by those entities which were not found traceable or were having no source to pump the money in the account of M/s Danodia Investments & Finance Ltd. It is however to clarify that mere reference of a provision different than applicable would not wash the effect of other provision, if applicable.
For all the reasons given above, we find force in the argument of the counsel for the appellant Department and find reason to cause interference in the impugned order, which is set aside. The order of the Adjudicating Authority is set aside and the order of provisional attachment is confirmed.
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2024 (5) TMI 1161
Benami Transaction - provisional attachment - beneficial owner of the Benami properties - SCN issued by Initiating Officer u/s 24 (1) of the Prohibition of Benami Property Transactions Act - The allegation is that there has been routing of funds from unknown sources through various companies and layering in this regard which have ultimately found a channel to the petitioners-companies through M/s Siddhi Vinayak Infra Zone.
HELD THAT:- As per statement of the concerned Directors/Partners/other Officials recorded and mentioned in the show cause notice, the original sale-deeds were not found in the office of these companies who in fact had common addresses, mostly so, nor the Director/Partners had any inkling as to the activities and source of funds of these companies of which they were Directors/Partners and they had mentioned the names of certain persons who have been mentioned as interested persons in the show cause notice who have links with other companies and LLPs. Based on the aforesaid material, the Initiating Officer has recorded his reasons to believe that the properties are result of benami transactions.
At the stage of consideration of admission and interim relief application looking into the facts and material on record, and that which we have perused, it is difficult to hold at this stage that none of the material was relevant or that it did not have a rationale connection with the transactions which are being referred as benami, however, again we do not record any conclusive opinion in this regard, as, all these issues need to be thrashed out finally.
No doubt, the argument of learned counsel for the petitioners that the transactions are based on legal documents and are permissible in law is very attractive, but, the stand of the Revenue is that these are all colourable transactions and, therefore, the opinion formed by the Initiating Officer at the stage of Section 24(1) is an opinion formed on the basis of material and it has rationale nexus with the object sought to be achieved which does not require any interference. It is trite that merely because some legal documents have been prepared and agreements have been entered into that may lead to an initial presumption about the validity of such transactions, but, then this is rebuttable and the Revenue is entitled to inquire, if there are grounds for it, as are being claimed, as to whether transactions are colourable and benami in terms of the Act 1988.
How far the transactions at hand based on material in possession of the Initiating Officer at the stage of Section 24 (1) would bring the transactions within the meaning of Section 2(9)(A) and (B) is also required to be considered, as, the jurisdictional facts envisaged in Section 24(1) have to be preexist and are prerequisites on the satisfaction of which alone the Initiating Officer has the jurisdiction to proceed in the matter.
On a perusal of records which have been produced separately before us in sealed cover, we find that the reasons and materials contained therein have been substantially discussed in the show cause notice and prima facie it is not as if the reasons and materials discussed in the impugned show cause notice and those available in these records are absolutely unrelated or alien to each other. This aspect, however, is also open for consideration at the time of final hearing as to whether the records contain relevant reason or material which is not mentioned in the show cause notice thereby rendering it defective and prejudicial.
Order of provisional attachment - Taking into consideration these facts, especially regarding sale of some of the lands/flats by Tilicho Ventures LLP which is part of the same consortium but, intriguingly has not challenged the notices before us, and, in spite of sufficient opportunities, the counsel for the petitioners did not deny this fact even orally during argument, although Mr. Parihar, learned Senior Counsel along with Ms. Radhika Singh, etc. appeared for all the seven petitioners-companies and Jitendera Prasad Verma is a Director in Tilocho Infra Developers Private Limited and also a partner in Tilocho Ventures Private LLP., whereas, Satish Kumar who has filed the affidavits in two of the petitions on behalf of the other companies is also a Director in the Tilicho Infradevelopers Private Limited, therefore, we are not inclined to stay the order of provisional attachment.
In our opinion, the following orders would serve the ends of justice at this stage:-
(I) Subject to final disposal of writ petitions and without prejudice to the rights of the petitioners herein, the proceedings under the Act 1988 may go on and the Initiating Officer shall take a considered decision under Section 24 (4) of the Act 1988 in accordance with law, accordingly.
(II) In the event the Initiating Officer revokes the provisional attachment of the property with the prior approval of the Approving Authority, then, of course, the matter would end and no further adjudication would be required before the Adjudicating Authority.
(III) However, if the Initiating Officer passes an order continuing the provisional attachment of the property with prior approval of the Approving Authority and refers the matter to the Adjudicating Authority under Section 24(5), the Adjudicating Authority may go ahead with the proceedings however, he shall not pass any final order under Section 26(3) of the Act 1988 till disposal of these writ petitions.
(IV) In the event the opposite parties herein want to withdraw the impugned show cause notices and issue them afresh in accordance with law providing the noticees with the material in the possession of the Initiating Officer, then, the pendency of these proceedings shall not come in their way. We make it clear that this is not a direction which we have issued, but, only a liberty which we have granted to the opposite parties in case they are of the opinion that this would be a better course of action, unless, of course, this is impermissible in law.
The opposite parties shall file their counter affidavit within four weeks. Two weeks thereafter shall be available to the petitioners for filing rejoinder affidavit. Considering the important issues involved herein, all these petitions shall come up for hearing in the 3rd week of July, 2024.
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2024 (5) TMI 384
Benami transaction - The applicant was found in possession of a significant amount of cash during an income tax raid - whether the bare ingredients of the offence under Section 53 read with Section 3 of PBPT Act were satisfied in the present case? - applicant submit that the applicant is an innocent person and has been falsely implicated in the present case due to enmity - whether sufficient ground for proceeding exists in the case or not? - HELD THAT:- Prosecution under Section 53 of PBPT Act can be initiated only in a case where the alleged transaction is either a Benami transaction pertaining to a Benami property or has been entered in order to defeat the provisions of any law or avoid payment of statutory dues or avoid payment to creditor whereas the complaint filed against the applicant does not make any whisper in this regard. In the absence of any allegation to the effect that the alleged transaction was entered by the applicant in order to defeat the provisions of any law or avoid payment of statutory dues or avoid payment to creditor, prosecution under Section 53 of PBPT Act could not have been initiated against the applicant, thus, the impugned summoning order dated 27.02.2024 fails on this count also.
It is also observed here that from the perusal of impugned summoning order dated 27.02.2024 it is evident that the learned trial court has not even applied its mind to the fact that whether the bare ingredients of the offence under Section 53 read with Section 3 of PBPT Act were satisfied in the present case or not. Further, this Court is of the view that summoning an accused is a very serious matter and the summoning order has to be passed after considering the legal aspects and material available on record in this regard Hon'ble Supreme Court of India has held that the order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not in the cases of Lalankumar Singh [2022 (10) TMI 1135 - SUPREME COURT], Pepsi Foods Ltd. [1997 (11) TMI 518 - SUPREME COURT], Mehmood UL Rehman [2015 (3) TMI 1349 - SUPREME COURT]
After going through the facts and circumstances of the case, this Court finds that learned trial court has not applied its judicial mind while summoning the applicant and has completely relied on the averments made in the complaint dated 27.02.2024 and also the order of summoning is a non-speaking order, therefore, in the opinion of this Court, the applicant has made out a case for interim relief. The matter requires consideration on fact and law both.
Learned Counsel for the opposite party Nos.1 and 2 prays for and is granted four weeks' time to file the counter affidavit. Two weeks' time thereafter shall be available to learned Counsel for the applicant for filing rejoinder affidavit.Accordingly, list/put up this case on 30.08.2024.
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2024 (5) TMI 84
Benami Property Transactions - Real/original owner - provisional attachment order issued u/s 24(3) of the Benami Transactions Act, 1988 - reason to believe that the petitioner is a Benamidar of respondent no.5 [her son-in-law ] - Who is original owner of the constructions? - Submission of petitioner is that the department has no evidence to prove any benami transaction or that the petitioner was a Benamidar of the constructions in question and respondent no.5 is the beneficial owner - HELD THAT:- Sri Krishna Kumar Dubey, Partner of M/s.Vishnu Mitra Buildcon has not given any basis or reason as to how he believes that the original owner of the constructions is respondent no.5 and even the department has not put a single question to Sri Krishna Kumar Dubey with regard to the basis of his knowledge. In support of his statement Sri Krishna Kumar Dubey has not provided any documentary or other evidence. Similarly, the department has also not referred to any other evidence in the show cause notice to support the said statement.
Section 24 (1) of the Benami Transactions Act states that "where the Initiating Officer, on the basis of material in his possession, has reason to believe". Thus, there are two pre-conditions to the issuance of the notice under Section 24(1) of the Benami Transactions Act; (i) The Initiating Officer should have material in his possession and; (ii) the material should be sufficient to cause a reason to believe. It goes without saying that while interpreting a taxing statute, the principle of strict interpretation is to be applied.
As per record, in the present case a mere statement of the contractor without any substantial supportive evidence is made the basis of the entire proceedings. Such a mere statement without any supportive evidence cannot under law be held to be a sufficient material in possession of an Initiating Officer to arrive at a reason to believe that constructions are benami. There has to be sufficient material in possession of the Initiating Officer on the basis of which he can come to a logical conclusion that can be called a reason to believe for initiating proceedings.
In the present case except for an oral statement of a contractor, who has not given any reason for making such a statement, and from whom the department has also not even asked as to on what basis he is making the said statement, the entire proceedings are initiated. There is not even an iota of material placed by the department before this Court, referred to in the show cause notice, on the basis of which the Court could believe the said bare statement and conclude that a reason to believe can be arrived at.
Admittedly, the petitioner has already submitted her Income Tax Returns for the relevant period and the said proceedings are not yet completed. As such, in the absence of the same the department also cannot claim that her earnings for the relevant year are beyond her known sources of income.
This Court has no hesitation in holding that there was no material in possession of the Initiating Officer which could be held to be sufficient for holding a reason to believe that the petitioner is a Benamidar of respondent no.5, her son-in-law, with regard to the constructions in question for initiating proceedings under Section 24(1) of the Benami Transactions Act.
As regards, the order of provisional attachment under Section 24(3) of the Benami Transactions Act is concerned, Section 24(3) requires that Initiating Officer is of the opinion that the person in possession of the property held Benami may alienate the property during the period specified in the notice. Without such a satisfaction the property can not be attached by the Initiating Officer.
In the present case, no such material has been referred to by the Initiating Officer in the impugned attachment order or placed before this Court which could demonstrate that the property is likely to be sold and thus require him to resort to Section 24(3) for provisional attachment. Thus, the order of provisional attachment is also without any basis.
The impugned show cause notice issued under 24(1) of the Benami Transactions Act and also the provisional attachment order issued under Section 24(3) of the Act, are hereby set aside.
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2024 (4) TMI 1049
Prohibition of Benami Transactions - provisional attachment order was confirmed - Who is the beneficial owner of property? - all the properties were purchased/ transferred prior to the amendment of 2016 in the Act of 1988 but properties were held by the benamidar even subsequent to the amendment - appellants submitted that perusal of the three tables would reveal that all those properties were purchased prior to the amendment in the Act, 1988 by the notification dated 01.11.2016 to amend various provisions of the Act of 1988.
As submitted that the appellant Sukh Lal Baiga purchased all the properties alleged to be benami from his own sources. He was working with Padam Kumar Singhania alleged to be the beneficial owner from the childhood and earning salary out of his work.
HELD THAT:- It is not in dispute that purchase of all the properties in the name of Sukh Lal Baiga is prior to the amendment of 2016 in the Act of 1988.
It is however a fact that all those properties were held by Sukh Lal Baiga even after the amendment. Holding of the properties even subsequent to the amendment of the year 2016 has a consequence and elaborately discussed in reference to the definition of “benami transaction” given under the amended provision of section 2 (9) by this Tribunal in the case of Suresh Bhageria Versus the Initiating Officer, DCIT (BPU-2), Mumbai [2024 (1) TMI 203 - APPELLATE TRIBUNAL FOR SAFEMA AT NEW DELHI]
It was held that if the benami transaction defined under section 2 (9) is to be applied, then it would be not only for transfer of the property but even its holding. The definition of benami transaction under the amended provisions was different than the un-amended provision.
The judgement quoted above deals with the first issue raised by the appellant where it has been held that if the property was purchased prior to the amendment of 2016 and is not held by the benamidar, then the judgement of the Apex Court in the case of “Union of India & Anr. Versus M/s. Ganpati Dealcom Pvt. Ltd [2022 (8) TMI 1047 - SUPREME COURT] would apply. However, if the property is held even after the amendment of 2016, then amended provision would apply. The detailed discussion of issue in the case of Suresh Bhageria (Supra) applies to the facts of this case.
In the light of the aforesaid and facts of this case, the first argument raised by the appellant cannot be accepted in the light of the detailed judgement of this Tribunal in the case of Suresh Bhageria (Supra).
Whether appellant Sukh Lal Baiga was having sufficient source to purchase the property from time to time? - The income of the appellant Sukh Lal Baiga and his further statement that all the properties referred in the schedule were purchased by Padam Kumar Singhania. The appellant Sukh Lal Baiga did not retract his statement though counsel for the appellant submitted that it has been questioned in the appeal but that cannot be taken to be a retraction. It is also a fact that the statement of different seller of the properties were also recorded and referred by the Adjudicating Authority. They have stated about payment of consideration by Padam Kumar Singhania for all the properties.
The statement of the seller have been corroborated by the evidence and the statement of Sukh Lal Baiga for purchase of property by Padam Kumar Singhania for which Sukh Lal Baiga was having no knowledge.
In the light of the facts given above, we find that material was brought by the respondents to prove a case of benami transaction for purchase of the properties.
Appellant questioned the statement of seller relied by the Adjudicating Authority without a chance of cross examination - An application to seek summoning of the witnesses to cross examination was not filed before the Adjudicating Authority. The statement of the seller was otherwise supplied to the appellant and has not been disputed. If the appellant was desirous of cross examination of those witnesses, he should have filed an application to summon them to provide an opportunity of cross examination before the Adjudicating Authority.
No such application was submitted by the appellant. The opportunity of cross examination is otherwise a part of natural justice but it is to be provided when statement of the witnesses are recorded before the Authority who is adjudicating the matter. It is not a case where the statement of witnesses were recorded by the Adjudicating Authority so as to allow cross examination of those witnesses as a course. The statement of witnesses were recorded during the course of investigation and there is no provision to provide cross examination by the Investigating Officer.
Hence, the allegation that Investigating Officer did not provide an opportunity of cross examination cannot be accepted. No one prevented the appellant to make an application to seek cross examination of the witnesses before the Adjudicating Authority. The appellant having failed to make an application to seek cross examination cannot now raise issue if the statement of witnesses have been relied after supplying a copy of those statement to the appellant.
In the light of the aforesaid, even the legal issue in reference to cross examination cannot be accepted and accordingly we do not find any force even in the third issue raised by the appellant.
We find a case for interference in the impugned order in reference to Aaditya Vikram Singhania holding him to be the beneficial owner only for the reason that he subsequently purchased benami properties in the year 2019. There is nothing on record to show that consideration of those properties was paid by Aaditya Vikram Singhania to purchase it in the name of Sukh Lal Baiga, otherwise mentioned in table C, rather the consideration was paid by Padam Kumar Singhania. Thus, for all the properties, he alone would be the beneficial owner and not Aditya Singhania.
Mere subsequent purchase of the property by Aaditya Vikram Singhania would however not affect the attachment but allegation of his being a beneficial owner of the property cannot be accepted and finding of the Adjudicating Authority to that extent is interfered and set aside with the declaration that beneficial owner of all the properties is Padam Kumar Singhania while benamidar to be Sukh Lal Baiga. The finding aforesaid would however not affect the attachment.
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2024 (3) TMI 1147
Benami transaction - Jurisdiction by the Investigating Authority or the Adjudicating Authority under the Benami Act - Benami transaction - summons issued u/s 19 of Benami Act and the provisional order of attachment as well as extension of such order passed u/s 24 of the said Act challenged - petitioner argues that the respondent-Authorities do not have any jurisdiction to initiate a proceeding under the Benami Act - HELD THAT:- The petitioner obviously acted as a conduit, being owned by shareholders which were none other than shell companies having fictitious existence, for channelizing money from undisclosed sources, shown to have been advanced by Shakambhari and others, into tangible properties by the 37 purchases which are in issue. Taking a broad view of Section 2(9)(D), the purchase of the properties through consideration which came from fictitious sources squarely attracts the said provision to the present transactions. It is to be noted that sub-clause (D) does not merely restrict itself to non-traceable sources of consideration but also to “fictitious” sources of consideration. Hence, there is sufficient prima facie material to indicate that the transactions-in-question were arrangements in respect of properties where the person providing the consideration is fictitious.
Hence, this Court does not find that there is ex facie erroneous assumption of jurisdiction by the Investigating Authority or the Adjudicating Authority under the Benami Act sufficient to displace the legitimate opinion formed in writing by the Investigating Authority, which justifies the reference to the Adjudicating Authority after issuance of notice and passing of provisional assessment order, which was continued subsequently.
For an adjudication of merits on the issues involved in the present case as indicated above, a full-fledged enquiry on factual assessments based on appreciation of evidence is required, which is entirely unwarranted at the instance of the writ court, since a comprehensive procedure is provided in Section 26 of the Benami Act, which is, as the Madhya Pradesh High Court held, in the nature of a self-contained code.
Thus, no ground to interfere with the impugned notice u/s 24 or the provisional orders passed therein, particularly, since the matter has already been referred to the Adjudicating Authority and is under consideration before it within the contemplation of Section 26 of the Benami Act. The appropriate remedy before the petitioner is to participate in the said proceedings, and to have its defence vindicated there. In any event, even thereafter, the petitioner has two stages of remedies – one, a hearing before confiscation and the other by way of an appeal under Sections 30 and 31 of the Benami Act, if aggrieved by the decision of the Adjudicating Authority.
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2024 (3) TMI 1060
Benami transaction - petitioner has called in show cause notice issued u/s 24(1) of the Prohibition of Benami Property Transactions Act, 1988 and Provisional Attachment Order issued u/s 24(3) of Act of 1988 - petitioners submits that the show cause notice and provisional attachment order are called in question mainly on the ground that the alleged benami transaction has taken place prior to 01/11/2016, the date when Act of 1988 stood amended - HELD THAT:- The ‘provisional assessment order’ as name suggests, is ‘provisional’ in nature . The ‘adjudicating authority’ is best suited to decide the question of Benami nature of the property. We find substance in the argument of learned ASG that show cause notice is a detailed notice running in several pages containing several factual basis and it is within the province of ‘adjudicating authority’ to decide whether property is ‘Benami’ in nature and whether petitioners are liable for any action under the Act of 1988.
The Division Bench declined interference against show cause notice and PAO and permitted the petitioner to raise all relevant aspects before adjudicating authority under Section 26 of the Act of 1988. We deem it proper to follow the same course. The petitioners can avail the remedies under the Act of 1988 and take all possible factual and legal grounds before the ‘adjudicating authority’.
Needless to mention that judgment of Advance Infra Developers (P) Ltd [2023 (12) TMI 620 - MADRAS HIGH COURT] and other judgments can be relied upon by the petitioners before the ‘adjudicating and appellate authority’ (if required) to impress upon it to take a different view than the view taken by Appellate Authority in M/s. Prism Scan [2024 (1) TMI 203 - APPELLATE TRIBUNAL FOR SAFEMA AT NEW DELHI] We have no doubt that if relevant grounds are taken and judgments are cited, the said authorities will consider and decide the matter on its own merits in accordance with law.
We find no reason to entertain these petitions despite availability of statutory alternative remedies. The petitioners may avail the said remedy.
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2024 (3) TMI 1002
Benami transaction - Beneficial owner of property - Provisional attachment order - scope of Amendment Act of 2016 - Constitutional validity - Amendment to Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 - retrospective or prospective effect - Attachment of property
As decided by HC [2022 (5) TMI 262 - TELANGANA HIGH COURT]Section 2 (9) (A) and Section 2 (9) (C) can only have effect prospectively. Central Government has notified the date of coming into force of the Amendment Act of 2016 as 01.11.2016. Therefore, these two provisions cannot be applied to a transaction which took place prior to 01.11.2016. Admittedly, in the present case, the transaction in question is dated 14.12.2011. That being the position, we have no hesitation to hold that the show cause notice dated 30.12.2019, provisional attachment order dated 31.12.2019 and the impugned order dated 30.03.2021 are null and void being without jurisdiction.
HELD THAT:- Delay of 624 days in filing this special leave petition is condoned.
The issues raised in this petition are squarely covered by a judgment rendered by a three-Judge Bench of this Court in Union of India & Anr. Vs. Ganpati Dealcom Pvt. Ltd. [2022 (8) TMI 1047 - SUPREME COURT] wherein held Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution.
In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary. The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively.
Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016.
Hence, the special leave petition is disposed of in the aforesaid terms.
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2024 (1) TMI 1439
Prohibition of Benami Property Transactions - Attachment order passed u/s 24(3) of the Benami Transactions (Prohibition) Amendment Act - As decided by [2022 (9) TMI 524 - GUJARAT HIGH COURT] as held authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016 and as a consequence thereof, all such prosecutions and confiscation proceedings which had been initiated came to be quashed.
Prosecution and initiation of proceedings in the instant case being pursuant to the Amendment Act impugned attachment order stan
HELD THAT:- There is a gross delay of 359 days in filing the Special Leave Petition. The issues which arise in this case are covered by the judgment of this Court in Union of India & Anr. vs. M/s. Ganpati Dealcom Pvt. Ltd. [2022 (8) TMI 1047 - SUPREME COURT]
Special Leave Petition is dismissed both on the ground of delay as well as on merits.
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2024 (1) TMI 907
Prohibition of Benami Property Transactions - Attachment order passed u/s 24(3) of the Benami Transactions (Prohibition) Amendment Act - as decided by HC [2022 (9) TMI 524 - GUJARAT HIGH COURT] Authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016 and as a consequence thereof, all such prosecutions and confiscation proceedings which had been initiated came to be quashed.
HELD THAT:- There is a gross delay of 370 days in filing this special leave petition. Moreover, the issues which arise in this case are covered by the judgment of this Court in Union of India & Anr. vs. M/s Ganpati Dealcom Pvt. Ltd. [2022 (8) TMI 1047 - SUPREME COURT].
In the circumstances, the special leave petition is dismissed both on the ground of delay as well as on merits.
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2024 (1) TMI 687
Provisional attachments made by the Initiating Officer u/s 24(3) of the Prohibition of Benami Property Transactions Act - HELD THAT:- There are two facts: (a) the Judicial Custody of the petitioners, who are also the directors of the company based on the case registered and (b) the order of provisional attachment made by the initiating authority on 03.02.2023, when they were still in judicial custody, which makes alienation impossible on the date the order of attachment was passed.
The respondents step into the scene only after the registration of the case but they are not the investigating agency. And it is not in dispute that these petitioners were arrested some two years after the registration of the said criminal case. Where were they during the interregnum? Were they absconding then? Maybe, or may not be, which is not very pertinent for the present. The point is whether the initiating officer knew that the petitioners were in judicial custody when Sec 24(1) show cause notice was issued, and provisional attachment under Sec.24(3) was made? There is nothing on record to indicate it.
What is the extent to which the initiating authority may have to travel for forming his opinion, and what is the extent to which he should spell out the grounds there for when an order of provisional attachment is made? - The scheme of the Prohibition of Benami Transaction Act is looked into, it makes benami transaction a crime, and besides providing for the confiscation of the property found to be held benami, it also provides that both the benamidars and the beneficiary are liable for criminal prosecution u/s 53 of the Act. An attachment of the property till an order of confiscation is made is only a preliminary step in that direction, and all that is required at that point in time is the existence of a suspicion that the property could be involved in a benami transaction.
Here is a situation where a FIR is laid against the petitioners in Cr.No:.92 of 2020 on 23.11.2020, the Income Tax Department has taken a couple of years to believe that that the property could be involved in a benami transaction. When a show cause notice under Sec.24(1) is issued, it is based only on this prima facie suspicion, and this suspicion is sufficient for the initiating authority to form an opinion on provisional attachment. Set in the context, Sec.24(1) notice does not conclude anything as to affect the right of the petitioners. Indeed, the Act provides lots of checks and balances within its scheme in order to ensure that right to property of the citizen is not invaded and trampled upon by the statutory functionaries. At the first stage, it issues a show cause notice u/s 24(1), and waits for the response of the suspected benamidar and the beneficiaries. They have ample opportunity to show cause and to establish that there is no basis for the initial suspicion of these authorities.
Till a decision is taken on the show cause notice issued under Sec.24(1) of the Act, the property which might face confiscation in an eventuality of final adjudication enabling it, the property must be secured for purposes associated with the working of the Act. It will be silly for an initiating authority to let an alienation of a benami property even as it tries to fix responsibility on the suspects. A provisional order of attachment needs to be understood in that context. It is not same as an order of attachment before judgement under Order XXXVIII Rule 5, 6 CPC. There the attachment is made not with any intent to secure it for a possible confiscation for the benefit of revenue administration of the State, but only to secure the interest of a creditor-plaintiff. Therefore, the standard required for an order under Order XXXVIII Rule 5,6 CPC are more stringent since it neither involves a crime, nor it involves the interest of the State.
The provisional attachment made by the initiating officer cannot be termed as bad in law. He has done that which the statute contemplates. And, this attachment is only provisional. Admittedly, the matter is now pending before the Adjudicating Authority. The petitioners have all the opportunities to approach the adjudicating officer and explain why the provisional order of attachment is bad.
To conclude, this Court does not find merit in these petitions and hence, all the writ petitions stand dismissed.
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2024 (1) TMI 541
Prohibition of Benami Property Transaction - Applicability of provisions of Section 5 of the Amended Act, 2016 - funds infused into the shell companies by multiple layering in the guise of share capital or loan - Initiating Officer had reasons to believe that the arrangements made by the respondent with various shell companies is a benami transaction within the meaning of Section 2 A (9) of the Prohibition of Benami Property Transactions Act, 1988 - as contended on the side of the appellants that Section 5 of the Prohibition of Benami Property Transactions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 will have retrospective effect and therefore, the common order passed by the Tribunal, to the contrary, is liable to be interfered with.
HELD THAT:- Today, when the matters were taken up for hearing, the learned counsel appearing for both sides in unison, submitted that a batch of appeals challenging the very same impugned order of the Appellate Tribunal, was disposed of, by this court, by passing a detailed judgment [2023 (12) TMI 620 - MADRAS HIGH COURT] wherein as opinioned that as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd [2022 (8) TMI 1047 - SUPREME COURT] holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced.
It is to be noted that in the Review Petition [2023 (1) TMI 1327 - SC ORDER] filed by the Department to review the order passed by the Honourable Supreme Court in Union of India vs. Ganapati Dealcom Pvt Ltd [2022 (8) TMI 1047 - SUPREME COURT] delay was condoned and the application for oral hearing of the review petition was allowed, however, no stay order was granted. In such circumstances, pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd, cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals.
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2024 (1) TMI 540
Prohibition of Benami Property Transactions - whether transactions are prior to the coming into force of Prohibition of Benami Property Transactions (PBPT) Act, 1988 as amended in 2016 i.e. 25.10.2016? - HELD THAT:- In the light of the judgments passed in the present matters by the Hon’ble High Court, Calcutta at Kolkata [2023 (3) TMI 1446 - CALCUTTA HIGH COURT] the appeals are disposed of with following conditions:-
(i) It is however made clear that finding recorded by the Adjudicating Authority, either of facts or on law, would not be binding on either of the parties rather they would be at liberty to take up factual and legal issues in future, if so required, in the appropriate proceedings. This order is not to be taken in confirmation of the impugned order.
(ii) It is also made clear that independent to the action taken by the Initiating Officer referring Benami Transactions of a period prior to the amendment by the Amending Act of 2016, if the Department has legal right under the law to take the proceedings, treating the amendment by the Amending Act of 2016 to be prospective, this order would not come in their way. It is however made clear that any such action should not offend the judgment of the Apex Court in the case of “Union of India & Anr. Versus M/s. Ganpati Dealcom Pvt. Ltd.” [2022 (8) TMI 1047 - SUPREME COURT].
In case, the Apex Court reviews its judgment having bearing on this appeal, the appellant would be at liberty to take appropriate remedies, which would may even a Review Petition before this Tribunal. In view of the above, the applications are allowed and the appeals are disposed of with the aforesaid directions/conditions.
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2024 (1) TMI 384
Prohibition of Benami Property Transaction - scope of provisions of Section 5 of the Amended Act, 2016 - HELD THAT:- This court judgment on 17.11.2023, [2023 (12) TMI 620 - MADRAS HIGH COURT] is of the opinion that as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd [2023 (1) TMI 1327 - SC ORDER] holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced. pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd, cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals. In this context, it is useful to refer to the decision of the Honourable Supreme Court in Union Territory of Ladakh and others vs. Jammu and Kashmir National Conference and another [2023 (9) TMI 1407 - SUPREME COURT] as held High Courts will proceed to decide matters on the basis of the law as it stands. It is not open, unless specifically directed by this Court, to await an outcome of a reference or a review petition, as the case may be. it is also not open to a High Court to refuse to follow a judgment by stating that it has been doubted by a later Coordinate Bench. In any case, when faced with conflicting judgments by Bench of equal stength of this Court, it is the earlier one which is to be followed by the High Courts, as held by a 5 Judge Bench in National Insurance Company Limied v. Pranay Sethi [2017 (10) TMI 1276 - SUPREME COURT]
Following the earlier order passed by this Court, all these civil miscellaneous appeals are disposed of, leaving it open to the appellants herein to proceed further on the basis of the outcome of the Review Petition filed by them before the Honourable Supreme Court.
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2024 (1) TMI 203
Prohibition of Benami Property Transactions - transfer of shares prior to the Amending Act of 1916 - Adjudicating Authority has confirmed the Provisional Attachment Order - a contest was made for the respondents who submitted that if anyone is holding a property after the amendment by the Amending Act, 2016 though transfer of property is prior to 01.10.2016, such a transaction would fall in the definition of “Benami Transaction” as given under section of 2 (9) (A) of the Act of 2016 - HELD THAT:- Detailed finding on each issue has been given. Thus, it is not correct to state that the respondent failed to prove benami transaction rather it is the appellant Companies failed to show and prove the financial sources or the source of inducement of finances after the year 2013-2014 other than by co-appellant.
It is also submitted that appellant Companies rightfully invested in the shares of B.I.L. and otherwise they were investing in other shares also. The argument aforesaid was made without clarifying as to from where the finance came in the Companies because inducement of finance in the Companies in rightful manner could not be proved by the appellants to show their innocence, but they utterly failed in doing so. A company having no business activity could get corporate finance on higher premium. M/s Futurage Corporate Care Private Limited has shown wholesale business but had no activity of purchase and sale for wholesale to carry out the activities. No expenses were shown to have incurred towards salaries/wages, payment of indirect taxes, electricity, rent etc. They were mere paper companies.
The clear conclusion from the survey and subsequent investigation was that control over the two appellant companies was acquired in the year 2014-15 and finances were infused into the companies at the instance of Shri Suresh Bhageria for the purpose of engaging in benami transactions in the shares of B.I.L. and other group companies of the Bhageria group. In fact, the two companies had no activity other than investment in B.I.L. and other Bhageria group companies.
In view of the above, we do not find the respondent failed to prove Benami transaction as per the provision of PBPT Act.
The appellant had disclosed the sources with relevant information and was accepted by the Tax Authorities. Thus, inducement of funds said to be in the shape of corporate shares on a higher premium could not have been questioned.
We find that assessment of income by the income tax authority remain on different footing. They remain concerned about the income and tax payment. The Tax Authorities conducted survey subsequently to detect benami transaction. The assessment of income does not regularize benami transaction, rather it will take its own course. If income of someone is assessed and thereupon found to be out of benami transaction, the action under the Act of 1988 can be taken.
All the facts on record are surrounding and pointing towards active role of Suresh Bhageria to first induce the funds into the Companies and then to get purchase of shares of B.I.L. apart from other companies of the group and thereby, it could not be inferred that Initiating Officer was predetermined to make out a case.
The appellant had further referred to the statement of Director of Erstwhile shareholder of the company during course of survey. It was submitted by the counsel for the appellant that they ceased to be shareholder at the time of survey in December, 2018. Thus, their statements could not have been relied upon.
According to the appellant, the statement of Erstwhile shareholder was irrelevant whereas, we find it be relevant. It is to find out the financials of the two appellant Companies from the year 2013-2014 onwards and to draw conclusion about the Benami Transaction. The statements of the then Directors were relevant and rightly relied by the respondents.
In fact, the material available on record and perused by us is sufficient to show close connection between Suresh Bhageria, the promoter of B.I.L. group with M/s Prism Scan Express Pvt. Ltd. and M/s Futurage Corporate Care Private Limited and reason of investment in shares of B.I.L. and other companies as benamidars. The appellant has failed to show any business activities of the appellant companies in the year 2013-14 and subsequently to get corporate shareholders on premium. The inducement of funds was itself through Benami Transactions, otherwise Corporate Share would not have been given on higher premium of a Company having no business activity. The money induced therein was used to purchase shares of BIL and other Companies.
We are unable to accept the argument of the appellant that the inferences have been drawn on extraneous consideration.
In the instant case, there was transfer of shares prior to the Amending Act of 1916, but such shares were held by the appellant Companies even after the amendment and therefore it would fall within the definition of “Benami Transaction”.
In the instant case, the Director of appellant Company, i.e. M/s Prism Scan Express Pvt. Ltd. and M/s Futurage Corporate Care Private Limited have denied knowledge about their shareholding or even interest in the Company and thereby the respondent have rightly applied section 2 (9) (A) (C ) of the Act. At this stage, it was submitted that initially show cause notice was not issued in reference to sub-section A rather it was under sub-section (B) and (C ) of section 2 (9).
The show cause notice can be given by referring to a particular provision but after appropriate proceedings, if a case is made out under other provision then an order passed thereupon would not be illegal. Thus, we do not find any substance in any of the arguments.
As further submitted that despite a mandate of section 24 (1) of the Act of 1988, the reasons to believe recorded in writing was not supplied to the appellant. We have gone through the record and find that a copy of the reasons to believe was not only supplied to the appellant but it has been enclosed with the appeal. In view of the above, the argument for alleged violation of Act is not made out.
The argument has been raised that Rule 5 of Rules, 2016 was not complied for attachment. It provides the manner of attachment.
We find arguments to be of no substance as the attachment of the property was made after following the rules and therefore the appellant failed to specify specific rule, alleged to have violated for attachment of the property. Thus, even the last argument raised by the appellant cannot be accepted.
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2023 (12) TMI 1023
Benami Property Transaction - Scope of provisions of Section 5 of the Amended Act, 2016 - HELD THAT:- Today, when the matters were taken up for hearing, the learned counsel appearing for both sides in unison, submitted that a batch of appeals [2023 (12) TMI 620 - MADRAS HIGH COURT] cases, challenging the very same impugned order of the Appellate Tribunal, was disposed of, by this court, by passing a detailed judgment as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd. [2022 (8) TMI 1047 - SUPREME COURT] holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced.
Further, it is to be noted that in the Review Petition (Civil)[2023 (1) TMI 1327 - SC ORDER] filed by the Department to review the order passed by the Honourable Supreme Court in Union of India vs. Ganapati Dealcom Pvt Ltd. delay was condoned and the application for oral hearing of the review petition was allowed, however, no stay order was granted. In such circumstances, pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd, cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals.
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