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TMI Blog2018 (12) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... taken from appeal no. 26/2018 filed byG.Bahadur. The same are referred as under:- (i) The Appellant is employed as a Security in St. Joseph's College of Engineering since 1995 and is drawing salary of Rs. 28,529/- p.m. The said college is run by St. Joseph Institute of Science & Technology Trust (in short "Trust"), whose Chairman is Shri B. Babu Manoharan. He has a bank account No. 482948206 with Indian Bank, Chennai in which there was a credit balance of Rs. 970/- on the date of attachment. (ii) The Appellant on 14/11/2016 had received an amount of Rs. 50,000/- as salary advance from the Trust. The appellant deposited the entire amount of Rs. 50,000/- in his bank account, which was subsequently withdrawn by him and consumed for his personal purposes. (iii) On 17/11/2016, a search action u/s 132 of the Income tax Act, 1961 was conducted in the case of the Trust. 4. During the course of search, sworn statement of the Appellant was recorded on 28/11/2016 by the Income Tax Authorities. The appellant in his sworn statement deposed the above facts. 5. The Appellant received a show cause notice dated 14/12/2016 from the Initiating Officer (I.O), but the said show cause notice was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the provisional attachment of the property already made under sub-section (3) of Section 24 of the Act which is packed with factual in accuracies. 10. In the I.O's order, it was stated, as under:- a. Para 6 of I.O's order reproduces a part of the Appellant's statement as under: "Yes after demonetisation I had received Rs. 50000 from Shri Sethu (attendance incharge) on 14/11/2016 which I had deposited in my Indian bank account (jeppiar branch). I had received 50 notes of Rs. 1000/-denominations which I deposited in jeppiar branch of Indian bank on 14/11/2016 " b. But in Para 4 of the I.O's order, he writes as under: "In response to the notice, the Benamidar had filed a reply, stating that the sum received by cash from ThiruBabu Manoharan (Beneficial owner) are his salary in advance. His reply is not acceptable, because in the sworn statement recorded before the Assistant/Deputy Director of Income tax (Inv.), during the course of the search, it has been stated by him that they have received the said amount as a loan." c. It was stated by the appellant that I.O has given a false finding that 'the statement before DDIT (Inv) and the submissions made before Initiating Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PB 41/2018 S Praveen 14.11.2016 50,000 - - 29.03.2017 50,000 Bank Transfer D.4 PB 42/2018 S. Thalapathy 14.11.2016 50,000 - - 30.03.2017 50,000 Cash D.5 PB 43/2018 P Shankar 14.11.2016 50,000 - - 31.03.2017 50,000 Bank Transfer D.6 PB 44/2018 R Illayaraja 16.11.2016 50,000 - - 31.03.2017 50,000 Bank Transfer D.7 PB 52/2018 P Gunasekaran 14.11.2016 2,00,000 - - 29.03.2017 2,00,000 Bank Transfer D.8 PB 56/2018 Arun Vasanthageethan 14.11.2016 2,50,000 19.11.2016 1,65,000 28.03.2017 85,000 Bank Transfer D.9 PB 62/2018 M S Sudheesh 14.11.2016 2,00,000 19.11.2016 1,65,000 28.03.2017 14. On the same lines, affidavits have been filed by the appellants stating that - i. Shri Ganesh Bahadur has stated in his affidavit that he is employed as a Security in St. Joseph's Engineering College since 1995 and drawing salary of Rs. 28,529/- per month. The college is run by St. Joseph's Institute of Science & Technology Trust. He had received an amount of Rs. 50,000/- as salary advance from the Trust on 14.11.2016 and returned back the said amount of Rs. 50,000/- to the Trust on 29.03.2017 through bank transfer. ii. In h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The college is run by St. Joseph's Educational Trust. The appellant received an amount of Rs. 2,00,000/- as salary advance from the Trust on 14.11.2016 and he returned back the said amount of Rs. 2,00,000/- to the Trust on 29.03.2017 through bank transfer. viii. Shri K. Arun Vasanthageethan has stated in his affidavit that he is employed as Professor in St. Joseph's Institute of Technology since 2012 and drawing salary of Rs. 82,274/- per month. The college is run by St. Joseph's Educational Trust. The appellant received an amount of Rs. 2,50,000/- 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 Rs. 1,65,000/- to the Trust on 19.11.2016. The remaining salary advance of Rs. 85,000/-was returned back by him to 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 Rs. 39,940/- per month. The college is run by St. Joseph's Institute of Science & Technology Trust. He had received an amount of Rs. 2,00,000/- as salary advance from the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, which were not even alleged anywhere by the Initiating Officer (IO). iii. Order of the Adjudicating Authority is completely devoid of the facts as: a. there is no mention of facts contained in the show cause notice under sub-section (1) of section 24 of the Act issued to the appellant; b. there is no mention of the facts contain in the order passed under section 24(4)(a)(i) by the IO. c. even in the facts contained in the Rejoinder dated 10.07.2017 filed by the IO before the Adjudicating Authority have not been mentioned. d. A Table containing the facts of the individual cases was submitted before the Authority, and each case should have been considered separately, but there is no mention of it anywhere in the 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 iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... void, illegal and unjust as all the references made and proceedings conducted by them during the course of the adjudication were contrary to the mandatory provisions stipulated under the Prohibition of Benami Property Transactions Act, 1988. iii. The provisions of the Act must be interpreted in a manner so that it is in conformity with not only its legislative intent but also with settled constitutional principles. The validity of the provisions might have received constitutional protection, but when stringent laws become applicable as a result where of some persons are to be deprived of his/her right in a property, scrupulous compliance of the statutory requirements is imperative. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract has been registered. 2(10) "benamidar" means a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name; 21. Every cash transaction cannot be termed as a "benami " transaction. As per section 2(9)A of the Act, the following twin conditions need to be satisfied- (1) the property being held by a person who has not provided the consideration, (2) the property is held by that person for the immediate or future benefit, direct or indirect of the person who has provided 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch money has been provided, or paid by, another person"; In the present case, all the appellants have never held the movable property or the same was registered in their respective banks. 25. The nine appellants are merely employees of the Trust (who is their employer). The statement of Chairman has already been recorded. From the entire record, it has not been established that the appellants had any point of time hatched any conspiracy with the employer in order to conceal any cash amount or they have any link and nexus 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: DIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on without having any direct/ indirect involvement in the crime. 27. 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. 28. The 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 mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... skill but on chance. It is argued by Mr Palkhivala that the language of the enactment being clear and unambiguous, it is not open to us to read into it a limitation which is not there, by reference to other and extraneous considerations. Now, when a question arises as to the interpretation to be put on an enactment, what the court has to do is to ascertain "the intent of them that make it", and that 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but that the taxes imposed by Sections 12 and 12-A of the Act were really taxes on the carrying on of the business of running prize competitions, and were hit by Article 301 of the Constitution, and were therefore bad. It is against this decision that Civil Appeal No. 134 of 1956, already referred to, was directed." 34. The position created by this judgment was that though the States could regulate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid provisions very carefully. The investigation has to be carried out as per settled law, the mechanical order under those circumstances cannot be passed. Thus, if the respondent wishes to invoke the amended provision of Benami Act, the respondent has to adhere the provisions strictly as defined and not otherwise against the innocent parties. The respondent has to provide cogent and clear 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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