Continued holding of property after a benami law amendment can attract the amended regime, while beneficial ownership still requires proof of funding.

Amended benami provisions were applied because the properties continued to be held in the ostensible holder's name after the 2016 amendment, even though purchase predated it. The record supported a benami finding: the ostensible purchaser's income did not explain the acquisitions, and statements indicated payment by another person, so the challenge to the benami determination failed. The complaint of denial of cross-examination also failed because copies of statements had been supplied and no request was made before the adjudicating authority to summon witnesses. However, the later purchaser could not be treated as beneficial owner without proof that he funded the original acquisition, so that part of the finding was set aside.

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Issues: (i) Whether the 2016 amendment to the benami law could apply where the property was purchased before the amendment but continued to be held thereafter; (ii) whether the material on record established a benami transaction and lack of independent source of funds in the name of the ostensible purchaser; (iii) whether denial of cross-examination vitiated the adjudication; (iv) whether the finding that the subsequent purchaser was a beneficial owner could be sustained.

Issue (i): Whether the 2016 amendment to the benami law could apply where the property was purchased before the amendment but continued to be held thereafter.

Analysis: The amended definition of benami transaction was treated as covering not merely transfer of property but also holding of property. The distinction drawn was that a transaction completed before the amendment would not be covered if the property was no longer held after the amendment, but if the property continued to be held by the benamidar after the amendment, the amended regime would apply. The earlier ruling relied on by the appellants was held inapplicable on the facts because the properties remained in the name and possession of the ostensible holder after the amendment.

Conclusion: The amended benami provisions were held applicable on the facts, against the appellants.

Issue (ii): Whether the material on record established a benami transaction and lack of independent source of funds in the name of the ostensible purchaser.

Analysis: The income claimed by the ostensible purchaser was found insufficient against the value and volume of the properties, and his own statement was relied upon along with the statements of sellers indicating payment by another person. On this material, the authority found that the properties had in fact been purchased by one person in the name of another and that the consideration was not shown to have come from the ostensible purchaser.

Conclusion: The finding of benami transaction was upheld against the appellants.

Issue (iii): Whether denial of cross-examination vitiated the adjudication.

Analysis: The statements relied upon were recorded during investigation, copies had been supplied, and no application had been moved before the adjudicating authority to summon the witnesses for cross-examination. The absence of such a request meant that the complaint of denial of cross-examination could not succeed.

Conclusion: The challenge based on denial of cross-examination was rejected against the appellants.

Issue (iv): Whether the finding that the subsequent purchaser was a beneficial owner could be sustained.

Analysis: There was no material to show that the subsequent purchaser had provided the consideration for acquisition of the properties in the name of the ostensible holder. The consideration was attributed to the original financier, so the later purchaser could not be treated as beneficial owner merely because he later purchased the properties.

Conclusion: The finding treating the subsequent purchaser as beneficial owner was set aside in favour of the appellants.

Final Conclusion: The appeals failed on the principal challenges to the attachment and the benami findings, but the impugned order was modified to the limited extent that the subsequent purchaser was not to be treated as the beneficial owner.

Ratio Decidendi: Under the amended benami law, a transaction may be caught not only by prior transfer but also by continued holding of the property after the amendment, and a later purchaser cannot be branded as beneficial owner absent proof that he provided the consideration for the original acquisition.

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