Appellant's changing stance on demonetized currency ownership leads to dismissed appeal under SAFEMA

The Appellate Tribunal under SAFEMA at New Delhi dismissed an appeal challenging attachment orders for demonetized currency. The appellant initially denied ownership of cash seized from three individuals, claiming they held it under fiduciary capacity. However, during adjudication proceedings, the appellant changed his position and declared ownership under the Pradhan Mantri Garib Kalyan Yojana, 2016. The Tribunal held that the money was channelized through shell companies for conversion purposes, not held in genuine trust. The Tribunal rejected arguments that demonetized currency lacked fair market value, noting it could be converted within the permitted timeframe. The appellant's changed stance transformed his status from benamidar to beneficial owner, and he could not benefit from his own inconsistent versions.

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Issues Involved:
1. Whether the cash amounting to Rs. 3,70,89,400/- recovered from Mohit Garg, Raj Kumar Sharma, and Devendra Kumar Jha constitutes a benami transaction under the Prohibition of Benami Property Transactions Act, 1988.
2. Whether the notice served to Nitin Gupta under Section 24(1) was sufficient or if a separate notice under Section 24(2) was required for treating him as a beneficial owner.
3. Whether demonetized currency notes can be considered as "property" with "fair market value" under Sections 2(16) and 2(26) of the Act.
4. Whether the findings of the Initiating Officer (IO) and the Adjudicating Authority were contrary to the record.

Detailed Analysis:

1. Benami Transaction:
The primary issue was whether the cash recovered was a benami transaction as per Section 2(9)(A) of the Act of 1988. The appellant argued that the cash was held in a fiduciary capacity by Mohit Garg and others for Nitin Gupta, thus falling under the exceptions to a benami transaction. The Tribunal analyzed the nature of the transaction and found that the cash was intended for conversion from demonetized to monetized money through shell companies, indicating an illegal purpose. Therefore, it did not qualify as a fiduciary capacity holding under the exceptions to Section 2(9)(A). The Tribunal concluded that the transaction did not fall within the exceptions and upheld the adjudicating authority's decision.

2. Notice under Section 24(1) and 24(2):
The appellant contended that he was served a notice under Section 24(1) as a benamidar but was later treated as a beneficial owner without a separate notice under Section 24(2). The Tribunal clarified that Section 24(2) requires a copy of the notice under Section 24(1) to be given to the beneficial owner if known. At the time of notice issuance, the identity of the beneficial owner was unknown, and the notice under Section 24(1) was appropriately served. As the identity of the beneficial owner was revealed during adjudication, a separate notice under Section 24(2) was not necessary. The Tribunal found no illegality in the proceedings and upheld the process followed by the authorities.

3. Demonitized Currency as Property:
The appellant argued that demonetized currency had no fair market value and thus could not be considered "property" under Sections 2(16) and 2(26). The Tribunal rejected this argument, noting that demonetized currency could still be tendered for conversion into monetized money within a specified period. Therefore, it retained value and qualified as property with fair market value at the time of seizure. The Tribunal concluded that the demonetized currency was indeed property under the Act.

4. Findings Contrary to Record:
The appellant alleged that the findings of the IO and Adjudicating Authority were contrary to the record. The Tribunal reviewed the proceedings and found that the IO conducted a thorough investigation, and the findings were based on the evidence available. The appellant's initial disowning of the currency and subsequent claim of ownership were considered, and the adjudication was based on the material presented. The Tribunal found no contradiction in the findings and dismissed this argument.

Conclusion:
The Tribunal dismissed the appeals, upholding the adjudicating authority's decision that the cash was part of a benami transaction, the notice procedures were correctly followed, demonetized currency qualified as property, and the findings were consistent with the record.

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