2025 (8) TMI 274 - AT - Benami Property

Provisional attachment of unaccounted cash upheld as benami property under Section 2(9)(D) of the PBPT Act

The AT upheld the provisional attachment of cash seized from the appellant, ruling that unaccounted cash qualifies as movable property under the PBPT Act ... Prohibition of Benami Property Transaction - Provisional Attachment Order - valid document/evidence for the source of cash given or not? - properties is cash seized from the possession of the appellant on 07.06.2018 and was stated to be transferred to ITO on 29.11.2018 - Whether cash is not property? - HELD THAT:- Unaccounted cash or cash without ownership cannot go scot- free from the purview of the PBPT Act and the same will be covered under the Act. The recovered cash in the present case is thus covered under the nature of movable properties as per Section 2(26) of PBPT Act, 1988. As per Section 2(8) of the PBPT Act, benami property means any property which is the subject matter of a benami transaction and also includes the proceeds from such property and cash in the present matter is unaccounted for as its source is unexplanatory and thus falls under the definition of benami property. Accordingly, we are of the considered view that cash is covered within the definition of tangible movable property. Whether for any Benami transaction three parties are required? - “Benami property” is thus a property held by a 'benamidar' (as defined u/s 2[10] of the Act) for and on behalf of a 'Beneficiary owner' [as defined u/s 2[12] of the Act]' to whom he is answerable. Therefore, the contention of the Ld. counsel for the appellant that for any Benami transaction three parties are required is devoid of any merits, as the benami transaction requires only the ‘benamidar’ and ‘beneficial owner’, hence just two parties are sufficient to constitute a benami transaction, as apparent from the bare perusal of definition mentioned in Section 2(9)(D) of PBPT Act, 1988. Whether Section 2(9)(D) cannot be invoked in absence of any investigation regarding the ownership of cash? - We are of the view that the appellant has not denied the fact that on 07.06.2018 nearby to the Pulamanthol toll-gate, the Sub-Inspector of Pattambi Police Station has seized the cash of Rs. 1,84,26,000/-found from the possession of present appellant Shri Hussain P along with Shri Muhammed Sayad without any valid document/evidence for the source of cash. Further, we cannot ignore the statement of appellant Shri Hussain P recorded under Section 131 of the Income Tax Act. This statement is silent on the aspect that appellant was doing any business in real estate, as stressed by him in his reply to the Show Cause Notice, which shows that this is an after-thought strategy and he take U- turn from the previous statement recorded under section 131 of the Income Tax Act. He clearly named one Sh. Shihab of Saudi under whose instructions he obtained cash from Salem. This particular statement reflects the truth regarding the cash transaction to explain the possession at the time of recording statement under section 131 of Income Tax Act. Appellant has not challenged the said statement, but developed a new story to explain the recovery of cash, without any corroboration by way of corroborating oral and documentary evidence, except his self-serving statement. The appellant has not disclosed how he earner the huge recovered money and the source of real estate transactions is also not disclosed by him in support of his contention. The fact that the Initiating Officer of respondent could not trace out and examine Sihab of Dubai or the source from where appellant collected the cash clearly attracts Section 2(9)(D) of PBPT Act. Thus, this issue is decided against the appellant and in favour of the respondent. Whether the provisions of PBPT Act are not attracted, seeing the fact that appellant filed ITR qua the said amount? - Principal object of the Income Tax Act is to collect Income Tax, but the object of the PBPT Act is to prohibit the practice of benami purchases to check the accumulation of wealth in the name of benamidars for the use of beneficial owner without detection and to confiscate the property involved in a benami transaction. The Income Tax is being collected in respect of the “unexplained money” at the rate of 60% of the same along with 25% of the Surcharge on the Income Tax. But the PBPT Act provides for the confiscation of the benami property in 100% and the fine of 25% of the value of the benami property. Hence, both the acts are being enacted for different purposes. We agree with the contention of Ld. counsel for the respondent that ITRs is a self- declaration of the ACC and the Income Tax Authority have no business to check the source of the money and only the Authority under PBPT Act, 1988 can initiate the proceedings for Benami Property. In the ITR the appellant has not explained the source of accumulating of the huge amount. The appellant has reflected the sum of Rs. 1,87,25,000/- as miscellaneous income at page 12 of the ITR. Thus, merely filing the tax does not exonerate the person from the application of the PBPT Act, in case the source of that money is not known and unanswered for. Accordingly, this issue is also decided against the appellant. ISSUES: Whether cash constitutes 'property' under the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)?Whether a benami transaction requires three parties or only two parties (benamidar and beneficial owner)?Whether Section 2(9)(D) of the PBPT Act can be invoked in the absence of any investigation regarding the ownership of cash'Whether the provisions of the PBPT Act are attracted when the person in possession of cash has filed Income Tax Returns (ITR) declaring the amount? RULINGS / HOLDINGS: Cash is covered within the definition of tangible movable property under Section 2(26) of the PBPT Act, and unaccounted cash with unexplained source falls within the definition of 'benami property' as per Section 2(8).A benami transaction requires only two parties: the 'benamidar' and the 'beneficial owner,' as defined under Sections 2(10) and 2(12) respectively; the contention that three parties are required is without merit.Section 2(9)(D) can be invoked even in absence of a full investigation into ownership when a person is found in possession of cash without valid documents or evidence of source, especially where the person's own statement indicates the source is untraceable or fictitious.Filing of Income Tax Returns after seizure does not preclude the application of the PBPT Act; the Act operates independently and additionally to the Income Tax Act, and unexplained cash remains liable under the PBPT Act despite tax declarations. RATIONALE: The Court applied the definitions in the PBPT Act, particularly Sections 2(8), 2(9)(D), 2(10), 2(12), and 2(26), interpreting 'property' broadly to include tangible movable assets such as cash, and recognizing that 'benami property' includes proceeds from such property.The Court rejected the argument that a benami transaction requires three parties, relying on statutory definitions which only require a benamidar and a beneficial owner.The Court relied on the recorded statement under Section 131 of the Income Tax Act where the person in possession of cash admitted inability to explain the source, implicating Section 2(9)(D) which covers transactions where the consideration provider is 'not traceable' or 'fictitious.'The Court emphasized that the PBPT Act is an anti-black money measure distinct from the Income Tax Act, as reflected in legislative intent and Section 60 of the PBPT Act, which states it is in addition to other laws and not in derogation of them.The Court noted that filing ITRs post-seizure is an afterthought and does not negate the applicability of the PBPT Act, especially where the source of the cash remains unexplained and uncorroborated.