2025 (9) TMI 1229 - AT - Benami Property

Appeal dismissed and attachment under s.24(4)(a)(i) upheld for unexplained funds, large cash deposits, and benami use

Satyawan Bhardwaj Versus The Initiating Officer, BPU, Chandigarh

AT dismissed the appeal and confirmed the attachment under s.24(4)(a)(i). The tribunal found the appellant failed to explain sources of funds for a 2012 ... Benami Transactions - Attachment Order passed u/s 24(4)(a)(i) - Applicability of the statute to the present transaction of 2012 after the Amendment Act, 2016 w.e.f. 01.11.2016 - failed to explain the sources of funds and characterization as Benamidar - purchase of the plot of land being sold by the PNB - Beneficial Owner could not be identified and hence remained unknown - HELD THAT:- We find that the accumulation of funds by the Appellant for the purchase of the plot of land being sold by the PNB in auction was during very short period before the auction. We also observe that the deposits made by the Appellant for the purchase of the said property was in cash. It is clear that to participate in the bid, the Appellant deposited demand draft of Rs. 5,10,000/- which was made by deposit of cash in his bank account. Thirdly, we find that the Appellant had failed to file either Income Tax Returns or the Wealth Tax Returns at any time before the impugned transaction. The Appellant also failed to support his case with evidence in the proceedings before the Ld. Adjudicating Authority. At every stage, the Appellant has attempted to only counter argue the conclusions reached at the preceding stage without putting forth a cogent explanation with corroborative material as to explain the necessity of buying a property of value which was beyond his means. Such dilatory conduct on the part of the Appellant has repeatedly caused the Authorities at various levels to reach conclusion that the Appellant got access to large cash in a short period of time to purchase the property. Corollary to such conclusion has been that the sudden availability of huge cash to a person who hardly had any means, could only have been from another person. We observe that the Ld. Adjudicating Authority has analyzed the evidence and the logic entered into by the lower authority so as to come to the conclusion that the Reference is to be allowed and the attachment is to be confirmed. Dismiss the Appeal. ISSUES PRESENTED AND CONSIDERED 1. Whether the Benami Transactions (Prohibition) Amendment Act, 2016 (and its provisions) can be applied to a transaction which took place in 2012 or whether the amended provisions operate only prospectively. 2. Whether the cash deposits and payments totalling Rs. 51,30,000/- (plus registration charges) made in short succession to purchase an auctioned property were satisfactorily explained by the appellant so as to negativate the finding of a benami transaction and the designation of the appellant as benamidar. 3. Whether the Attachment Order under Section 24(4)(a)(i) of the Prohibition of Benami Property Transactions Act, 1988 (PBPTA) was correctly confirmed by the Adjudicating Authority on the material on record, including adequacy of enquiry and corroboration. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Applicability and temporal operation of the 2016 Amendment to PBPTA Legal framework: The question concerns retrospective application of substantive penal/forfeiture provisions introduced by the Benami Transactions (Prohibition) Amendment Act, 2016. Precedent Treatment: The Tribunal relied upon the Supreme Court's judgment in Ganpati Dealcom Pvt. Ltd. which had earlier held that key provisions of the unamended Act and certain in rem forfeiture provisions were unconstitutional and that the 2016 Amendment could not be applied retrospectively; however, that judgment was the subject of a review order of the Supreme Court which recalled the earlier decision and restored the matter for fresh adjudication. Interpretation and reasoning: Given the recall of the earlier pronouncement and restoration of review, this Tribunal proceeded to adjudicate the appeal on merits rather than treat the 2016 Amendment as inapplicable. The Tribunal concluded that the review order permits continued consideration of pre-2016 transactions on their merits under the statutory scheme as interpreted post-recall. Ratio vs. Obiter: The finding that the Appeal should be adjudicated on merits in view of the Supreme Court's recall is determinative for the present matter (ratio for the Tribunal's approach to temporal applicability). Comments on the constitutionality of pre-2016 provisions are treated as governed by higher court proceedings and not decided afresh here (obiter as to constitutional issues beyond scope). Conclusion: The Tribunal adjudicated the dispute on merits despite the transaction occurring in 2012, applying the statutory framework as informed by the Supreme Court's review order; the non-application of the 2016 Amendment as a blanket bar to proceedings was not accepted for disposal of this appeal. Issue 2 - Sufficiency of explanation for sources of funds and characterization as Benamidar Legal framework: The statutory scheme requires that where a transaction is found to be benami, the person who furnished consideration but acted as a nominee/benamidar may be held liable; inquiries consider the source of funds, creditworthiness, documentary corroboration, and timing of accumulation of funds. Precedent Treatment: The Tribunal relied on established principles that sudden accumulation of large cash sums, lack of tax filings, failure to produce corroborative evidence, and explanations amounting to ex post rationalizations can support an inference of benami dealings. Interpretation and reasoning: The Tribunal examined the material: (a) heavy cash deposits in short period immediately prior to auction; (b) absence of Income Tax or Wealth Tax returns; (c) claimed sources (trade advance, sale of vehicles/JCB, sale of cattle, sale of ancestral land) supported mainly by assertions and limited documentary anchors; (d) withdrawals and redeposits chronology which the authorities regarded as suspicious; and (e) failure to produce adequate corroboration despite opportunities. The Tribunal characterized the appellant's explanations as ex post rationalizations, insufficiently corroborated, and improbable in light of timing and cash nature of transactions. The Tribunal gave weight to the Adjudicating Authority and Initiating Officer findings that the appellant failed to place cogent corroborative material and, at stages, misled or delayed the enquiry. Ratio vs. Obiter: The Tribunal's conclusion that the appellant's explanations were inadequate and that the appellant was appropriately designated benamidar is dispositive (ratio). Observations about what would have constituted adequate corroboration and credibility assessments are explanatory and illustrative (obiter to extent not strictly necessary to final disposition). Conclusion: The Tribunal upheld the finding that the appellant acted as benamidar; the claimed sources of funds were not satisfactorily proved and amounted to ex post rationalization, supporting confirmation of the attachment. Issue 3 - Validity of confirmation of Attachment under Section 24(4)(a)(i) PBPTA Legal framework: Attachment pending adjudication is authorized under PBPTA where the authority is satisfied that property is benami or likely to be subjected to in rem proceedings; confirmation requires review of evidence, enquiries conducted by the Initiating Officer, and assessment by the Adjudicating Authority. Precedent Treatment: The Tribunal applied standards that the Initiating Officer and Adjudicating Authority must make reasonable enquiries, give opportunity to the alleged benamidar to explain sources, and assess documentary evidence; where explanations are uncorroborated and suspicious facts exist (cash payments, lack of creditworthiness), confirmation of attachment is permissible. Interpretation and reasoning: The Tribunal found the Initiating Officer conducted investigations triggered by an anonymous complaint (identity protected as policy), examined banking entries, noted rapid cash mobilization, and afforded opportunities to the appellant to produce evidence. The Adjudicating Authority analyzed the material and endorsed the IO's conclusion. The Tribunal accepted that the IO and Adjudicating Authority had a reasonable basis for attachment: sudden availability of large cash beyond appellant's means, lack of tax/wealth records, inconsistent or uncorroborated explanations, and delays/dilatory conduct by the appellant. Ratio vs. Obiter: The confirmation of the Attachment Order on the facts of this case is the operative ratio. Remarks on procedural protections afforded to informants and the sufficiency of enquiries in general are explanatory and contextual (obiter where not strictly determinative beyond this case). Conclusion: The Attachment Order dated 30.04.2009 as confirmed by the Adjudicating Authority was properly sustained; the Tribunal found no ground to interfere and dismissed the appeal. Cross-reference The Tribunal's treatment of Issues 1-3 is interlinked: the decision to adjudicate on the merits post-recall of the higher court's earlier ruling (Issue 1) directly permitted examination of the sufficiency of explanations and corroboration (Issue 2), which in turn supported confirmation of the attachment (Issue 3).