2025 (12) TMI 1493 - AT - Benami Property

Property purchase funded by another's payments, treated as benami u/s2(9)(A); appeal dismissed, attachments including sale proceeds upheld.

The dominant issue was whether the impugned acquisition constituted a benami transaction under s.2(9)(A) of the 1988 Act. The AT held that documentary ... Benami transaction - definition of Section 2(9)(A) - conversion of the agriculture land to non-agriculture land - payment of consideration for purchase of two parcels of land directly made by the appellant - agriculture land was existing in the name of Schedule Castes and Scheduled Tribes persons - denial of opportunity of cross- examination - provisional attachment of the property - no show-cause notice was given - HELD THAT:- The facts have been taken into consideration coupled with the documentary evidence which include even the Sale Deed indicating the relationship of the benamidar and the beneficial owner for purchase of property with required arrangement sufficient to make out a case of benami transaction. It is coupled with the bank statement to show payment of consideration for purchase of property by the appellant, Smt. Priti Agarwal. Thus, we do not find any force in the argument of the Ld. Counsel for the appellant to allege that the benami transaction is not made out under Section 2(9)(A) of the Act of 1988. We find that the issue aforesaid has been taken into consideration by the Adjudicating Authority elaborately relying on the judgment of the Madhya Pradesh High Court in the case of Harivallabh Mohanlal Joshi [2018 (8) TMI 2101 - MADHYA PRADESH HIGH COURT] The appellant was given many opportunities but she failed to avail it. It is now settled proposition of law that right of cross- examination is not inbuilt, rather, it is to be given when so required. In the instant case, the respondents have relied on the statement of Shri Shiv Shankar apart from other witnesses and even documentary evidence which include bank statement of the appellant, Smt. Priti Agarwal and the Sale Deed have been relied to draw conclusions about benami transaction. Detailed discussion of the facts in that regard has been made. The provision quoted above permits attachment of the property other than for which provisional attachment has been caused. Ld. Counsel for the appellant submitted that no notice under Section 26(5) of the Act of 1988 was given, though the provisional attachment is deemed to be from the date, it was caused by the Initiating Officer. Deeming clause should reverse the proceedings back to the stage of the proceedings taken up by the Initiating Officer. It mandates issuance of show-cause notice. We are unable to agree to the interpretation of the Section 26(5) of the Act of 1988 taken by the appellant. The provision aforesaid allows attachment of the property other than referred in the impugned order. Thus, we do not find that the attachment of a sum is vitiated on the ground that no show-cause notice was given. Thus, even the last argument raised by the appellant cannot be accepted. Appeal and accordingly it fails and is dismissed. It is a fact that there is no allegation against the appellant to get involved in the transfer of property. However, payment of consideration was made by Smt. Priti Agarwal directly to the seller. - The appellant is found to be recipient of the amount after sale of the property said to have been acquired by benamidar out of benami transaction thus the respondents rightly attached the property in the hands of the appellant to the extent of the proceeds received by him out of the sale of the benami property. The monetary trail has been reflected by the respondents and accordingly we find no reason to cause interference in the appeal of Sameer Agarwal also. It accordingly fails and is dismissed. Issues: (i) Whether the facts establish a benami transaction within the meaning of Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988; (ii) Whether denial of opportunity to cross-examine witnesses relied upon vitiates the proceedings; (iii) Whether provisional attachment of Rs. 97.36 lakhs without separate show-cause notice is valid under Section 26(5) of the Act; (iv) Whether provisional attachment insofar as it relates to sums received by Shri Sameer Agarwal is justified.Issue (i): Whether the facts establish a benami transaction under Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988.Analysis: The Tribunal considered documentary evidence (bank statements and sale deeds), statements of the benamidar and sellers, and the disposition of sale proceeds after conversion and plotting. The payment of purchase consideration directly from the appellant's account to sellers, absence of routing through the benamidar's account, and receipt of sale proceeds by the alleged beneficial owner were treated as corroborative facts satisfying the two limbs of Section 2(9)(A) (payment by another person and future benefit to the beneficial owner).Conclusion: The Tribunal held that a benami transaction under Section 2(9)(A) is made out and upheld the adjudicating authority's confirmation of provisional attachment in respect of the properties.Issue (ii): Whether denial of opportunity to cross-examine witnesses whose statements were relied upon vitiates the proceedings.Analysis: The Tribunal examined the record of multiple opportunities given to the appellant to cross-examine and relied on precedent that the right to cross-examination is not absolute but depends on circumstances. The authority found that ample opportunities were afforded, the appellant failed to avail them, and reliance was also placed on documentary evidence independent of the statements.Conclusion: The Tribunal held that denial of cross-examination did not vitiate the proceedings and did not warrant setting aside the adjudicating authority's order.Issue (iii): Whether provisional attachment of Rs. 97.36 lakhs without issuance of a separate show-cause notice is valid under Section 26(5) of the Act.Analysis: The Tribunal interpreted Section 26(5) as permitting provisional attachment of property discovered to be benami during adjudication even if not originally referred by the Initiating Officer, and rejected the appellant's contention that a fresh show-cause notice was mandated by the deeming provision.Conclusion: The Tribunal held that attachment of Rs. 97.36 lakhs was not vitiated for want of a separate show-cause notice and is valid under Section 26(5).Issue (iv): Whether provisional attachment against Sameer Agarwal is justified to the extent of amounts received by him from sale proceeds.Analysis: The Tribunal considered bank statements showing transfers to Sameer Agarwal totaling specified sums and accepted the finding that he was recipient of sale proceeds derived from the benami property, justifying attachment to that extent.Conclusion: The Tribunal held that provisional attachment insofar as it relates to amounts received by Sameer Agarwal is justified and dismissed his appeal.Final Conclusion: The Tribunal dismissed the appeals after upholding that the material on record established a benami transaction, that cross-examination was not denied so as to vitiate proceedings, that attachment under Section 26(5) is permissible without a separate show-cause notice for properties discovered during adjudication, and that attachment against a recipient of proceeds is supportable.Ratio Decidendi: Where consideration for acquisition is paid by one person but title is in another and the beneficial owner receives future benefit from the property, a benami transaction is established; the right to cross-examination is not absolute and may be refused where ample opportunity is given and documentary evidence independently supports the findings; Section 26(5) permits provisional attachment of properties discovered during adjudication.