Property purchases in another person's name with buyer funding: treated as benami u/s2(9)(A), attachment upheld

Whether the provisional attachment was sustainable by treating the properties as "benami property" under s.2(9)(A) of the 1988 Act (as amended in 2016) was decided against the appellants. The Tribunal held that the record showed an admission that the properties were purchased in the name of a benamidar while consideration was provided by the beneficial owner, satisfying the statutory ingredients of s.2(9)(A). The plea that the 2016 amendment operated only prospectively was rejected as inconclusive pending SC clarity, and, in any event, the appellants failed to substantiate any asserted onward transfer arrangement or explain purchase in the benamidar's name despite lack of means. The appeals were dismissed and the attachment order upheld.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the initiation of proceedings and provisional attachment were vitiated for want of proper notice under section 24(1) and section 24(3) of the Prohibition of Benami Property Transactions Act, 1988.

(ii) Whether, on the facts found, the attached properties constituted a "benami transaction", including determination of benamidar/beneficial owner and satisfaction of the essential ingredients of section 2(9)(A) (as amended in 2016).

(iii) Whether proceedings could be sustained where the transfers/purchases were stated to be prior to the 2016 amendment, and whether the concept of property being "held" after the amendment brought the transaction within the amended definition.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Validity of initiation and provisional attachment with reference to notices under section 24(1) and section 24(3)

Legal framework (as discussed): The Tribunal addressed the requirement of notice under section 24(1) followed by action under section 24(3) leading to a provisional attachment, and subsequent reference to the Adjudicating Authority for confirmation.

Interpretation and reasoning: Although lack of proper notice was urged, the Tribunal recorded as a fact that notice under section 24(1) was issued and was followed by section 24(3), after which the provisional attachment order was passed and sent for confirmation.

Conclusion: The Tribunal rejected the challenge based on alleged non-compliance with section 24(1) and section 24(3) and found no procedural illegality on this ground warranting interference with confirmation of attachment.

Issue (ii): Whether the transaction satisfied the ingredients of "benami transaction" and justified confirmation of attachment

Legal framework (as discussed): The Tribunal applied the ingredients reflected in section 2(9)(A) (as amended), focusing on property being transferred to or held by one person while consideration is provided or paid by another, and the evidentiary indicators of lack of means of the apparent holder.

Interpretation and reasoning: The Tribunal relied on findings that (a) documents of multiple properties standing in one person's name were recovered from the residential premises of another person controlling the relevant business group; (b) the apparent holder had no demonstrated financial capacity to acquire numerous properties of the stated aggregate value and was not an income-tax payer until much later; and (c) the source of funds was found to be the other person/business, leading to the inference that consideration was provided by the beneficial owner while title stood in the benamidar's name. The Tribunal treated the appellants' own stance regarding funding (and the failure to show any independent source of funds of the title-holder) as supporting satisfaction of the statutory ingredients. The explanation that the properties were acquired for eventual transfer to a public authority was rejected because it was raised without pleading or supporting documents, and did not explain why acquisitions were made in the name of an individual with no means rather than in the name of the business entity said to be undertaking the project.

Conclusion: The Tribunal held that the essential ingredients of a benami transaction stood satisfied: consideration was provided by the beneficial owner while properties were purchased/held in the name of a person lacking means, justifying confirmation of the provisional attachment.

Issue (iii): Applicability of amended definition to properties purchased prior to the 2016 amendment; effect of post-amendment "holding"

Legal framework (as discussed): The Tribunal examined the amended definition's use of the expressions "transferred to" and "held by", and applied its own interpretation that "benami transaction" covers not only transfer but also continuing holding of property where consideration was provided by another.

Interpretation and reasoning: The Tribunal rejected the contention that the words "transfer" and "held" could not operate as alternatives within the definition, and declined an interpretation that would amount to re-writing the provision. It accepted the proposition that even where the acquisition/transfer occurred prior to the amendment, if the property continued to be held by the benamidar after the amendment, proceedings could be initiated and attachment could follow under the amended framework. On the facts, the Tribunal found no credible, documented basis to treat the acquisitions as having been completed for immediate onward transfer such that the benamidar was not holding the property in the relevant period; the asserted onward transfer narrative remained unsupported.

Conclusion: The Tribunal upheld invocation of the amended definition on the basis that continued holding of the property after the 2016 amendment brings the arrangement within the scope of "benami transaction", and found no merit in the non-retrospectivity objection as framed on the facts of continuing holding and lack of proof of the alleged onward transfer arrangement.

Final disposition (as a consequence of the above determinations): Having found procedural compliance with section 24 notices and having affirmed that the transactions satisfied the benami ingredients within the applicable definition, the Tribunal found no ground to interfere with confirmation of the provisional attachment and dismissed the appeals.

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