Benami transaction not proved where share funding lacked independent evidence and companies showed genuine business capacity.

Provisional attachment of properties was not confirmed because the Department failed to prove the essential ingredients of a benami transaction. The Tribunal found no direct, reliable or independent evidence that share subscription funds came from the alleged beneficial owner or were routed through shell entities for another person's benefit. It also noted that the companies had business activity, profits, assessed returns and financial capacity to justify the share issue at premium, and that the investments appeared to have been made for their own benefit. The alternative statutory basis was likewise found unsustainable on the facts, so the attachment was not upheld.

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Issues: Whether the provisional attachment of the properties was liable to be confirmed on the basis of the material relied upon by the Department, and whether the ingredients of a benami transaction under the Act were established.

Analysis: The appeals arose from common findings that the Department had not produced direct, reliable, or independent evidence to show that the consideration for the share subscriptions originated from the alleged beneficial owner and was routed through the alleged shell entities for the benefit of another person. The material relied upon consisted largely of statements recorded in income-tax proceedings, without adequate independent inquiry under the benami law and without corroboration from the documentary record. The record also showed that the respondent companies had business activity, profits, assessed returns, and financial capacity to justify the share issue at premium, and the investments were found to have been made for their own benefit. The Tribunal further accepted that the Department had not discharged the burden of proving the essential ingredients of benami ownership, and the invocation of the alternative statutory limb was also found untenable on the facts.

Conclusion: The Department failed to establish a benami transaction or justify confirmation of the provisional attachment, and the denial of confirmation was upheld.

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