2026 (1) TMI 1247 - AT - Benami Property

Benami transaction and provisional attachment dispute over bank accounts; statutory benami elements unmet, appeal dismissed.

Issue concerned whether statutory requirements for a benami transaction and provisional attachment under the PBPT Act, 1988 were satisfied. The IO failed ... Benami transaction - burden of proof - provisional attachment - statutory requirements of a benami transaction as defined u/s 2(9)(A) - benamidar - beneficial owner - Initiating Officer - Whether the IO has successfully discharged the statutory burden upon him u/s 2(9) read with Sections 23 and 24 of the PBPTA, 1988, in order to establish that M/s Surge Ahead Solutions Pvt. Ltd. and M/s Bajaj Capital Insurance Broking Ltd. are the benamidar and beneficial owner respectively - attached bank accounts are benami properties. - HELD THAT:- The provisional attachment order of the IO also suffers from fundamental infirmities as well. The IO by the said PAO sought to attach bank accounts, however, he falls short in identifying the original benami property that may have been transfer in favour of the “Surge” for the immediate or future benefit of the Bajaj Group or even its converted form, or its traceable proceeds. In fact, the IO attempts to treat bank balances as “equivalent value” assets, which is not a concept under the statutory scheme of the PBPT Act, 1988. It is also noted that the IO has relied on investigations conducted by the Income Tax Department and that no independent inquiry appeared to have been undertaken by him under the PBPT Act, 1988. Even if it established that the Bajaj Group practiced certain degree of control and influence over “Surge”, the statutory requirements of section 2(9)(A) under the PBPT Act, 1988 need to be fulfilled. The PBPT Act, 1988 cannot be invoked as a substitute to hold the parties accountable for alleged violations of IRDAI regulations or any fiscal statutes. The respondents can be accused of misusing regulations in order to circumvent the corporate structuring, but this is not a case of benami transaction. Thus, we find that the IO has failed to make out a case under section 2(9)(A) of the PBPT Act, 1988. Therefore, we find no reason to cause interference in the order of the Ld. AA. The appeal accordingly fails and is dismissed. Issues: Whether the Initiating Officer discharged the statutory burden under Section 2(9)(A) read with Sections 23 and 24 of the Prohibition of Benami Property Transactions Act, 1988 to establish that M/s Surge Ahead Solutions Pvt. Ltd. and M/s Bajaj Capital Insurance Broking Ltd. are respectively the benamidar and beneficial owner and that the attached bank accounts are benami properties.Analysis: The statutory definition of benami transaction requires (a) property held by one person, (b) consideration provided by another, and (c) the property held for the immediate or future benefit of the person providing consideration. The material on record showed operational and managerial links between the entities, shared premises and employees, centralized payroll functions, and transfers from Surge to group companies; however, suspicion or regulatory/tax irregularities alone do not satisfy the statutory ingredients of Section 2(9)(A). The Prohibition of Benami Property Transactions statutory scheme requires identification of specific property acquired or held in the name of the putative benamidar with consideration traceable to the alleged beneficial owner and proof of holding for the beneficial owners present or future benefit. The attachment order suffered from infirmities: the Initiating Officer did not identify an original benami property or traceable proceeds, treated bank balances as 'equivalent value' contrary to the statutory scheme, and attached accounts some of which were closed prior to the attachment order. The Initiating Officer also largely relied on external investigations without conducting an independent inquiry required under the PBPT Act. These deficiencies meant the Initiating Officer failed to satisfy the statutory burden necessary to establish a benami transaction.Conclusion: The Initiating Officer failed to discharge the burden under Section 2(9)(A) read with Sections 23 and 24 of the Prohibition of Benami Property Transactions Act, 1988; the attached bank accounts are not benami properties and the Adjudicating Authority's revocation of the attachment is upheld, favouring the respondents.