Benami property dispute: Tribunal finds third-party funders were true beneficiaries; statutory relative exception inapplicable, transfers benami.

Analysis addresses benami characterization of a property where documentary and circumstantial evidence established that third parties funded the acquisition and were intended beneficiaries; consequently the statutory exception for lineal ascendants/descendants did not apply because the consideration was paid by nephews and the property was held for their benefit. Post-registration transfers and absence of fresh consideration were treated as evidence of layered benami transactions, supporting application of the doctrine of sham or fraudulent transactions. Compliance with procedural Rule 5 was held immaterial once benami elements were proved, and assertions of bona fide independent ownership were rejected on financial incapacity and payment evidence.

---

---

Issues: Whether the impugned immovable property is a benami property within the meaning of Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988, and whether the appeals against the Adjudicating Authority's declaration of benami transaction succeed.

Analysis: The Tribunal examined evidentiary material concerning the source of consideration and the beneficial interest. Bank statements, admissions, earlier sale agreements and post-registration transactions were analysed to determine whether the purchase consideration originated from persons other than the registered owner and whether the property was held for the benefit of such persons. The Tribunal considered the effect of registered documents (sale deeds, stamp duty payment, TDS and ITR entries) and held that registration and related formalities do not negate a benami transaction where the source of funds and beneficial interest point otherwise. The statutory test under Section 2(9)(A) requires proof that consideration was paid by a person other than the ostensible owner and that the property was held for the benefit of that person; the material on record was found to satisfy both limbs.

Conclusion: The Tribunal concluded that the impugned property is a benami property as the consideration for purchase was provided by persons other than the registered owner and the property was held for their benefit. The appeals challenging the Adjudicating Authority's declaration of benami transaction are dismissed.

---