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of <h1>Benami property dispute: Tribunal finds third-party funders were true beneficiaries; statutory relative exception inapplicable, transfers benami.</h1> Analysis addresses benami characterization of a property where documentary and circumstantial evidence established that third parties funded the ... Benami transaction / beneficial ownership - burden and source of consideration - documentary evidence versus circumstantial evidence - doctrine of sham or fraudulent transactions - compliance with Rule 5 PBPT Rule - Initiating Officer (IO) initiated proceedings under the PBPT Act, 1988 on the basis of information received from the Joint Commissioner of the Income Tax (BPU) - HELD THAT:- The statutory exception for lineal ascendants and descendants applies to the transaction in question. The exception under section 2(9)(A) applies only when the property is held for the benefit of the lineal ascendent/descendant and the consideration is paid by the lineal relative. However, in the present case, the nephews paid the consideration and the property was held for their benefit and not for the benefit of Satpathy. Therefore, the statutory exception would not save the appellants from the legal consequences under the PBPTA, 1988. With respect to the argument that, the post-registration transactions show the property was always intended for Sh. Prasanta Kumar Dash and Sh. Shishir Kumar Sahoo, The Ld. AA rightly noted after getting the land registered in his name in 2018, Satpathy immediately executed sale agreements with both nephews in 2018–19. Moreover, no fresh consideration was paid during the 2019 transfer which proves that 2019 sale was merely book adjustment of earlier funds paid by the nephews. This demonstrates classic benami layering. With respect to the argument that compliance with Rule 5 PBPT Rules, it is irrelevant when benami elements are proven. Even if minor procedural issues are alleged, they do not override the core statutory violation. The bank statements, agreements, and admissions independently satisfy all ingredients of Section 2(9)(A). Thus, procedural objections cannot invalidate the findings. The Tribunal is unable to accept the contention that the purchase of the subject property by Shri Prabhakar Satpathy was a bona-fide and independent transaction funded entirely from his own resources. Even if certain advance payments or expenditures were allegedly made by Shri Satpathy, it does not by itself, establish his financial independence in the acquisition of the impugned property. The respondent has placed material indicating the financial incapacity of Shri Satpathy vis-à-vis the value of the property and the financial involvement of Sh. Prasanta Kumar Dash and Sh. Shishir Kumar Sahoo. Even though the appellants claim that the beneficial interest remained with Shri Satpathy from 26.10.2009 to 2018, the evidence on record establish the fact that the Sh. Prasanta Kumar Dash and Sh. Shishir Kumar Sahoo were the actual beneficiary and intended owner. 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.
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