2026 (2) TMI 795 - AT - Benami Property

Benami Transaction Definition expanded to include continued holding post amendment, capturing pre amendment transfers where consideration paid by another.

A transaction where consideration was paid by one person and title was registered in another falls within the benami definition because the fiduciary ... Benami transaction - Provisional Attachment Order (‘PAO’) - consideration payment by the beneficial owner for its future benefit - conversion of land from agricultural to non-agricultural - piece of land purchased and registered in the name of benamidars - definition of 'benami transaction' u/s 2(9)(A) - exception of fiduciary capacity - prospective application of the Amendment Act 2016 - HELD THAT:- It is no doubt that the Apex Court in the case of Ganpati Dealcom [2022 (8) TMI 1047 - SUPREME COURT] applied the amending Act of 2016 with prospective application but that judgment has been recalled by the order dated 18.10.2024. Thus, the issue no more remains open for debate at this stage. It is, however, necessary to refer the order of this Tribunal in the case of Prism Scan [2024 (1) TMI 203 - APPELLATE TRIBUNAL FOR SAFEMA AT NEW DELHI] when referring the judgment in the case of Ganpati Dealcom (supra), the definition of ‘benami transaction’ under Section 2(9)(A) of the Act of 1988 was given interpretation with its prospective application. The word ‘ held’ used in the provision of Section 2(9)(A) of the Act of 1988 was given interpretation and is applicable to this case. The land in dispute was existing in the name of benamidars as on date of the amendment and even subsequently for some years, as admitted by the appellants himself. Even if we consider the Amending Act of 2016 to be prospective in nature, the definition of Section 2(9)(A) of the Act of 1988 would apply to the case because the transaction may have taken place prior to amendment but private appellants were holding the property on 01.11.2016 and even subsequently for considerable period. The clarification given in the cases where the property was held by the benamidar even after the amendment would be covered by the order in the case of Prism scan (supra). Thus, even the third argument raised by the appellants cannot be accepted. We do not find perversity in the order passed by the Adjudicating Authority to cause interference in the impugned order. The Adjudicating Authority found that even Shri Kaluram Berva was neither an employee of the beneficial owner nor appointed as an agent of the beneficial owner. His name was used for the purchase of agricultural land because he was falling under the Scheduled Caste category and thus land could have been registered in his name. It is further with the finding that the transaction took place to the benefit of the beneficial owner. Thus, the ingredients of Section 2(9)(A) of the Act of 1988 were fulfilled. No merit in any of the arguments raised by the appellants. Accordingly, appeals fail and are dismissed. Issues: (i) Whether the transaction and registration of land fall within the definition of 'benami transaction' under Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988; (ii) Whether the amended definition in the Amending Act of 2016 (effective 01.11.2016) applies where the transfer occurred before amendment but the property was held by the benamidar on and after 01.11.2016.Issue (i): Whether the facts satisfy Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988.Analysis: The definition in Section 2(9)(A) requires (a) transfer to or holding by a person where consideration is provided or paid by another, and (b) the property is held for the immediate or future benefit of the person who provided the consideration, subject to listed exceptions including holding in a fiduciary capacity. Admitted facts show the land was registered in the name of third parties while the consideration was paid by another person and, after conversion from agricultural to non agricultural, the beneficial owner obtained the property. The fiduciary exception requires that title not have passed by a concluded transaction; registration in the name of the benamidar with transfer of title indicates the exception does not apply.Conclusion: The transaction falls within Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988; conclusion is in favour of the Respondent.Issue (ii): Whether the Amending Act of 2016 applies prospectively only, or applies where the property was held by the benamidar on and after 01.11.2016 despite transfer before that date.Analysis: The amended definition expanded the concept by including both transfer and holding; the statutory term 'held' must be given effect. Where a person continues to hold the property on the date the amendment came into force (01.11.2016) or thereafter, and the consideration was provided by another, the amended definition captures such continuing holding even if the transfer occurred earlier. Prior authority holding prospective effect has been reconsidered; the factual admission that the property was held by benamidars on and after 01.11.2016 brings the transaction within the amended definition.Conclusion: The Amending Act of 2016 applies to a transaction where the benamidar was holding the property on or after 01.11.2016; conclusion is in favour of the Respondent.Final Conclusion: The appeals are dismissed because the transactions satisfy the amended definition of benami transaction and none of the statutory exceptions apply; the provisional attachment confirmation is sustained.Ratio Decidendi: Where consideration for a property was provided by one person and the property continued to be held by another person on the date the Amendment Act, 2016 came into force (01.11.2016) or thereafter, such holding falls within Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988, notwithstanding that the transfer occurred before the amendment.