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Issues: (i) Whether the appellant was the beneficial owner and the bank-credit transaction was a genuine business sale of gold; (ii) Whether the alleged delivery of gold through the broker and the broker's affidavit established the transaction; (iii) Whether non-examination of the alleged operator and non-cross-examination of the proprietor vitiated the proceedings.
Issue (i): Whether the appellant was the beneficial owner and the bank-credit transaction was a genuine business sale of gold?
Analysis: The evidence on record, including the pattern of cash deposits, immediate transfers, stock register entries, purchase and sale invoices, and surrounding circumstances, showed that the transaction was not a genuine sale of gold. The Tribunal treated cash as property capable of forming the consideration in a benami arrangement and held that, where the alleged business transaction is not genuine, the transfer of demonetised cash into banking credits falls within the mischief of the benami law. The documentary record was found inconsistent with the claim of legitimate gold trading and was treated as supporting accommodation entries rather than real commerce.
Conclusion: The appellant was held to be the beneficial owner, and the transaction was not accepted as a genuine business transaction.
Issue (ii): Whether the alleged delivery of gold through the broker and the broker's affidavit established the transaction?
Analysis: The Tribunal found that delivery of gold through the broker was not proved. The affidavit of the alleged broker was treated as insufficient in the absence of authority, supporting KYC material, and reliable proof of the buyer's identity and participation. The absence of corroborative evidence, together with the documentary inconsistencies, led to the conclusion that the affidavit was procured to support the defence.
Conclusion: The alleged delivery through the broker and the broker's affidavit were not accepted as proof of a genuine sale.
Issue (iii): Whether non-examination of the alleged operator and non-cross-examination of the proprietor vitiated the proceedings?
Analysis: The Tribunal held that the alleged operator was not traceable and his identity and whereabouts were not established, so no useful purpose would have been served by his examination. As to the proprietor, the Tribunal found no prejudice from the absence of cross-examination, particularly when the appellant could have produced the witness in defence and no examination-in-chief or affidavit-based evidence requiring cross-examination was shown.
Conclusion: The procedural objections based on non-examination and absence of cross-examination were rejected.
Final Conclusion: The confirmation of attachment to the extent of Rs. 25,00,000/- was sustained, the appeal failed, and the appellant was left to seek hearing, if any, at the confiscation stage.
Ratio Decidendi: Where documentary and circumstantial evidence shows that an alleged commercial transaction is only a device to convert demonetised cash into banking credits, the transaction may be treated as benami and the attachment confirmed notwithstanding the absence of direct proof of cash delivery.
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