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Issues: (i) Whether the provisional attachment and its confirmation were justified on the footing that the impugned cash-to-RTGS routing constituted a benami transaction under the Prohibition of Benami Property Transaction Act, 1988. (ii) Whether denial of cross-examination of the persons whose statements were relied upon vitiated the proceedings for breach of natural justice.
Issue (i): Whether the provisional attachment and its confirmation were justified on the footing that the impugned cash-to-RTGS routing constituted a benami transaction under the Prohibition of Benami Property Transaction Act, 1988.
Analysis: The Tribunal found that cash of Rs. 39,50,000 deposited after demonetisation in accounts controlled by the alleged benamidar was routed back through RTGS to the appellant's account, and the appellant did not produce convincing independent evidence to show a genuine prior business relationship or to substantiate the claimed sale of gold as the true source of the credits. The surrounding circumstances, the statement recorded under Section 131 of the Income-tax Act, 1961, and the timing and pattern of the transactions were treated as supporting the inference that the arrangement was a planned benami routing of funds.
Conclusion: The transaction was treated as benami and the confirmation of the provisional attachment was upheld, against the appellant.
Issue (ii): Whether denial of cross-examination of the persons whose statements were relied upon vitiated the proceedings for breach of natural justice.
Analysis: The Tribunal held that no prejudice was shown from the absence of cross-examination. It noted that there was no statement of one proposed witness on record, and as regards the other, the appellant had been supplied the statement and the witness had not appeared when summoned. Applying the settled prejudice-based approach to natural justice, the Tribunal concluded that the impugned action was not invalid merely because cross-examination was not granted.
Conclusion: No violation of natural justice was found, against the appellant.
Final Conclusion: The appeal failed and the order confirming the provisional attachment was sustained.
Ratio Decidendi: In benami proceedings, where the surrounding circumstances and recorded statement support the conclusion that funds were routed through controlled entities back to the alleged beneficiary, and no real prejudice is shown from denial of cross-examination, the attachment and its confirmation need not be set aside.
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