TaxTMI 
TaxTMI 
2019 (4) TMI 1161
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....nd RKW Developers Private Limited is the beneficial owner. 3. The brief facts are that the respondent No 1 purchased ten residential flats at New Urmila CHS Limited, 19th Road Khar West, Mumbai for total consideration of Rs. 95.25 Crores. All of these ten flats are part of one single building i.e. Urmila CHS Ltd. which was constructed on land admeasuring 608.64 Sq. Mtrs. and 656.11 Sq. Mtrs. and situated at plot of land bearing C.T.S. No. D/900/A/3 Survey No. 637/638 of Suburban Scheme VII (Khar), Khar (West), Mumbai. The said properties have been purchased by the respondent no. 1 from ten persons on 17.01.2017 consisting of 5 individuals and 5 companies. 4. It is alleged by the appellant that these 5 individuals and the Directors of these 5 companies are dummy directors of these companies and dummy owner of the properties. The individuals and directors of these companies are employees of the respondent no. 2. They were not aware of any details, transactions or day to day functioning of the companies, though they are the directors of the said companies, which were handled by Mr. SachinPathak and Mr.Hemant Bhatia, who are in turn the accountants of M/s RKW Developers Private Limit....
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....e respondent no 1 for redevelopment since beginning as evident from the fact that even the fees for filing forms with RoC with respect to change in the partnership agreement and the appointment of present partners in the respondent no. 1 was paid by the respondent no. 2. Mere approvals in the name of benamidar do not prove in any way that the benefits from the property are actually enjoyed by it and not by the beneficial owner as there is an active financial relationship between the respondents as evident from the bank statement as even after availing loan from DHFL, the respondent no. 1 received huge amounts of money from respondent no. 2 which it used for the development of property, thereby establishing that the respondent no. 2 is directly involved in the development of project in order to derive future benefits arising out of the same. The person providing the consideration i.e. DHFL and person reaping the benefits of such transaction i.e. respondent no. 2 are same as they are linked to each by means of common directors and promoters 8. It is submitted on behalf of appellant that the benefits to the beneficial owner arising out of property held in the name of the benamidar ne....
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....Group and controls key departments viz. legal, corporate planning, land acquisition, construction, marketing and finance, etc. Mr. Dhruv looks after the finance of the Midcity Group as he is well acquainted with various financial institutions, including Altico Capital India Private Limited, India Bulls Housing Finance Limited, India Infoline Finance Limited, Punjab National Bank, Union Bank of India, Kotak Mahindra Bank, Punjab & Maharashtra Co-operative Bank Ltd. and DHFL, as he has in the past raised funds from them for his other projects, in the ordinary course of business. b) The Midcity Group has over two decades of experience in the Real Estate and Infrastructure space. Midcity Group has completed around 28 projects till date in the City of Mumbai Suburban. Presently there are numerous other ongoing projects with saleable area admeasuring approximately 1.5 million sq. ft. c) In or about October 2016, Mr. Dhruv came to know about a property situated at Khar (West) which was available for redevelopment. Finding the property ideal and feasible, Mr. Dhruv decided to purchase the flats and initiate re-development on the said Property. d) At the relevant time, all the other e....
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....tion. In order to safeguard the interest of the flat owners, it was also agreed that the physical possession of the flats would be taken only once the cheques are encashed. h) During the said period, R-1 was also in process of complying with the requirements of DHFL with respect to raising a loan and creation of mortgage. It was only after the requisite compliances were followed by R-1 that on 4th January 2017, DHFL issued its inprinciple approval to the loan. It was only on the basis of the inprinciple approval that R-1 proceeded to execute and register the agreements with various flat owners in the building on 13th January 2017 and registered the same on 17th January 2017. All the vendors were paid valuable consideration and requisite stamp duty was also paid on all the agreements. The total consideration paid by R-1 to all the flat owners and the owner of the land is approximately about Rs. 111,32,00,000/- (Rupees One Hundred and Eleven Crores Thirty Two Lakhs Only) and the total amount paid towards stamp duty by R-1 was approximately about Rs. 5,56,60,500/- (Rupees Five Crores Fifty Six Lakhs Sixty Thousand and Five Hundred Only). i) That accordingly, on 19th January 2017, ....
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.... Consequent to the filing of the above reference, Ld. Adjudicating Authority in a detailed and comprehensive order dated 24.10.2018, did not confirm the Provisional Attachment Order as passed by the IO, finding the pleadings and grounds taken by R-1 to be true, valid and genuine. 13. Admittedly, the Adjudicating Authority inter-alia on various reasons disallowed the reference filed by the IO by passing the speak detailed order on the following:- i) SCN is not sustainable since no explanation given by IO for changing the character of original reference and hence order u/s 24(3) & 24(4) are also invalid and illegal. ii) No explanation was given as to why the Provisional Attachment Order u/s 24(4)(a)(i) was not served to the R-2. iii) The IO has miserably failed to discharge the burden of proof cast upon him to prove the transaction as benami. iv) Genuine and Bona-fide transaction carried out by R-1 and Failure of the IO to establish connection between DHFL and RKW Developer Pvt. Ltd. (R-2). v) Transaction not carried out in stages as alleged as the R-1 has able proved that the land was purchased by it through genuine sources and for re-development. vi) The possession, co....
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....letter dated 06.04.2018, the lender i.e. DHFL had addressed to the IO that "the loan to Manpreet Estates LLP (a Midcity group concern) was sanctioned in the normal course of our business for acquisition of project and redevelopment thereof. The subject loan is not the only project loan sanctioned to that group. Earlier also some projects of that group were financed by us"The said Letter was reproduced in the order of the Adjudicating Authority. Therefore, it is wrongful for the appellant to state that R-1 did not had the financial capacity to avail loan from DHFL or it has a control over to the financial institution. 18. The appellant has disputed the veracity of the loan agreement as executed between R-1 and DHFL, and has claimed that R-2 is exercising control over DHFL. DHFL i.e. Dewan Housing Financial Corporation Ltd. is a listed public company having substantial public holding. Therefore, submission of the appellant cannot be accepted to the effect that it is in control of a public listed company as the loan extended to the R-1 by DHFL was done on 'arm's length basis'. The relevant disclosures for the payment of interest have been made in the Income Tax Return filed for the A....
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....efaulter from transferring or charging the property in any way and prohibiting all persons from taking any benefit under such transfer or charge. Service of notice of attachment: 49. A copy of the order of attachment shall be served on the defaulter. Proclamation of attachment 50. The order of attachment shall be proclaimed at some place on or adjacent to the property attached by beat of drum or other customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and on the notice board of the office of the Tax Recovery Officer. 22. Under these mandatory provisions, the IO was duly bound to follow the statutory procedure mandated in above rules. Though order of attachment was passed and served on the R-1, the requirement of proclamation of attachment order at some place on or adjacent to the property attached by beat of drum or other customary mode and affixture of copy thereof on a conspicuous part of the property and on the notice board of the office of the Initiating Officer was not done.Certificate of confirmation of affixture of the order on the notice board of the Initiating Officer is also not found enclosed with the reference confi....
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....rary evidence is proved by the appellant. Thus, in the facts of present case and documentary evidence proved, the onus of proving a benami transaction rests entirely on the shoulders of the IO who is making the charge. The burden of proof shall shift to the person who is taking contrary of within the meaning of section 91 and 92 of the Evidences Act, 1972. 27. The authority has also concurred with the submission of R-1 that the IO has miserably failed to discharge such burden of proof. Section 92 of Indian Evidence Act,1872 talks about the exclusion of evidence of oral agreement. Once the primary evidence is proved by way of written document which is not challenged, no evidence of an oral agreement or statement shall be admitted, the burden shall be shifted to the party who pleaded oral agreement. After the amendment in the Benami Act, if apply as it is, the burden of proof was shifted upon the appellant. In the present case, the IO has failed to discharge such burden and he has merely based on his personal perception with uncorroborated statements had passed the order without even a single iota of evidence to discharge such a burden of proof once the R-1 was able to prove that hi....
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....d that the purchase money came from a person other than the person in whose favour the property is transferred. The purchase is prima-facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary; (3) The true character of the transaction is governed by the intention of the person who has contributed the purchase money and (4) The question as to what his intention was has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the motives governing their action in bringing about the transaction and their subsequent conduct etc." d) Andalammal V. Rajeswari Vedachallam AIR 1985 Mad 321 "The next question to which we propose to advert is the issue relating to benami theory. It is by now well-settled that the burden is on the person who sets up the case of benami in the instant case the respondents and that if the burden is not discharged, the ostensible title will prevail. To substantiate a case of benami, the judicial pronouncements have laid down several factors have to be taken into consideration and on an over all assessment of such factors is the court to render a fi....