TaxTMI 
TaxTMI 
2024 (9) TMI 130
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....T-916/CHN/2019, MP-PBPT-785/CHN/2019 (Stay) FPA-PBPT-917/CHN/2019 MP-PBPT-786/CHN/2019 (Stay) FPA-PBPT-918/CHN/2019, MP-PBPT-787/CHN/2019 (Stay) FPA-PBPT-919/CHN/2019, MP-PBPT-788/CHN/2019 (Stay) FPA-PBPT-920/CHN/2019, MP-PBPT-789/CHN/2019 (Stay) FPA-PBPT-921/CHN/2019, MP-PBPT-790/CHN/2019 (Stay) FPA-PBPT-922/CHN/2019, MP-PBPT-791/CHN/2019 (Stay) FPA-PBPT-923/CHN/2019, MP-PBPT-792/CHN/2019 (Stay) FPA-PBPT-924/CHN/2019, MP-PBPT-793/CHN/2019 (Stay) FPA-PBPT-925/CHN/2019 JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN AND SHRI BALESH KUMAR MEMBER For the Appellants : Mr. Anish Dhingra, S.P.P. For the Respondents : Mr. A.K Tewary, IRS (Retd.) and Mr. A. Krishnamorrthy, FCA ORDER The batch of appeals have been preferred by the Deputy Commissioner of Income Tax (Benami Prohibition Unit) to challenge the order dated 20.06.2019 passed by the Adjudicating Authority under section 26(3) of Prohibition of Benami Property Transactions Act, 1988 (in short 'the Act of 1988') 2. By the impugned order, the Adjudicating Authority has refused to confirm the provisional attachment order dated 22.11.2018 passed under section 24(4)(a)(i) of the Act of 1988. 3. The attachment of property ....
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....N. Ravichandra n 26,98,64,500 -- 12 F.No.IO/PBPT/Radha/162 P. Radha 2,49,92,000 -- 13 F.No.IO/PBPT/Deepak/163 R. Deepak Kumar 35,99,82,000 -- 14 F.No.IO/PBPT/Ramarajan/164 T.L. Ramarajan 25,00,00,000 -- 15 F.No.IO/PBPT/Thiyagaiya/165 T. Thiyagaiya ------ 1.00 16 F.No.IO/PBPT/Venkatraman/166 Venkatraman Rangaswamy 19,72,35,000 -- 178,42,42,200 101.0 kg 7. The perusal of the table given above not only makes a reference of the show cause notices issued to the non-appellant but also the details of the cash seized from them. The table even contains the quantity of gold recovered and seized from different persons. 8. According to the table given above, a sum of Rs. 178,42,42,200/- was seized apart from 101 KG gold. It is also a fact that during the course of the search operation at the premises of the respective persons, the individual had admitted that it belongs to Sh. Nagarajan and similarly Sh. Nagarajan had admitted that cash and gold belongs to him which said to have been given to different persons for safe custody as Sh. Nagarajan and others were involved in c....
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....serves to be set aside. 12. It was submitted that the Adjudicating Authority erroneously considered Income Tax Assessment order in favour of Sh. Nagarajan to be another ground to pass the impugned order though it was subsequent to the search and even the attachment order. It is even ignoring the fact that the cash is considered to be property of the person who is possessing it and would be treated to be the owner. 13. A reference of the Judgement of the Delhi High Court in the case of Sukh Ram Vs. ACIT (2006) 285 ITR 256 was given and relevant para is quoted hereunder: It is settled that possession is evidence of ownership and the strength of the presumption of ownership arising from the fact of possession depends on the nature of property involved. This presumption is one of the strongest in case of cash found in the possession of a person since cash is one of the properties of which title is transferable by mere delivery of possession 14. The possession of cash gives the ownership and in the light of the aforesaid, it comes out to be a case of benami transaction because beneficial owner pass on the property to benamidar and the facts aforesaid are proved from ba....
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.... avoid repetition of the same facts. 20. It is an admitted case of both the parties that on a search conducted by the Income Tax Department under section 132 of the Income Tax Act, cash and gold was found with the non- appellants and accordingly their statements apart from the statement of Sh. Nagarajan were recorded. Substance of the statement is that the cash and gold was given by Sh. Nagarajan to others for safe custody based on the trust. Sh. Nagarajan has not disowned ownership of the cash and the gold. In the similar manner, the possessor of the gold and the cash did not claim it to be of their ownership but shown it to be of Sh. Nagarajan. In few cases, where a third party got involved for the safe custody of cash and gold, the property was given by the person to whom it was initially given by Sh. Nagarajan. The substance of the case or facts are that the cash and gold belonging to Sh. Nagarajan has been given to other persons who were holding it at the time of the search. If the matter is considered simpliciter, it would become clear that consideration of the gold or the cash was paid by the Sh. Nagarajan and it was kept with the other person who were holding it at the t....
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....is held by a person and consideration of which has been provided or paid by another person. It is for immediate or future benefit, direct or indirect of the person who has provided the consideration. In the instant case, the property said to have been transferred or held by a person whose consideration was given or provided by other person and accordingly, the transaction may fall within the definition of "benami transaction". To illustrate it for purchase of gold, consideration was paid by Sh. Nagarajan and it was transferred or held by other person and thereby it can be said to be a "benami transaction". The definition is however subject to exceptions and in this case, we need to give reference of sub clause (ii) of clauses (a) and (b) of section 2(9)(A). The facts on records shows that Income Tax authorities had recorded the statement which shows that cash and gold was given to the different persons for safe custody and that too on trust. In that case, it is to be taken to be holding of the property in the fiduciary capacity for the benefit of the other person. 24. It is also when subsequently, beneficial owner disclosed the cash and gold for the assessment to the income tax ....
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....00 Kept by Shri Bhaskar, maternal uncle (p.94). Shri Bhaskar confirmed cash belonged to SPK & Co. Given to Bhaskar for safekeeping. 9 Shri. Mohamed Ahamed Rasool 19.00 Given by Shri Thiyagaiah (p. 110) who confirmed that he had given to Rasool for safety purpose. Given to Shri Thiyagaiah for safekeeping. (q 22) 10 Shri N.J Abraham 8,87,48,000 Given by Shri Nagarajan for Safe custody(p.89) 3 bags were given to him for safe custody. (q 17) 11 N. Ravichandran 26,98,64,500 Shri Nagarajan asked me to allow him to park his car (p.97). I parked my car in his residence. (q 16) 12 Smt P. Radha 2,49,92,000 Given by Kothandaraman, brother (p 91) who confirmed that he had received from Nagarajan (p 107) Given to Shri Kothandaraman for safe custody. (q 44) 13 Shri R. Deepak Kumar 35,99,82,000 -- Shri Nagarajan parked car at my residence. My driver parked my BMW car in his residence. He did not know about cash kept in car. 14 Shri T.L.Ramarajan 25,00,00,000 -- Shri Boominathan had given for safekeeping. Given to Shri Boominathan, for safekeeping,....
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....ownership of the property, rather it was shown to be of the alleged beneficial owner, i.e. Sh. Nagarajan. Thus, while not agreeing with the reasons given by the Adjudicating Authority, we have recorded our own reasoning for not endorsing the reference for the attachment of the properties rather the references are rejected for the reason recorded by us. 31. At this stage we may refer to the Judgement of the Apex Court in the case of Sri Marcel Martins Vs M. Printer & Ors reported in AIR 2012 Supreme Court 1987. Therein, the issue regarding "fiduciary capacity" was taken into consideration and following finding has been recorded in relevant paras of the judgement and are quoted hereunder. (15) The expression "fiduciary capacity" has not been defined in the 1988 Act or any other Statute for that matter. And yet there is no gainsaying that the same is an expression of known legal significance, the import whereof may be briefly examined at this stage. (16) The term "Fiduciary" has been explained by Corpus Juris Secundum as under: "A general definition of the word which is sufficiently comprehensive to embrace all cases cannot well be given. The term is deri....
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....principal, and attorney- client - require the highest duty of care. Fiduciary relationship usually arise in one of four situations: (1) when one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first, (2) when one person assumes control and responsibility over another, (3) when one person ha a duty to act for give advice to another on matters falling within the scope of the relationship, or (4) when there is a specific relationship that has traditionally been recognised as involving fiduciary duties, as with a lawyer and a clinet or a stockbroker and a customer." 19. Stroud's Judicial Dictionary explains the expression "fiduciary capacity" as under: "Fiduciary Capacity - An administrator who had received money under letters of administration and who is ordered to pay it over in a suit for the recall of the grant, holds it "in a fiduciary capacity" within Debtors Act 1869 so, of the debt due from an executor who is indebted to his testator's estate which he is able to pay but will not, so of moneys in the hands of a receiver, or agent, or Manager, or moneys due to an account from the London agent of a....