TaxTMI 
TaxTMI 
2025 (8) TMI 1239
X X X X Extracts X X X X
X X X X Extracts X X X X
....5,18,600/- Om Samriddhi Banquet & Hospitality LLP Account No. 002812100018645 in the Bharat Cooperative Bank Ltd., Rizvi Nagar, Khira Nagar, Santacruz west, Mumbai-400054 2. As per the facts of the case, I.O. received information from Investigation Directorate of Mumbai that Mr. Bikramjeet Ram has used his bank accounts to deposit old notes of denomination of Rs 500/- and Rs. 1,000/- belonging to M/s Om Samriddhi Banquet & Hospitality LLP, Address: Banquet Hall No. 1, 5th Floor, Phirozshah Mehta Road, Santacruz West, Mumbai-54). The demonetized notes were deposited into bank accounts of his proprietorship concern, namely M/s Vikram Trading. The amount so deposited was later-on transferred to account of M/s Om Samriddhi Banquet & Hospitality LLP in The Bharat Cooperative Bank, Santacruz West, Mumbai - 400054 with account no. 002812100018645. Mr. Bikramjeet Ram, during the course of his statement recorded by IO on 12-01-2017 under oath under section 131 of the Income Tax Act, 1961, has accepted that bank accounts of M/s Vikram Trading have been used to deposit cash. Mr. Gurcharan Singh (partner of Om Samriddhi Banquet & Hospitality LLP), during the course of his statem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the facts of the case, as mentioned in his list of dates & events as under:- At the time of demonetization, the appellant discovered currency of Rs. 8518600/- in its possession. In order to avoid the hassle of long queues and risks of being identified by criminal elements, the Appellant gave the currency notes to Mr. Amit Gala and Mr. Bikramjeet Ram to deposit the same in the bank account of the Appellant along with an authority letter, on payment of commission of 2%. However, the said amount was erroneously deposited in the account of M/s Vikram Trading, whose proprietor is Bikramjeet Ram. During this period, the Appellant received the said amount through RTGS payments from M/s Vikram Trading. Since the part-time accountant of the Appellant was unaware of how this amount was received, the amount was credited to the Suspense Account of the Appellant. Thereafter, the Chartered Accountant of the Appellant realized that the said amount was wrongly credited in the proprietary concern M/s Vikram Trading of Mr. Bikramjeet Ram, who had further transferred it to the account of the Appellant by way of RTGS. At that stage, the said amount receipt was recognized as sales business r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h RTGS in the bank account of appellant company is a benami transaction, within the meaning of Section 2 (9) (A) of the PBPT Act. He pointed out that the Adjudicating Authority failed to consider that IO has not supplied the reasons to believe before issuing the Show Cause Notice under Section 24 (1) of the Act, and thereby, violated the principles of natural justice. He stressed that failure to supply the reasons of belief by the IO point out that no reasons were ever recorded by the IO before issuing the Show Cause Notice. Further, he stated that the supply of reasons to believe is essential as the PBPT Act is pari-materia to IT Act, namely Section 147/148 of IT Act, under which reasons to believe have to be supplied. In support of his contention, he relied upon the two judgments. Firstly, in the case of C.B. Gautam v. Union of India (1993) (1) SCC 78 and Mohd. Zafar v. Union of India (1994) SCC Suppl (2) 1, wherein, it is held that order would be incomplete unless either reasons are incorporated therein or have been served separately along with the order on the affected parties. He argued that the Provisional Attachment Order passed by the IO under Section 24 (4)(a)(i) dated 21.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of showing that the transfer is a benami transaction lied on the person who asserts that it is such a transaction. If it is provided 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. The true character of the transaction is governed by the intention of the person who has contributed the purchase money; and The question as to what is 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. He further argued that notice under Section 24 (1) of the PBPT Act issued to Sh. Bikramjeet Ram was invalid because no property was held as benami by him being already transferred to the appellant firm as reflected in the statement of accounts. Prayer is accordingly made to allow the present Appeal. 4. On the other hand, Ld. Counsel for the Respondent controverted the submissions on each and every issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ging to M/s Om Samriddhi Banquet & Hospitality LLP. The demonetized notes were deposited into bank accounts of his proprietorship concern, namely M/s Vikram Trading. The amount so deposited was later-on transferred to account of M/s Om Samriddhi Banquet & Hospitality LLP in The Bharat Cooperative Bank, Santacruz West, Mumbai- 400054 with account no. 002812100018645. The facts of the case are not denied by the Ld. Counsel of the appellant that demonetized currency was handed over to Amit Gala & Bikramjeet Ram, which was later-on transferred to its account after deposit in the account of M/s Vikram Trading. However, he took the plea that they have not obeyed the direction for depositing directly into the account of the appellant. Thus, admitting the factual position, he only raised the legal issues. We cannot ignore the fact that the accounts of M/s Vikram Trading were opened in different banks only after demonetization, but not for any real business. Further, the amount of Rs.85,18,600/- received by appellant LLP on different dates was firstly kept in the heading suspense account and thereafter claimed it as its own amount received through M/s Vikram Trading. Hence, these facts clea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om account of M/s Vikram Trading on different dates, - Firstly, the said amount was reflected in the suspense account and thereafter, kept in the business transaction account, without any business dealing between the parties, - Moreover, the true character of the transaction is governed by the intention of the person who has contributed the purchase money; and the question as to what is 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. All these facts speak for itself that the transaction between the appellant and Bikramjeet Ram is a benami transaction, to show the demonetized currency notes as business receipts. 9. Issue no (iv) to (vi) are taken up together being interconnected. With respect to the issue no (iv), Section 2(10) defines the term "Benamidar" as under: "Benamidar" means a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name; We are of the view that cash is a movable prope....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enforceable. Consideration is an important element to fulfill the entire requirements of a legitimate contract. If the promised consideration fails to materialize, it can result in a breach of contract. In a benami transaction, the consideration (payment or value exchanged) for a property is provided by one person, but the property is legally held by another, who is the benamidar, the person in whose name the property is registered. This means the benamidar does not own the property but holds it on behalf of the real owner, the beneficial owner, who paid the consideration. During demonetization, there were many instances of persons depositing old notes into their bank accounts which belonged to another person and then exchanging them for new notes. The definition of property under the benami act is very wide and also includes cash. Hence such a transaction would also be termed as a benami transaction. In the present case, Bikramjeet Ram took the demonetized currency notes from appellant LLP to deposit the same in his bank accounts and thereafter, to return the same by way of RTGS/through banking channel, so as to project the same as legal business transaction. Since cash can be ....