AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 560
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....it old notes of denomination of Rs. 500 and Rs. 1,000 belonging to Bhandari Gold & Jewellers Pvt. Ltd. (BGJPL), Unit No. 407/429/430, Bussa Udyog Bhavan, Tokersi Jivraj Road, Sewree, Mumbai 15. The old notes were deposited into bank account of his proprietorship concern, namely Champalal Jewellers, in Bombay Mercantile Co-operative Bank Ltd., Bangra West, Mumbai with account no. 1101/1836 (current account). The sum so deposited was later transferred to account no. 679044000041 of BGJPL in Kotak Mahindra Bank, Plot No. C-27, 'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. 3. Sh. M.C. Jain, during the course of his statement recorded on 01-12- 2016 under oath under section 131 of the Income Tax Act, 1961, accepted that Rs. 92,00,000/- cash was provided by Sh. Jayesh Bhandari on behalf of BGJPL with instructions to deposit the same in the bank account of his proprietorship concern, namely, Champalal Jewellers, and then transfer the amount back to bank account of BGJPL through RTGS. Relevant portion of the statement is produced below: Cash received (Rs.) Date of receipt of cash Date of deposit of cash in bank account 45,00,000/- 13-11-2016 13....
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....ed the aforesaid transaction as "Benami Transaction" as defined u/s 2(9)(A) and 2(26) of PBPT Act on the basis of the statements recorded under duress and irrelevant documents collected during the survey carried out on 01.12.2016 by the Income-tax authorities. In this regard, it is pointed out that in the Income-tax assessment order for Α.Υ., 2017-18 (F.Y. 2016-17) of M/s BGJPL, the assessing officer had added Rs. 92 lakhs deposited by M.C. Jain to the returned income of M/s BGJPL as unexplained credit. However, the said order has been set aside by the Hon'ble Income Tax Appellate Tribunal (ITAT) vide its order dated 19.07.2023. A copy of the said order has been placed on record. 10. The appellant submits that the orders passed by the authorities below are not sustainable. It is firstly contended that M/s BGJPL had given its duly accounted, legitimately earned cash to M.C. Jain for purchasing gold for it. However, M.C. Jain had returned such cash to BGJPL when he had not purchased gold. The said transaction of receiving of cash and returning thereof, wherein there is no lending of name, has wrongly been considered as benami transaction. The judgment of the Appe....
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....was no sale-purchase of gold is irrelevant. The authorities below failed to establish how receiving of Rs. 92,00,000 and returning thereof is benami transaction under section 2(9)(A) of PBPT Act. It is pointed out that money had been transferred back to the alleged beneficial owner even before initiation of proceedings by the Department. The provisions of section 2(9)(A) of the PBPT Act cannot be invoked in the present bipartite transaction. Section 2(9)(A) of the Act is applicable only where consideration for the property has been provided or paid by another person, i.e., beneficial owner. In the present case, the cash itself (the purported benami property), not the consideration thereof, has been given by the purported beneficial owner to the purported benamidar. This section envisages that the "consideration" for the "benami property" should be provided or paid by the beneficial owner. Hence, section 2(9)(A) is not invokable in the present case as no consideration for the purported benami property had been paid by BGJPL. 14. It is further argued that the provisions of Section 2(9)(A) of the Act are analogous to the erstwhile definition of "benami transaction" wherein it has b....
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....rer of such note to receive such amount. When a person hands over the currency note to another under any sort of transaction, the actual and legal ownership of currency note is transferred along with the actual possession. When currency note is being given to another with a promise to return the same or supply some other consideration in lieu thereof in future, it is treated as loan, deposit or advance payment of consideration, as the case may be, but not a "benami property". Hence, currency note cannot be a "benami property" per se. 17. Based on the above arguments and contentions, it is prayed by the appellant that the instant appeal be allowed with consequential reliefs. Submissions from the Side of the Respondents: 18. Learned Counsel for the respondent strongly opposed the arguments and contentions raised on behalf of the appellant. He submitted that the decisions cited by the learned Counsel for the appellant are not binding. What the appellant has referred to in various judgements are obiter dicta, including the order of the Income Tax Appellate Tribunal (ITAT). He points out that the Counsel for the appellant has only made partial reference to the judgement in Ganp....
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....d remanded the case back to the assessing officer. With regard to the Invoice, he stated that the appellant is not relying on the same. He stated that the same was scrapped. As regards CGST and SGST shown to have been collected as per the Invoice, the learned Counsel was unable to clarify immediately and submitted that he would have to seek instructions. Analysis & Findings: 23. We have given careful consideration to the facts on record and the rival contentions of the parties. The undisputed facts of the case with regard to the amount of Rs. 92,00,000/- attached as benami property in the present case are the following: • That an amount of Rs. 45 Lakh was deposited in cash in the Bank Account of M/s Champalal Jewellers, the proprietary concern of the appellant, Shri M.C. Jain on 13.11.2016; • That another amount of Rs. 47 Lakh was deposited in cash in the Bank Account of M/s Champalal Jewellers, the proprietary concern of the appellant, Shri M.C. Jain on 15.11.2016; • Thus, the total amount deposited (in cash) in the Bank Account of M/s Champalal Jewellers, the proprietary concern of Shri M.C. Jain on the two dates, i.e., 13.11.2016 and ....
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....0/- was provided by Mr. Jayesh Bhandari on behalf of M/s BGJPL with instructions to deposit the same in the Bank Account of his proprietorship concern, namely, Champalal Jewellers, and transfer the amount back to the bank account of M/s BGJPL through RTGS. There is nothing to indicate, nor it was argued by the learned counsel for the appellant that the said statement had been retracted, and if so, when and how. Furthermore, the said statement of Sh. M.C. Jain is supported by the sworn statement of Sh. Pankaj Bhandari, Director of M/s JGJPL. Therefore, a bland statement to the effect that the statements were recorded under duress cannot come to the assistance of the appellant without any formal retraction substantiated by cogent reasons and also without any further submissions as to how and why the said statement should be considered to have been made under duress; (ii) That in view of the submission made in appeal that the cash was given to Shri M.C Jain in the last week of October/first week of November, which was contrary to the admission made by him in his statement before the Department, the Ld. Counsel for the appellant was asked a categorical question during the hear....
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.... any actual delivery of the said goods, was an attempt to conceal the nature of the transactions. In response to the questions raised by the Ld. Counsel for the respondent during oral hearing of the case, the Ld. Counsel for the appellant was unable to provide any clarification and in fact, submitted that the invoice was a scrap document on which the appellant is not seeking to rely. 25. The argument of the ld. Counsel of the respondent that M/s BGJPL itself being in the jewellery business, what expertise was Shri M.C Jain expected to bring in purchasing gold on their behalf, is also not without merit. In light of all these facts, we have no hesitation in coming to the conclusion that the true version of the facts was what had originally been stated by Shri M.C Jain in his statement, namely, that the entire exercise was intended to defeat the effect of demonetization to flush out black money by showing unexplained cash in old currency to be legitimate business receipts. 26. It is next contended that the present proceedings under the PBPT Act were initiated on the basis of survey carried out under the Income-tax Act on 01.12.2016. On the basis of the same survey, additions wer....
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.... if it is found to be correct. Secondly, it is seen that the claim of the appellant before the ITAT was that cash deposits made by Shri M. C. Jain were out of cash sales already declared by them in their books of account. On the other hand, the claim of the appellant before us is that the money was advance paid for purchasing gold on behalf of M/s BGJPL which was returned to the company by Sh. M.C. Jain because in the meantime demonetisation occurred on 08.11.2016, due to which М.С. Jain had deposited the same in his bank account and, thereafter, as market became extremely disordered, the money was returned to the company. The differing versions of facts claimed before the ITAT and this Appellate Tribunal gives credence to the submission of the Ld. Counsel for the respondent that the appellant is blowing hot and cold. Thirdly, it is evident that as per the appellant's own submission before the ITAT, the amount of Rs. 92,00,000/- had previously not been declared and was only declared after the search operation conducted by the I-T Department. Considering all these facts, we see absolutely no merit in the claim that the ITAT has given any finding in the appellant's favour....
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....otive. 31. It is next contended that the scope of benami transaction under the PBPT Act, 1988 (as amended in 2016) only includes tripartite transactions but not bi-partite transactions and the provisions of Section 2(9)(A) cannot be invoked in this case. The judgement of the Hon'ble Supreme Court in the case of Ganpati Dealcom Pvt. Ltd. Civil Appeal No. 5783 of 2022 (Order dated 23.08.2022) is cited. We have perused the relevant parts of the said judgment and find ourselves in agreement with the Ld. Counsel for the respondent that the appellants have conveniently placed partial reliance upon the said judgment. In the same judgment, the Apex Court has in a later paragraph clearly stated that the PBPT Act, 1988, after its amendment in 2016, clearly includes bi-partite transactions also. The relevant part of the judgment is cited below: "16. 2016 ACT AND ITS ANALYSIS 16.1 The next subject of examination is the 2016 Act, which amends the 1988 Act, and expanded the 1988 Act to 72 sections (from 9 sections), divided into 8 chapters. At the outset, we need to understand the general scheme of the law. The definition of benami transactions, which is the heart of the ent....
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....ty is held by that person for the immediate or future benefit, direct or indirect of the person who has provided the said consideration. It was further held that every transaction where cash is paid to person in lieu of a future promise cannot be termed a "benami" transaction as there is no lending of name. There can be no "benami" transaction if the future benefit is due from the person who is also the holder of property. 34. None of the above facts exist in the present case. The legal proposition no doubt holds good that as per section 2(9)(A) of the Act, the twin conditions need to be satisfied, namely, (i) the property is transferred to or is held by a person who has not provided the consideration, (ii) the property is transferred to, or is held by, that person for the immediate or future benefit, direct or indirect of the person who has provided the said consideration. At this point, it would be fruitful to refer to the relevant part of the definition of 'Benami Transaction' under the amended Act which is as follows: 2. (9) "benami transaction" means,- (A) a transaction or an arrangement- (a) where a property is transferred to, or is held by, a person, and the cons....