TaxTMI 
TaxTMI 
2026 (1) TMI 908
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....the properties while answering the references. Aggrieved by the orders passed separately on 18.07.2022, these appeals have been preferred by the Department raising several factual and legal issues. The reason to deny confirmation of the provisional attachment order of the properties is common. Thus, a common order is passed in four appeals. 2. In the case of M/s Gainful Multitrade Pvt. Ltd., Shri Balveer Singh Choudhary was shown to be beneficial owner while appellant M/s Gainful Multitrade Private Limited as Benamidar. In the appeal against M/s Samvrudhi Multitrade Pvt. Ltd., the Beneficial Owner is Shri Nawal Kishor Joshi and M/s Samvrudhi Multitrade Pvt. Ltd. is alleged to be Benamidar. In the appeal against M/s Roopam Multitrade Private Limited, the Beneficial Owner is Shri Pawan Kumar Varma while M/s Roopam Multitrade Private Limited is alleged to be benamidar. In the appeal against M/s Gladiolus Property & Investments Pvt. Ltd., the Beneficial Owner is again Shri Balveer Singh Choudhary while the respondent company - M/s Gladiolus Property & Investments Pvt. Ltd. is alleged to be the Benamidar. 3. The reference of different Benamidar and Beneficial Owners in different a....
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....ation for allotment of the shares through the banking channel. On the receipt of the amount by the respondent companies, it was used to acquire the shares of other companies M/s Capri Global Capital Limited ( in short "CGCL") and financial investment in ICICI Prudential Money Fund, Tata Money Market Funds and ICICI Prudential Ultra Short-term Funds aggregating Rs. 5,04,93,959/-. Ignoring all those facts, the Adjudicating Authority refused to confirm the PAO. It is also in ignorance of the fact that once the respondent company received proceeds out of benami transaction, then its onward utilization was also liable for provisional attachment of those properties as per Section 6 of the Prohibition of Benami Property Transactions Act, 1988 (in short "the Act of 1988"). It was further stated that even the shell Companies had no business to their credit so as to infuse huge amount for seeking allotment of shares of respondent companies and at the same time the respondent company had no business to charge premium for allotment of shares. The transactions were routed to infuse cash by the beneficial owner to use it through banking channel. It resulted in benami transaction because consider....
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....e provisional attachment of the properties in the hands of the respondent. 10. The respondent company was incorporated on 05.08.2004 and has been engaged in the business of investing and trading in shares and securities since 22.02.2008. Between FY 2007-08 to 2010-11, the company received Rs. 56,35,00,000 (Rupees Fifty Six Crore Thirty Five Lakhs only) as subscription towards shares capital from various entities ("investing companies") through banking channels and against the subscription so received, the Company issued shares to those Companies. The Company was regularly filing of income tax returns. Returns of Income declared for AY 2008-09 to 2020-21, reflect that the Company was a profitable entity, earning profit before tax of INR 3,09,78,498/- (FY 2008-09) on a paid-up equity share capital of Rs 77.25 lacs i.e., more than 400% of its capital in one year alone, demonstrating its financial capacity from business operations. This high level of profitability was the reason for premium charged on issue of shares. The ITAT in its order in ITA No. 2924/MUM/2017 for AY 2009-1 0 has observed as under: "6.3 So far as the justification of share premium is concerned, we find ....
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....d out by the Appellant Department under the PBPTA. The statements were inadmissible under Section 33 of the Indian Evidence Act, 1872. 16. The Appellant failed to adduce any direct, reliable, or substantive evidence demonstrating that the share capital and premium received by the Respondent Company from the Investing Companies was the cash/income of the BO and channelized through the accommodation entry providers, into the Investing Companies which finally purchased shares of the Company. The Appellant solely relied on the statements of certain individuals who claim to be accommodation entry providers operating in Kolkata recorded by the Income Tax Department U/s 131 of the Income Tax Act, 1961. The proceedings in which statements were recorded by IT Authorities have no connection with the Answering Respondent, and are entirely unrelated qua unknown entities. The aforesaid persons neither named Respondent Company nor Respondent No. 2 that money received from Respondent No. 2 was purportedly channelized into the Investing Companies. 17. The Appellant has also failed to provide any material to demonstrate that the Respondent Company is a mere shell company/paper entity and that....
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..... & Ors (FPA- PBPT-2497/MUM/2023, order dated 05.11.2024) dismissing the Department's Appeal because department failed to produce any evidence to prove that consideration for purchase of the property was provided by the BO and therefore the Respondents therein were the BOs. 23. Section 2(9)(D) PBPTA is applicable only where the source of consideration for purchasing a benami property is "not traceable or fictitious". It has no application in cases where the beneficial owner is identified. 24. Admittedly, in the present case, the Respondent No. 2 is alleged to be the beneficial owner, who alleged to have provided the consideration, which was invested by the Investing Companies as share capital of the attached properties. Since the source of the consideration is known, Section 2(9) (D) PBPTA could not have been invoked. 25. Since the Appellant Department failed to conduct any independent investigation, including recording of the statements of the relevant persons under the Act, outcome of proceedings in re-assessment are relevant and binding in the present proceedings. 26. The Ld. ITAT, vide its Order dated 16.05.2019 observed that the identities of the Investing Comp....
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....ies was utilized for acquiring shares of other companies and for further investments. The Adjudicating Authority did not find any evidence to show infusion of cash by the beneficial owner through the accommodation entry provider entities /companies at Kolkata and Mumbai so as to convert the cash amount into share of GPIPL as a benami transaction. Subsequently, the benamidar company, GPIPL transferred the funds to M/s Kala Mercantile Pvt. Ltd. and M/s Gainful Investments & Advisors Pvt. Ltd. at a very low price. However, how the issue is relevant could not be specified. The Adjudicating Authority even considered the role of Shri Balveer Singh Choudhary alleged to be beneficial owner. It did not find evidence for infusion of cash by him in the shell companies to acquire the share of the appellant, GPIPL and for its onward acquisition of shares of CGCL and for other investments. 30. In absence of satisfaction of first limb, a case was not found for benami transaction under Section 2(9)(A) of the Act of 1988. 31. The Adjudicating Authority further found self- contradiction in the notice and the initiation of the proceedings by the Initiating Officer. The transaction could not hav....
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....ities continuously. All the reasons were elaborately discussed by the Adjudicating Authority in passing the impugned order. 35. Ld. Counsel for the respondent further made a reference that the initial transaction taken to be benami in nature by the Adjudicating Authority with the remark that the appellant could have attached the shares allotted by the respondent company in that case and not the shares acquired on its onward investment on receipt of the Share Application Money on allotment of shares on premium. We have gone through the order carefully and find that the observation has been made only to analyze the action of the appellant where they did not attach the alleged infusion of cash into benami transaction converted into the shares of the appellant company to the alleged Shell Companies. The Adjudicating Authority made observation as to why the shares allotted by the respondent companies to the alleged Shell Companies could not to be attached if it was a case of benami transaction. The argument was raised by the appellant in ignorance of the finding that the Initiating Officer failed to subscribe the evidence to make out a case of benami transaction. Thus, we do not find....