TaxTMI 
TaxTMI 
2026 (3) TMI 1331
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....m the Attachment Order dated 20.06.2018 passed under Section 24(4)(a)(i) of PBPTA by the Initiating Officer and held that agricultural land property old S/F No- 80 (new Sy No- 80/2) measuring 19 Acres 06 Guntas of land situated at Agara Village, Kengeri Hobli, Bangalore South taluk valued at Rs. 39,56,71,500/- was not a Benami Property. The Impugned Order No. 2 in Reference No. R-895/2018 did not confirm the Attachment Order dated 20.06.2018 passed under Section 24(4)(a)(i) of PBPTA by the Initiating Officer and held that agricultural land comprising of properties (1) Sy. No 403/2, Kaggalipura Village, Bangalore South Taluk (2 Acres 20 Guntas) (2) Sy. No- 160/2, Kengeri Hobli, Bangalore South Taluk (9 Acres 6 Guntas) (3) Sy. No - 79/2, Kengeri Hobli, Bangalore South Taluk (1 Acre) and (4) Sy No 72/3, Kengeri Hobli, Bangalore South Taluk (5 Acres) totally valued at Rs. 20,07,72,500/- were not Benami Properties. 2. Ld. Counsel for the Appellant Department stated that the two References relate to the agricultural properties which were bought by Shri Narendra Lamba from the funds provided by Trust Vyakti Vikas Kendra India (VVKI) in Reference No. R-894/2018 and the funds provided by....
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....nversion of the agricultural land and accordingly money was advanced for purchase of the said land. The sale deeds were accordingly executed. 4. Ld. Counsel for the Appellant Department argued that the definition of term fiduciary has not been defined in the Act and claimed that in the instant case Sh. Lamba could not have stood in a fiduciary capacity for the Trusts to purchase the land, to apply for conversion of the said land and upon conversion, to transfer the same to the Trust. Hence, Ld. Counsel argued against the contention that Shri Lamba as a facilitator for these transactions had acted in the fiduciary capacity for the benefit of the Trusts and hence the case falls within the exception provided under Section 2(9)(A)(ii) of the PBPTA. Therefore, Ld. Counsel rejected the contention that the subject arrangement could not be regarded as Benami transactions under the PBPTA. Ld. Counsel further submitted that from the enquiries made with the banking authorities and submissions of the Trusts and of Sh. Lamba, it was clear that the purchase consideration for the properties had been provided by the Trusts either to Sh. Lamba through its bank accounts or to the sellers of the p....
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....es of law. It was an admitted fact that the properties were purchased by the Trusts as they were in need of the land and since the Trusts could not have purchased the properties in their own names owing to the bar under the Karnataka Land Reforms Act, the same was done through Shri Narendra Lamba. Ld. Counsel contended that Ld. AA had erred, since the possession of the property was with the Trusts. Shri Lamba had not even held the properties as envisaged in Section 2(9)(A)(a) of PBPTA. Ld. Counsel further argued that the registration of the sale deed in the name of Shri Narendra Lamba reflected the transfer of the property and bestowing clear title to sell the property to Shri Lamba as the title stood in his name. Ld. Counsel further contended that the Ld. AA has clearly erred in observing that the ingredients of Section 2(9)(A)(b) of PBPTA are not satisfied in the present case. It has already been elaborated in the previous para that in the case of immovable property, the registration of the sale deed in the name of the Benamidar is sufficient evidence that he is holding the property for the beneficial owner. Ld. Counsel pleaded that it would be a dangerous proposition, if it is h....
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.... to resist any attempt on the part of the transferor to disturb transferee's lawful possession under the contract of sale and his position either as a plaintiff or as a defendant should make no difference. The reading of Section 53A of the Act shows that there are only two parties in the Act. Whereas under the Benami law, the transfer of the immovable property consists of three parties, one the seller, second in whose name the property is registered and third is the person who pays the consideration for the purchase of the property. The Explanation to Section 2(9) of the PBPTA has been inserted only to safeguard the genuine buyers. Ld. Counsel explained that the Beneficial Owners have taken the possession owing to the fact that they have paid the consideration but have not purchased the property in their own name but in the name of the Benamidar for their own immediate, future, direct/ indirect benefits. The Beneficial Owners thus, to circumvent the law found the via media and involved Benamidar Shri Narendra Lamba and purchased the land in his name. It has thus been proved beyond all reasonable doubts that the present transactions were benami transactions and also that as per ....
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....ules out the transactions as Benami. Ld. Counsel contended that the two limbs of Section 2(9)(A) viz (a) & (b) are not satisfied as between the two limbs the Act uses the word 'and'. Ld. Counsel further stated that in any case the exception clause of Trusts is also invocable. Ld. Counsel has also argued that as the rights in terms of the provisions of Section 53A accrued to the Trusts which held the properties from Sh. Lamba for adequate consideration before the issue of notice under Sub-Section (1) of Section 24 without having knowledge of the Benami transactions, the impugned properties could not be covered by the provisions of confiscation of the said properties. 12. Ld. Counsel for the Respondents submitted that the only reason for registering the land in the name of Shri Lamba was due to the prohibition in the Karnataka Land Reforms Act, 1961 (KLRA) which prohibited non-agriculturists from holding / buying of agricultural lands. As per the KLRA, as was existing at that time, only an agriculturist could purchase agricultural land. In order to comply with the legal requirement, it was necessary to have the lands bought in the name of an agriculturist, then convert the classif....
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....he declaration under sub-section (2) and after such enquiry as may be prescribed, send a statement containing the prescribed particulars relating to such land to the Deputy Commissioner who shall, by notification, declare that such land shall vest in the State Government free from all encumbrances and take possession thereof in the prescribed manner. (4) In respect of the land vesting in the State Government under this section an amount as specified in section 72 shall be paid. Explanation. - For purposes of this section it shall be presumed that a land is held by an institution, trust, company, association or body where it is held by an individual on its behalf." 13. Ld. Counsel for the Respondent submitted that the above Section was omitted from the original by the amendment made vide Karnataka Land Reforms (Second Amendment) Act, 2020 ("Amendment Act")- Karnataka Act No.56 of 2020. The provision of section 5 of the Amendment Act is produced below: "5. Omission of section 79B: In the Principal Act, section 79B shall be omitted." "(2) Sections 2, 3, 4, 5, 6, 10 and 11 shall be deemed to have been come into force with effect from 1st day of March, 1974....
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....ouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual; (iv) any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendant and the individual appear as joint owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual;" We are unable to agree with the interpretation given by the Respondents to the said provisions. While it is true that the provisions of Clause (a) and of Clause (b) are to be read together in view of the conjunction 'and' used in the statute, the argument that the property was always held by the Trusts and not by Shri Lamba even after the transfer make the provisions of Section 2(9)(A) inapplicable is not true. Careful reading of the provisions reflect that the impugned property can either be transferred to or held by the Benamidar for which the consideration has been provided by another person. It is not disputed that the consideration had been provided by the Trusts and the property con....
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....the circumstances of the present cases do not reveal that these cases fall under the Explanation. It is also clear that the Explanation refers to the exclusion of the transactions between the seller and the buyer of the property, but the cases presently under consideration involve not only the seller and the buyer of the impugned properties, but also third party in whose benefit the transactions between the seller and the buyer occurred for consideration paid by the said third party. 18. The Impugned Orders have relied upon the argument that Shri Narendra Lamba was acting in fiduciary capacity for the Trusts, while purchasing the impugned properties. It is an admitted fact that Shri Lamba purchased the properties in his own name, so as to circumvent the provisions of the Karnataka Land Reforms Act, 1961 which prohibited the Trusts from buying agricultural lands. Shri Lamba being an agriculturist as well as being closely associated with the Trusts either as Trustee (VVMVP) or as teacher (VVKI) agreed to buy the impugned land, so as to convert the same for non-agricultural purpose for ultimate transfer to the Trusts. These transactions occurred in 2015. The MoUs for ensuring that ....
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....ubmission made cannot be accepted as correct. The Benami nature of a transaction is to be adjudged on the provisions of section 2(9) of PBPT Act, which deals with "Benami transactions". Unless the transaction is strictly covered within the stipulations and parameters set out by the said provisions, there cannot be any question of considering the provisions of KLR Act. Further, the consideration of transaction being entered into to defeat the provisions of any law, may be relevant when any penalty is to be considered for Benami transaction in terms of the provisions of Section 53 of PBPT Act. That also as is clear from the language of Section 53, Benami transaction needs to be established. Nothing is placed on record that any appropriate authority empowered under the provisions of KLR Act has initiated any action for the alleged violation of the provisions of the said law. Nothing is adduced to show that the transfer of the property in the name of D-1 as an agriculturist was acted upon by the competent authority to be illegal." We reiterate that the Benami nature of a transaction is to be adjudged on the basis of the provisions of Section 2(9)(A) of PBPTA. We have already observe....
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....urther the said Judgement delivered by the single Judge of the Hon'ble Rajasthan High Court, is most likely to be impugned before the Division Bench of the Rajasthan High Court. Though there is no stay granted by the Division Bench of the Rajasthan High Court till now, in view of the situation, it will be appropriate to await further till the issue is finally determined. Though there is considerable force in the arguments raised by the Defendants as to retrospective application, the same are not accepted for the reasons stated herein. However also in view of the reasons and findings herein above recorded, it is not necessary to dwell on the issue regarding retrospective application in the present case." The Respondents in their written submissions dated 29.01.2024 (VVKI) and dated 16.04.2024 (VVMVP) have made the following comments: "Though there is considerable force in the arguments raised as to retrospective application, it will be appropriate to await till the issue is finally determined. However, in view of the reasons and findings recorded, it is not necessary to dwell on the issue regarding retrospective application in the present case." The matter relatin....