TaxTMI 
TaxTMI 
2026 (4) TMI 386
X X X X Extracts X X X X
X X X X Extracts X X X X
....torship firm of Sh. Ankit Jain) at 1157/1124 Ground Floor Kucha Mahajani, Chandni Chowk, Delhi-. 110006) converted into cut & polished gem. stones amounting to Rs. 1.36 Crores and the amount outstanding with the debtors viz. Shri Mahavir Jewellers (Rs. 1,97,40,488/-) and Shri Rajrani Jewellers Private Limited (Rs.99,98,731/-). Facts of the case: 2. As per the facts of the case, a search was conducted in case of Sh. Atul Tyagi, H. No. 202, 2nd Floor, Gali No. 6, Near Mohini Tent House, Rajapuri, New Delhi and his various concerns on 09.12.2016 wherein it was revealed that Sh. Atul Tyagi is involved into the practice of money laundering and providing accommodation entries. One of such beneficiary entities which took accommodation entries in lieu of cash deposited in the bank accounts of the concerns controlled by Sh. Atul Tyagi was M/s Rishabh Trading Co. (Proprietorship concern of Sh. Ankit Jain), 1157/1124, C. F., Kucha Mahajani, Chandni Chowk, Delhi. The name of M/s Rishabh Trading Co. came to the fore during analysis of bank accounts of the concerns controlled by Sh. Atul Tyagi. It was found that M/s Rishabh Trading Co. transferred its unaccounted cash to the Axis Bank acco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....47770 1678300 2016-17 0 0 1064029 0 2583 914030 2017-18 0 0 78150381 0 5656 78003200 2018-19 0 168000 3819012 0 34091 3865660 6810136 2019-20 0 98000 4015186 695892 15724 4672270 2376620 Comparison of the profit declared over the years in the ITR: AY Opening Stock Closing Stock Purchase Sales Profit before Tax 2009-10 0 2158984 12408194 10716414 259444 2010-11 2158984 774366 116294761 119748007 620009 2011-12 774366 6616310 119213481 115959848 725322 2012-13 6616310 10606238 1212644577 1215461636 1990157 2013-14 10606238 33739450 2629869366 2617041197 3027905 2014-15 33739450 35608598 3392513989 3398781576 3131355 2015-16 35608598 30029193 1610303863 1620618734 1768698 2016-17 30029193 62781474 341133781 319717484 1062193 2017-18 62781474 82391614 1263295012 1327566939 78148865 2018-19 82391614 122416114 3562245073 3532956075 3021986 2-19-20 122416114 915....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d transactions explained through fund flow in the findings in Para 4.1 of the impugned order show that the case comes under the purview of the Benami Transactions. Here, the entities of Sh. Atul Tyagi (mentioned in Column 5 of Table 1 above) acted as benamidars, who held the unaccounted cash, (the Benami Property) of Sh. Ankit Jain, (the actual Beneficial Owner) for the future benefit of Sh. Ankit Jain. The transactions referred in the said case fulfills the conditions laid down for any transaction to be benami as defined in Section 2(9) of the PBPT Act, 1988. The statement of Sh. Ankit Jain, the beneficial owner also reinforces the entire benami transaction as he has admitted that he had utilized the bogus entities operated/ controlled by Sh. Atul Tyagi for infusing his unaccounted cash. 9. The sub-clause (A) of the section 2(9) of the PBPT Act is applicable in the current scenario as the transaction, or an arrangement was made where the property (demonetized unaccounted cash) was deposited in the bank account of the concerns operated/controlled by Sh. Atul Tyagi. Here, the arrangement made by Sh. Ankit Jain to convert the demonetized unaccounted cash through the entities (acti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the present appeal. Arguments on behalf of the Appellant: 11. Ld. Counsel for the appellant contended that the Impugned Order cannot be sustained since it proceeds on the entirely erroneous premise that the Appellant was the "beneficial owner" of the cash, when in fact the entire case of the Department/Respondent is premised on the Appellant being the real owner of the cash at all points in time. The Income Tax Department has also proceeded to levy tax on the Appellant at the rate of nearly 60% on this basis. The investigation done by the in Department, in fact bears out the statements provided by the Sh. Rishabh Jain and Atul Tyagi by which it is clear that the cash was never "transferred to" or "held by" the so-called benamidars. The term "transfer" is defined under Section 2(29) of the PBPT Act as "sale, purchase or any other form of transfer of right, title, possession or lien" and does not include any case of some interim custodian arrangement. 12. He argued that intention of the Parties to be considered for declaring a transaction a 'benami' because essence of a benami transaction is the intention of the party or parties concerned. Other principles governing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g: Cash amounting to Rs.7.814 Crores infused in the Axis Bank A/c No.916020057721334 of M/s. Rishabh Trading Company converted into cut & polished gems amounting to Rs.1.36 Crores and amount outstanding with debtors viz., Mahavir Jewellers (Rs.1,97,40,488) and Shri Rajarani Jewellers (Rs.99,98,731). He submitted that PBPT Act does not provide any jurisdiction to the authorities under the Act to attach any property, which is not benami in nature. Unlike Prevention of Money Laundering Act, 2002 (PMLA), the statute governing benami transactions/property do not provide power of attachment on the basis of 'value thereof'. In this regard, he relied upon the final order passed by this Appellate Tribunal in case, 'V Rajinikanth v. DCIT, Chennai' [FPA/PBPT/16/CHN/2018, Decision dated 17th October 2018], wherein it is held that: - "39. The Benami Act is a Special Act. All the provisions are very stringent provisions. Once the appeals are dismissed by this Tribunal (and its order is became final in higher court), the criminal prosecutions have to be initiated against the parties. It is also settled law that once the provisions of Special Law are clearly worded....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lled by him, and thereafter, transferred in the bank account of the M/s. Rishabh Trading. In the present case, the 'benamidars' are not the name lenders. Furthermore, it is settled law that in order to infer whether a transaction/transfer of property is benami or not, one is required to see the intention of the parties. The essence of 'benami' is amiss, in the present case. The Department is relying only on the statements of the Ankit Jain (the appellant, herein) and Atul Tyagi. Both the said individuals have admitted factual aspect of the transaction. Neither there was any intention to hide the real nature of transaction, nor to conceal the real ownership of the property, which is palpable from the statements, hence, the same is not a benami transaction. 16. He contended that the Respondent has invoked Section 2(9)(A) of the PBPT Act. For the said provision to be brought into action, the following twin conditions need to be satisfied - 1) the property being held by a person, who has not provided the consideration; 2) the property is held by that person for the immediate or future benefit, direct or indirect of the person who provided the consideration. He argued....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 6 of PBPT cannot be utilized in order to infer benami transaction. Section 6 only comes into picture when the foundational facts have been laid by the Respondent to show that the transaction, in fact, was benami. The Respondent cannot be allowed to do 'reverse engineering' where they first aver that mere fact that transaction has been reversed will not take away the nature of benami. Section 6 is sequitur to fact being established by the Department that (i.) The essence of the transaction was 'benami' (ii.) The intention of the parties was such that they wanted to conceal real nature of the transaction. The motive of the parties to create a subterfuge and in this regard, their conduct becomes important. Without establishing the aforesaid facts, the Respondent cannot take advantage of the Section 6. 20. He contested that the Respondent and the Ld. AA has completely ignored the fact that the Petitioner has paid tax on the said income to the IT Department and had shown the said amount as his income for FY 2016-17. It is a circumstance that ought to have been countenanced and dealt with, whilst adjudicating the facts. Whilst agitating this, the Appellant is aware a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....version into some other form, then the property in the converted form and also includes the proceeds from the property". "Benami property" is thus a property held by a "benamidar" (as defined u/s. 2[10] of the Act) for and on behalf of a "Beneficiary owner" [as defined u/s. 2[12] of the Act]" to whom he is answerable. Property, which can be used to buy any other movable or immovable property. In the present case, the demonetized cash of Rs. 7.184 Crore/- was handed over to Atul Tyagi. Mr. Atul Tyagi deposited the said cash in his many benami entities and thereafter transferred the same to appellant as under: Name of the Beneficiary Beneficiary A/c No./ Bank Entities of Sh. Atul Tyagi Transacted Amount (in Rs.) Ankit Jain (Prop. M/s Rishabh Trading Co.) 916020057721334 1. Kirpalu Enterprises (916020012800210) 30,50,000/- 2. Mac Allied Sales Corp. (913020035420441) 60,00,000/- 3. Shree Krishna Eneterprises (916020012865851) 1,05,00000/- 4. Daksh Tradewell Pvt. Ltd. (913020035132489) 5,85,90,000/- Total 7,81,40,000/- The said amount deposited in different entities during the demonetization period was later on transferred back to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion (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, admittedly Atul Tyagi took the demonetized currency notes from appellant concern to deposit the same in the bank accounts of different entities 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 used for purchasing any property and any property can be sold to get cash, under such situation, cash is consideration for the property and vice-versa. A property can be exchanged with any property without in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... deed as benami transaction. the judgment of this appellate tribunal in case The DCIT (BPU-2) Mumbai v. M/s Surge Ahead Solutions Pvt. Ltd. & M/s Bajaj Capital Insurance Broking Ltd. in FPA-PB No. 52/2025, dated 05.01.2026 is not applicable to the facts of the case as the benami properties are identified by the respondent and appellant failed to controvert this fact as per Section 103 of the Indian Evidence Act, now Section 11 of the BSA, 2023, as he failed to prove that the attached property was not purchased from the received benami property/amount. In view of the above discussion, issue no (i) to (ii) are decided against the appellant and in favour of respondent. 24. Now coming to issue no.(iii), it is stressed by the appellant that the provisions of PBPT Act are not attracted, seeing the fact that appellant filed ITR qua the said amount. However, we are of the view that the submission of Income Tax Return is an afterthought strategy to escape from any proceedings under Income Tax Act or any other law. We agree with the contention of the Ld. Counsel for the respondent that Section 60 of the PBPT Act prescribes that the provisions of this Act shall be in addition to any oth....