TaxTMI 
TaxTMI 
2026 (4) TMI 765
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.... the Provisional Attachment Order while answering the reference. 2. The case in hand was initiated after a search conducted under Section 132 of the Income Tax Act on 16.06.2022 on Maharani Group of company founded by Shri Mahaveer Lunia. The office of the IO received information along with relevant documents from DGIT (Inv.), Rajasthan, Jaipur. Shri Mahaveer Lunia was shown to be the founder and main promoter of the Maharani Group. The group is mainly engaged in the business of handicraft items viz. clothes, wooden handicraft, various metal handicraft items, for retail sale thereof to local as well as foreign tourists. The business generated huge margin of profit as tourists pay handsome price for choice items. To reduce the profit margin and also to manage cash for the requirements of the group for making further investment in purchase of lands and immovable properties, the firm debited huge bogus purchase bills managed from jewelers of Jodhpur. Payment was made to these jewelers through banking channels against the bogus purchases and cash was received back. Apart from this, Shri Mahaveer Lunia also worked as a money-lender and earns unaccounted interest income. The unaccount....
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....iple Dealer Pvt. Ltd. and lastly 14 properties in the name of appellant M/s Swagatma Enclave Pvt. Ltd. making it in all 143 properties. The money involved therein was found to be Rs. 40 Crores Rs. 18 Crores and Rs. 17 Crores respectively in the entities named above. Finding a case of benami transaction, notice was issued to the appellants under Section 24(1) followed by notice under Section 24(3) of the Act of 1988. The provisional attachment order was caused thereupon. It was followed by adjudication by the Adjudicating Authority on a reference by IO. After hearing the parties, the Provisional Attachment Order was confirmed and aggrieved by the aforesaid, these appeals have been preferred by the appellants. Arguments of counsel for the appellants: 5. The learned counsel for the appellants submitted that initiation of proceedings by the respondents was on an erroneous presumption of benami transaction in the hands of the appellants where three entities were taken to be benamidar while Mahaveer Lunia to be the beneficial owner. It was in ignorance of the fact that Mahaveer Lunia was not the shareholder of the companies, rather he was the founder and the main promoter of Mahara....
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....nd accordingly issues in reference to the facts of the case have been raised. 9. The learned counsel for the appellants submitted that the companies have used DIN No. which further shows genuine transactions, however, IO assumed jurisdiction ignoring all relevant facts of the case. 10. The learned counsel for the appellants further submitted that the impugned order has been passed based on the statements recorded during the course of the proceedings on a search under Section 132 of the Income Tax Act. It is without an independent inquiry by the I.O. and collection of material as a consequence thereof. 11. The counsel for the appellants further submitted that the show cause notice under Section 24(1) of the Act of 1988 was issued on 28.04.2023 for filing of reply by 15.05.2023. However, before expiry of the period, the impugned order was passed on 01.05.2023 itself thus the appellants was not provided proper opportunity of hearing and thereby the whole proceedings should be sacked on the aforesaid ground itself. 12. The learned counsel further submitted that the appellant Mahaveer Lunia said to be holding three appellant companies ignoring the fact that he was not a shar....
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....rchase bills from jewelers in Jodhpur. The payments for fake purchases were made via banking channels with introduction of cash and utilizing the same for buying land and immovable properties. The cash was funneled into shell companies controlled by Shri Mahaveer Lunia and his family members. The companies were previously managed by entry operators from Kolkata and Mumbai. The Chartered Accountant (CA) Shri Anil Sanklecha (relative of Shri Mahaveer Lunia) was instrumental in facilitating these transactions. The CA handled approximately Rs. 40-42 crores in cash of Shri Mahaveer Lunia through hawala operators (Angadias) as admitted by him in his statement. This cash was introduced into the shell companies which had huge share premium reserve. It was used to acquire various properties in names of the shell companies. A significant number of properties (79 in name of M/s Alishan Complex, 50 in name of M/s Principle Dealer Pvt. Ltd. and 14 in name of M/s Swagatma Enclave Pvt. Ltd. totalling 143 properties in all) were purchased in name of appellant entities, with the investment of over Rs. 40 crores Rs. 18 crores, and Rs. 17 crores respectively in different properties from the fiscal ye....
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....on. 21. We have considered the aforesaid issue also. The statements recorded under one statute can be used in proceedings under another statute, if the provisions and purposes of the statutes align and there is no express prohibition against it. In the case at hand, statements were recorded under section 132(4) of the Income Tax Act, 1961 and the same have been used for the proceedings under the PBPT Act. Therefore, it becomes necessary to examine whether Income Tax Act and PBPT Act can be construed together. It cannot be denied that the purpose of both the Income Tax Act and the PBPT Act is to ensure transparency and legality in financial transactions and asset holdings. The PBPT Act, like many other legal frameworks, allows for the use of statements and evidence that are relevant to the case, regardless of where or under which Act they were originally recorded. Section 60 of the PBPT Act clarifies "Applications of other laws not barred". The provisions of the Act of 1988 shall be in addition to, and not, save as hereinafter expressly provided, in derogation of any other law for the time being in force. It is evident from above that the PBPT Act empowers and enables Authorities....
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....ing advance/loan could have been available or would have been produced by the appellants but no such material could be revealed during the course of inquiry/investigation. 25. Detailed finding in that regard has been recorded, thus, the impugned order has not been passed merely on the statements of the witnesses but other material to prove the case of benami transaction. At this stage, we may further refer to the retraction of the statement by Sh. Anil Sanklecha, CA, relative of Mahaveer Lunia. The retraction was made by an affidavit after expiry of the considerable period and it is not that the statement of Sh. Anil Sanklecha, CA was recorded by the Income Tax authorities under duress or coercion. Retraction for the sake of it and with the delay is not acceptable. It is otherwise a fact that the impugned order has not been passed only based on statements, rather it was with corroborative evidence and the material and, therefore, rightly relied upon by the respondents. It may be that stand-alone statements indeed may lack evidentiary value, if they are not corroborated or supported by other evidence. However, if these statements are consistent with other evidence or provide esse....
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....ent. The appellant M/s Swagatma Enclave Pvt. Ltd. were having two shareholders namely M/s Surpati Packaging Pvt. Ltd. and M/s Upward Commerce Pvt. Ltd. with shareholding of 49.99% each. It is also seen that Shri Mahaveer Lunia and his family members are having 50% shareholding in both in M/s Surpati Packaging Pvt. Ltd. and M/s Upward Commerce Pvt. Ltd. Similarly, M/s Shivaasha Mercantile Ltd. is having 99.98% shareholding in M/s Alishan Complex Ltd. in which Mahaveer Lunia and his family members are having 58.24% shareholding. Likewise, M/s Mahavir Agency Pvt. Ltd. and M/s Jagdamba Dealer Pvt. Ltd. are having 49.98% each shareholding in M/s Principle Dealer Pvt. Ltd. Further, M/s Jodhana Buildmart Pvt. Ltd. and M/s Marudhar Landcon Pvt. Ltd. were having 50% each shareholding in M/s Mahavir Agency Pvt. Ltd. Shri Mahaveer Lunia and his family members were having 100% shareholding of M/s Jodhana Buildmart Pvt. Ltd. and M/s Marudhar Landcon Pvt. Ltd. The shareholders along with their shareholding and subsequent shareholders are given in the following table:- Company Shareholders Subsequent Shareholders M/s Alishan Complex Pvt. Ltd. M/s Surpati Packagi....
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....al statements. M/s Swagtma Enclave Ltd. was initially operated and managed by M/s Surpati Packaging Pvt Ltd. and M/s Upward Commerce Pvt. Ltd. M/s Alishan Complex was initially operated and managed by M/s Shivaasha Mercantile Pvt Ltd and M/s Principle Dealer Pvt. Ltd. initially operated and managed by M/s Jagdamba Dealer Pvt. Ltd. and M/s Midland Financial Advisory Pvt. Ltd., shareholding changed in FY 2016-17 leading to the Mahaveer Lunia family becoming the shareholders. Despite these changes in shareholding, there was no significant alteration in the companies' operations. 31. We find that the transactions under question came to light, when list of properties under question were found at the residential premises of Shri Mahaveer Lunia during the search action carried out by the Income Tax Department on Maharani group on 16.06.2022. The group specializes in business of handicrafts. During search and post search investigations, it emerged before the Income Tax Authorities that this business generates huge margin as the tourists pay handsome price for choice items. The investigation uncovered the group engaged in fraudulent practices, including inflating expenses through bog....
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....52289.00 2017-18 1,00,50,000 8,89,46,122.13 51,00,000 19,54,08,003.25 4300000 205999787.00 2018-19 1,00,50,000 8,89,23,482.00 51,00,000 19,54,12,088.75 4300000 205978753.00 2019-20 1,00,50,000 8,89,15,964.30 51,00,000 19,54,05,053.35 4300000 205970996.96 2020-21 1,00,50,000 8,89,10,209.10 51,00,000 19,54,08,654.85 4300000 205970446.96 2021-22 1,00,50,000 8,89,05,140.00 51,00,000 19,54,03,574.18 4300000 206283760.00 Apart from above, appellant companies have submitted that they have received funds from entities to which advances were given by them in the previous years i.e. Chanakya Finvest Pvt Ltd, Bangbhumi Properties Pvt Ltd, Bangbhumi Realestate Pvt Ltd, Moonstar Projects Pvt Ltd, Everlink Complex Pvt Ltd, Dreamlight Developers Pvt Ltd, Mahaveer Lunia, Gajraj Abasan Pvt Ltd, Bosslife Residency Pvt Ltd, Bosslife Residency Pvt Ltd, Ridhi Vincom Pvt Ltd, Wheelers Developers Pvt Ltd, Lakeview Highrise Pvt Ltd, Suniyojit Hirise Ltd, Kandoi Financial Services, Lake Residency Pvt Ltd, Gajraj Heights Pvt Ltd, Sappers Finance And Consultancy Pvt Ltd, Jia Auto Sales Pvt Ltd, Shyam S....
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....ectors in those companies earlier. In order to verify the veracity of said submission, list of current and previous directors was perused from the records, wherein it is seen that Shri Suresh Mukhia was director in past. It is also noticed from material on record that one company was having two shareholders namely M/s Surpati Packaging Pvt. Ltd. and M/s Upward Commerce Pvt. Ltd. with shareholding of 49.99% each. It is also seen that Mahaveer Lunia and his family members were having 50% shareholding in both M/s Surpati Packaging Pvt. Ltd. and M/s Upward Commerce Pvt. Ltd. Similarly, M/s Shivaasha Mercantile Ltd. is having 99.98% shareholding in other companies, in which Mahaveer Lunia and his family members were having 58.24% shareholding. Likewise, M/s Mahavir Agency Pvt. Ltd. and M/s Jagdamba Dealer Pvt. Ltd. are having 49.98% each shareholding. Further, M/s Jodhana Buildmart Pvt. Ltd. and M/s Marudhar Landcon Pvt. Ltd. are having 50% each shareholding in M/s Mahavir Agency Pvt. Ltd. Mahaveer Lunia and his family members are having 100% shareholding of M/s Jodhana Buildmart Pvt. Ltd. and M/s Marudhar Landcon Pvt. Ltd. 35. It is evident from above that Mahaveer Lunia and his fam....
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....s and ultimately used for making purchase of the said lands/immovable properties in the name of appellant companies. 37. It was argued by the counsel for the appellants that when the Income Tax Department did not assume jurisdiction to initiate proceedings against the benamidar companies with respect to the alleged transactions, it clearly goes to show that the allegations levelled by the IO are absolutely baseless and devoid of any merit. When the income tax department has itself not doubted the genuineness of these transactions, then the IO had no jurisdiction to declare the companies as shell companies and accordingly it is not justified to hold company as Benamidars of their own properties purchased from their own funds. 38. Shri Mahaveer Lunia is not shareholder in the Companies. In fact, he holds shares of the shareholding company, that too of limited extent. The companies have purchased the immovable properties out of their own funds and these properties become the properties of the company and shareholders do not become the owners of the properties of the Company thus the IO has committed serious error in holding that the company has purchased the immovable properties....
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....ext question is co-related to the last issue. The counsel for the appellants submitted that the cash transaction cannot be taken to be the basis for the benami transaction. It is nothing but admission about the involvement of cash in the transaction though with the qualification that mere involvement of cash would not make out a case of benami transaction. The proposition taken by the counsel for the appellant may be correct and we may endorse that each cash transaction may not involve a benami transaction, rather it cannot be only on an allegation to make out a case under Section 2(9)(A) of the Act of 1988. If the involvement of cash transaction results in benami transaction, it cannot be nullified only on the ground that involvement of the cash would make out a case of benami transaction. However, if no allegation is made out then even involvement of cash would not make out a case of benami transaction. It depends on the facts of the case. In the instant case, huge amount was involved which remained unaccounted and even if in the revised return, it was assessed, if the fact remained that it was used for benami transaction and, therefore, the argument is clarified with the aforesa....