AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 806
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....T-268/MUM/2025, MP-PBPT-2314/MUM/2025 Exemp. MP-PBPT-2312/MUM/2025 Stay FPA-PBPT-269/MUM/2025, MP-PBPT-2272/MUM/2025 Exemp. MP-PBPT-2270/MUM/2025 Stay FPA-PBPT-270/MUM/2025, MP-PBPT-2320/MUM/2025 Exemp. MP-PBPT-2318/MUM/2025 Stay FPA-PBPT-271/MUM/2025, MP-PBPT-2260/MUM/2025 Exemp. MP-PBPT-2258/MUM/2025 Stay FPA-PBPT-272/MUM/2025, MP-PBPT-2263/MUM/2025 Exemp. MP-PBPT-2261/MUM/2025 Stay FPA-PBPT-273/MUM/2025, MP-PBPT-2323/MUM/2025 Exemp. MP-PBPT-2321/MUM/2025 Stay FPA-PBPT-274/MUM/2025, MP-PBPT-2308/MUM/2025 Exemp. MP-PBPT-2306/MUM/2025 Stay FPA-PBPT-275/MUM/2025, MP-PBPT-2302/MUM/2025 Exemp. MP-PBPT-2300/MUM/2025 Stay FPA-PBPT-276/MUM/2025, MP-PBPT-2299/MUM/2025 Exemp. MP-PBPT-2297/MUM/2025 Stay FPA-PBPT-277/MUM/2025, MP-PBPT-2296/MUM/2025 Exemp. MP-PBPT-2294/MUM/2025 Stay FPA-PBPT-278/MUM/2025, MP-PBPT-2305/MUM/2025 Exemp. MP-PBPT-2303/MUM/2025 Stay FPA-PBPT-279/MUM/2025, MP-PBPT-2290/MUM/2025 Exemp. MP-PBPT-2288/MUM/2025 Stay FPA-PBPT-280/MUM/2025, MP-PBPT-2281/MUM/2025 Exemp. MP-PBPT-2279/MUM/2025 Stay FPA-PBPT-281/MUM/2025, MP-PBPT-2287/MUM/2025 Exemp. MP-PBPT-2285/MUM/2025 Stay FPA-PBPT-282/MUM/2025, MP-PBPT-2311/MUM/2025 Exemp. MP-PBPT-2309/MUM/2025 Stay FPA-PBPT-283/MUM/2025,....
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....bling activities is being run under the brand name of "GAME KING" by the ARC group. The business operation at the field level is organized through workforce at five different levels. The group has appointed Super Area Managers (SAM) in different regions. These are close confidants or loyal employees of the group who are in charge of the territory. These SAMs in turn appoint Area Managers (AMs) under them in the region they control or are assigned by the group. The AM then appoint Shopkeepers/Agents who solicit customers, commonly called as 'Clients' or 'Child ID'. Everyone in the hierarchy is given a unique ID starting with prefix GK that stands for Game King. The authority to create these IDs and passwords were controlled by the two promoters namely Shri Ramesh Chaurasia and Shri Achal Chaurasia. Once a person is appointed at a particular level, the group creates IDs and allots passwords to him. These persons appoint people below them and get the IDs and passwords allotted to them by the group. As players/clients need points to bet/gamble, they would transfer the money to the Agents or AM/s The Agents and AMs transfer the cash to the group directly or through SAM/s....
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....osed in the returns of income filed by the individuals or entities of the group. From the said business, it was generating huge amount of cash regularly. This cash is being introduced in the books of accounts of the ARC group concerns, by taking accommodation entries in the form of bogus share premium, unsecured loan, partner's capital, commission and consultancy income, trading income, capital gain and agriculture income with the help of various intermediaries who were sourcing or arranging the accommodation entries for the group in exchange of cash and were being paid commission in cash, one such entity being M/s ARC Agrochemical LLP i.e. the "Benamidar" M/s ARC Agrochemical LLP has not shown any business activity or income from betting and gambling business. 8. It was also observed that M/s ARC Agrochemical LLP did not have any actual business. The cash was generated from the business of online betting & gambling being operated & controlled by Ramesh Chaurasia and Achal Chaurasia i.e. the 'Beneficial Owners', and such illicit funds were routed into books of accounts of M/s ARC Agrochemical LLP through accommodation entries making out a case of benami transaction. ....
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..... It was also found that the said LLP drastically revised its income in response to the notices u/s. 148 issued by the Central Circle- 5(2), Income Tax Department subsequent to the selection of the case for assessment on the basis of search conducted by the Investigation Wing of the Income Tax Department. Further, the said returns were filed in September, 2023 i.e. and after initiation of proceeding under the Act of 1988 by issuing show cause notice us. 24(1) of the Act by the IO, BPU-1, Mumbai to certain other ARC Group entities i.e. M/s Adesh Ventures LLP (29-09-2022) and M/s ARC Vastu Nirman Pvt. Lai. (11-11-2022). In the revised returns, M/s ARC Agrochemical LLP had shown the receipt of agricultural income for F.Y. 2017-18, F.Y. 2018-19, 2019-20 and 2020-21 to the tune of Rs. 17,62,220/- Rs. 32,72,700/- Rs. 26,50,000/- and Rs. 27,15,000/- respectively and claimed the same as "exempt". Such revised returns were submitted after notices u/s. 148 of the IT Act, 1961 to the said LLP after the search conducted on 15.02.2022 and the order were passed u/s. 24(4) by BPU-1, Mumbai. This showed that M/s ARC Agrochemical LLP did not have any actual business from Agriculture and Animal Husb....
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....Hence, the introduction of such huge funds by Authentic Finance Private Limited as partner in the firm having mere 10% shareholding is nothing but accommodation entries. 13. Further M/s ARC Agrochemical LLP had received bogus unsecured loans from various entities over the years. Shri Ramesh and Shri Achal Chaurasia floated shell/front entities including M/s ARC Agrochemical LLP to bring the unaccounted cash into books of accounts through unsecured loans. Majority of all such entities are LLP's which do not have active business and are not filing audit report, like in the case of M/s ARC Agrochemical LLP. These entities have huge outstanding unsecured loans from unrelated parties in their books. 14. As discussed, the investment made by M/s. ARC Agrochemical LLP in Listed Securities and Mutual Funds amounting to Rs. 99,95,29,791.54/- (as per Statement of Holdings in CDSL as on 22.01.2004). In addition to the partner's capital, the source of the funds obtained by M/s ARC Agrochemical LLP to purchase shares/ mutual funds was through bogus unsecured loans. Further, in the F.Y. 2017-18, M/s ARC Agrochemical LLP purchased agricultural land in Dhanaura, Uttar Pradesh amountin....
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....dent and there is no cross-appeal or cross- objection, the finding cannot be interfered. However, we may clarify that the order passed by the Court discharging or acquitting the accused would depend on the evidence led before the Court in the Criminal cases where charge has to be proved beyond doubt while the same parameters are not applicable in the Civil proceedings though burden of proof for benami transactions remains on the person alleging such transaction which would be addressed subsequently while addressing other arguments. However, in the Criminal case, if adequate evidence was not led to prosecute, it may result in discharge or acquittal while in the proceedings under the Act of 1988 enough material was available with the Initiating Officer. The finding may sustain despite an order of the Court discharging the accused from the allegation of online betting and gambling. In any case, this argument was rejected by the Adjudicating Authority itself and there is challenge to it by way of cross-objection or appeal. 19. The next issue was in regard to the recording of reasons to believe by the Initiating Officer. It is said to be not clear, rather, vague and based on presumpt....
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....easons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings under s. 34 of the Act is open to challenge in a court of law." 21. The issue raised regarding reasons to believe has been decided adverse to the respondent and there is no cross-appeal or cross objection to the aforesaid and accordingly it stand concluded adverse to the respondents. 22. The next question was regarding placing reliance of the statements of third-party recorded in coercion, stress and threat and were retracted thereupon, thus could not have been relied. It was further argued by the respondent that there was no corroborative evidence available with the Initiating Officer to cause provisional attachment holding it to be a case of benami transaction. The Adjudicating Authority has considered the issue and recorded its findings that statements were not the sole evidences or material relied upon by the Initiating Officer. The statements were not recorded under pressure or threat, as alleged, as there is no evidence....
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....ce to Section 24(4)(b)(i) of the Act of 1988 for the reason that while causing the provisional attachment under Section 24(3) of the Act of 1988, certain properties were not included which were subsequently added while causing an order under Section 24(4)(b)(i) of the Act of 1988. Section 24 of the Act of 1988 is quoted hereunder for ready reference:- 24. Notice and attachment of property involved in benami transaction.-(1) Where the Initiating Officer, on the basis of material in his possession, has reason to believe that any person is a benamidar in respect of a property, he may, after recording reasons in writing, issue a notice to the person to show cause within such time as may be specified in the notice why the property should not be treated as benami property. (2) Where a notice under sub-section (1) specifies any property as being held by a benamidar referred to in that sub-section, a copy of the notice shall also be issued to the beneficial owner if his identity is known. (3) Where the Initiating Officer is of the opinion that the person in possession of the property held benami may alienate the property during the period specified in the notice,....
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....tion(1) was issued. 29. Sub-section(4) to Section 24 of the Act of 1988 is divided in two parts. First part refers to further action after provisional attachment under sub-section(3) of Section 24 of the Act of 1988. It is for continuance of the PAO but should be with the prior approval of the Approving Authority. Section 24(4)(b)(i) of the Act of 1988 evolve an exception to first part of sub- section(4). It provides that where a provisional attachment had not been made under sub-section(3) then the Initiating Officer would be competent to pass an order to provisionally attach the property with the prior approval of the Approving Authority until the passing of the order by the Adjudicating Authority under Section 26(3) of the Act of 1988. The second part would obviously be for the property which is not part of the order Section 24(3) of the Act of 1988. Section 24(4)(b)(i) of the Act of 1988 allows Initiating Officer to pass a provisional attachment of the property other than for which such an order was caused under Section 24(3) of the Act of 1988. The Adjudicating Authority has made reference of Section 24(1) of the Act of 1988 to stress upon a show cause notice for provisiona....
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....16732/2023, 14527/2023 & 15074/2023. The relevant para of the judgement is quoted hereunder:- 17. So far as argument of the learned counsel for the petitioners to the effect that the provisional attachment order passed by the Initiating Officer under Section 24(3) of the PBPT Act is illegal as the petitioners were asked to submit response/reply to the notice under Section 24(1) and (2) of the PBPT Act up to 15.05.2023 but without waiting for reply, the Initiating Officer passed the provisional attachment order on 01.05.2023 is concerned, from bare perusal of the provisions of Section 24 of the PBPT Act, it is clear that the Initiating Officer is not required to wait or consider the response/reply filed pursuant to the notice under Section 24(1) & (2) of the PBPT Act before passing the provisional attachment order. The only requirement for the Initiating Officer is to seek approval of the approving authority before passing the provisional attachment order under Section 24(3) of the PBPT Act and from the provisional attachment order dated 01.05.2023, it is clear that prior approval of the approving authority was obtained by the Initiating Officer. Hence, the said argument of....
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....om agriculture. It was also found that the LLP drastically revised its income in response to the notices u/s. 148 issued by the Central Circle-5(2), Income Tax Department subsequent to the selection of the case for assessment on the basis of search conducted by the Investigation Wing of the Income Tax Department. Further, the said returns were filed in September, 2023 i.e. after initiation of proceeding under the Act of 1988 by issuing show cause notice u/s. 24(1) of the Act of 1988 by the IO, BPU-1, Mumbai in the case of ARC Group entities i.e. M/s Adesh Ventures LLP (29-09-2022) and M/s ARC Vastu Nirman Pvt. Ltd. (11-11-2022). In the revised returns, M/s ARC Agrochemical LLP has shown the receipt of agricultural income for F.Y. 2017- 18, F.Y. 2018-19, 2019-20 and 2020-21 to the tune of Rs. 17,62,220/- Rs. 32,72,700/- Rs. 26,50,000/- and Rs. 27,15,000/- respectively and claimed the same as exempted. Such revision was done after the notices u/s. 148 of the IT. Act, 1961 issued to the LLP as a consequence of the search conducted on 15.02.2022 and order were passed u/s. 24(4) of the Act of 1988 to the ARC Group entities by BPU-1, Mumbai. This showed that M/s ARC Agrochemical LLP did ....
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....the account of the company otherwise, beneficial owner could have transferred the amount to company directly. 36. The Adjudicating Authority, further, recorded the finding that even Section 2(9)(A) of the Act of 1988 is not attracted in the present case. It is for the reason that the beneficial owner would not invest his money in its own company to make out a case of benami transaction. However, in the present case, the beneficial owners themselves are holding the entities entered into the benami transaction. 37. An erroneous conclusion has been recorded in ignorance of the material available on record and even the modus operandi adopted by the respondent. It is not a transaction where the money was directly transferred by the beneficial owner in his own entity treated as benamidar, rather, money was routed through other companies to transact it further in the companies taken to be the benamidar. No reason was given as to why the beneficial owner, owning the benamidar companies could not be transacted directly. The modus was taken note by the Initiating Officer to make out a case of benami transaction. In the instant case, the huge unaccounted cash generated out of online bet....