TaxTMI 
TaxTMI 
2026 (5) TMI 936
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.... Shri Jamsheer P.K of Kozhikode were found in possession of cash of Rs. 50,13,000 (Rupees Fifty lakhs and Thirteen Thousand only) by the Sub Inspector of Police, Kunnamangalam Police station on 27.03.2017. Since these persons were not able to explain the source of the cash, the same was seized by the Police. The amount was produced before JFCM Court, Kunnamangalam and a claim petition was filed before the Hon'ble Judicial First-Class Magistrate, Kunnamangalam by the Income-Tax Department. The said two persons failed to give any explanation for the source of the seized money amounting to Rs. 50,13,000/- before the Hon'ble JFCM-Kunnamangalam. Both could not furnish any legal and verifiable claim regarding the ownership and nature of the cash seized; could not furnish any evidence/proof with regard to the claim that they are from genuine accounted sources; and they have not even filed income tax returns. Thus, Ld. JMFC, after hearing the parties and the Income Tax Department, allowed the claim petition and thereby the amount of Rs. 50,13,000/- seized by police was handed over to the Income Tax Department on 04.12.2017. On receiving the aforesaid information, verifications w....
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.... to substantiate his claims till date and accordingly, the same was treated as Benami property as per the provisions laid down under Section 2(9)(D) of the PBPT Act, 1988. Based on these facts, the IO under Section 24(4)(b)(i) of the PBPT Act passed the provisional attachment order on 12.03.2018 wherein he found the same to be benami property. After that a reference was filed by the IO under Section 24(5) for confirmation of the provisional attachment order. The SCN was issued to the appellant on 13.04.2018 by the ACIT, BPU, Kochi, in response to which appellant approached the hon'ble High Court of Kerala for challenging the order dated 12.03.2018 but is writ petition was dismissed and then, appellant was again given notice dated 27.06.2018 for appearance before the AA. The appellant submitted his objections on 30.7.2018 and after going through the reply and hearing the rival submissions, the Adjudicating Authority being not convinced with the replies & submissions allowed the reference No. 599/2018 vide order dated 25.03.2019. Aggrieved the said order, appellant filed the present appeal. 3. During the arguments, Ld. Counsel for the appellant submitted that the proceedings....
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....preventing the activity of obtaining of properties in the name of fictitious and other persons. When viewed in this context, it is apparent that the legislature never intended that the Act would cover cash where the person in whose possession the same is found has explained the source of cash and other person claimed the cash and when adequate provision in this regard has been made in the Income Tax Act through Ss. 68 & 69 as well as other enactments. This is apparent by reading section 60 of the Act, that the application of other laws is not barred. The provisions of this Act shall be in addition to, and not, save as hereinafter expressly provided, in derogation of any other law for the time being in force. This clearly express the intention of legislature. Sec. 24(1) of the Act under which the Initiating Officer issued notice dated 13.12.2017 reads thus: 24: Notice and Attachment of Property involved in Benami Transactions: [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 cau....
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....fficer has failed to note that "benami property is "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. When the term "benami property is defined as a property which is the subject matter of a "benami transaction" as well as "the proceeds from such property", it is obvious that "unexplained cash or cash source regarding which is not explained with acceptable evidence will not come within the ambit of the term "benami property" that could be proceed against under Sec. 24[1] of the Act. She stressed that the Initiating Officer has failed to further note that presence of cash on the person of the appellant did not prove any "transaction or arrangement in respect of a property" involving consideration which alone is covered by Sec. 2[9][D] of the Act. The transaction or arrangement in respect of a property referred to in Sec. 2[9][D], it is apparent, covers the sale or transfer of a movable or immovable property involving passing of consideration from the buyer to the seller - where the buyer is either not traceable or is fictitious. As against this, in the instant cas....
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....rigorous imprisonment for a term which shall not be less than one year, but which may extend to seven years and shall also be liable to fine which may extend to twenty-five per cent of the fair market value of the property. The fine may extend to 25% of the fair market value of the property not of the benami cash recovered." Ld. Counsel for the appellant also argued that the reason to believe must be in writing based on cogent material which ought to be supplied to the Noticee which were never communicated to him and therefore said proceedings are bad in law. She contended that it was incumbent upon the respondents to give reasons in writing to the noticee which must be relevant and germane. She further pointed out that the seized amount of Rs. 50,13,000/-be taken as the income of the appellant for the FY 2017-18 and thus appellant is only liable to pay the Income Tax for the seized amount and after deduction of the same, the balance amount needs to be returned to the appellant. She argued that the respondent is not concerned with the source of cash earned by the appellant by any means whatsoever and once appellant is ready to pay the Income Tax on the seized amount, the r....
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....s as per Section 2(26) of PBPT Act, 1988. Further, as per Section 2(8) of the PBPT Act, benami property means any property which is the subject matter of a benami transaction and also includes the proceeds from such property and cash in the present matter is unaccounted for as its source is unexplanatory and thus falls under the definition of benami property. Accordingly, we are of the considered view that cash is covered within the definition of tangible movable property. 7. Now coming to issue no. ii), the relevant provisions are reproduced as under: Sec. 2[8] of the Act defines "Benami property" as "any property which is the subject matter of a benami transaction and also includes the proceeds from such property". "Benamidar" in turn, is defined u/s. 2[10] of the Act thus: "[10]: "benamidar" means a person or a fictitious person, as the case may be, in whose name the property is transferred or held and includes a person who lends his name." Section 2(12) of the PBPT Act defines "Beneficial owner" : "means a person, whether his identity is known or not, for whose benefit the benami property is held by a benamidar." "Benami property" is....