TaxTMI 
TaxTMI 
2026 (7) TMI 860
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.... the Income Tax Act,1961 on Keyal Group on 11.11.2022. It was found that the entities of Keyal Group have shown purchases from few fictitious entities in their books of accounts, one of which was M/s Sanmati Trading Co. (Proprietor Ms. Reeta Devi). After getting the information, the Initiating Officer (IO) proceeded in the matter under the Act of 1988. 3. The IO analyzed the financial profile of M/s Sanmati Trading Co. which revealed that it is not having any business, rather the entity was not found to be in existence. The summons was issued to Ms. Reeta Devi, Proprietor of the firm M/s Sanmati Trading Co. but was returned undelivered. The officer was deputed for physical verification and inquiry but the address given by Ms. Reeta Devi, the entity was not found available. 4. The further inquiry revealed that M/s Sanmati Trading Co. was on the GST portal but not dealing in the products like clothes/fabrics, rather it may be in metal and scraps while the appellant company was dealing in clothes and fabrics. Therefore, the purchase of fabrics by the appellant company was found to be fictitious and it is not only the transaction to be fictitious but even the firm, namely, M/s Sa....
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...., plaited bands, etc. it could not have been inferred that they could not sell or deal with in the clothes and fabrics. The main thrust of the respondents to hold the transaction to be fictitious was even in reference to the GST registration of the benamidar firm M/s Sanmati Trading Co. In any case, the respondents could have attached the property involved in the alleged benami transaction and not the amount lying in the bank account of appellant company different than the alleged benami property. The prayer was accordingly made to cause interference in the impugned order. 9. The learned counsel for the appellant did not raise any other argument than referred to above. It is despite an opportunity to raise any other legal or factual issue. The counsel restricted his argument to what has been narrated above. Arguments of counsel for the respondents: 10. The counsel for the respondents seriously contested the appeal. Elaborate and vehement arguments were made on each issue raised by the appellants which would be referred while recording our finding to avoid repetition of the facts and for the sake of brevity. Finding of the Tribunal: 11. We have considered the rival su....
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.... aforesaid ground itself, a challenge to the impugned order has been made. 14. To address the issue, it would be relevant to quote Section 2(9)(B) of the Act of 1988 which is as under: "(B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name;" The provision quoted above refers to a transaction or an arrangement in respect of the property carried out or made in the fictitious name. In the instant case, the allegation against the appellant is for a transaction in the name of fictitious entity, namely, M/s Sanmati Trading Co. Accordingly, a case under Section 2(9)(B) of the Act of 1988 was taken up by the respondents. 15. The issue is as to whether M/s Sanmati Trading Co. can be said to be a fictious company or entity merely for the reason that it was not filer of income tax returns. The answer is that it cannot be the sole ground, however, it can be supported by other material to find out whether the entity is fictitious or not. In the instant case, the transaction by the appellant company with M/s Sanmati Trading Co. was for supply of clothes and fabrics of which no relevant material could be placed on record by the app....
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....in his bank account. The counsel for the appellant submitted that what can be attached is the benami property and not any other property in lieu thereof. The aforesaid argument was tested and found that the appellant was involved in fictitious transaction with ulterior motives and thereby he was showing purchase of clothes and fabrics and accordingly to make the payment as a consequence thereof. It was to a firm which was not existing. Accordingly, the appellant could get the cash amount in return to it. Taking the aforesaid into consideration, it was found that the amount routed by the appellant was coming back to him and accordingly the provisional attachment of the amount involved in benami transaction has been made. The appellant otherwise could have disclosed the source of the amount involved in dummy entities and thereupon transfer to the appellant company in one or the other form. 18. The counsel for the appellants vehemently contested the issue on the ground that burden of proof lies on the person who makes the allegation. It is a fact that initial burden lies on the person who makes the allegation of benami transaction but once it is satisfied, the other party has to de....