Attachment of Admitted Sum as Benami Property and Remand for Further Prosecution Inquiry
Reference: Sections 27, 53, and 54 of the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)
Status: Partly in Favor of Assessee / Remanded for Investigation
1. The Core Dispute: Demonetised Cash Deposits and Benami Loans
The case involved a sum of ₹1 crore, which the Initiating Officer (IO) alleged was demonetised currency belonging to the appellant. According to the Revenue, this cash was orchestrated through a third party (SP) and deposited into the bank accounts of two “benamidar” companies (AVPL and HVPL), only to be subsequently transferred to the appellant’s account under the guise of a loan.
Appellant’s Defense: The appellant maintained that the ₹1 crore was a bona fide loan obtained through a legitimate broker. This was supported by a broker’s affidavit, brokerage payment records, and TDS (Tax Deducted at Source) filings.
Revenue’s Stand: The IO argued the transaction was a circular arrangement to “wash” demonetised currency. However, the Revenue relied heavily on oral statements from SP without providing concrete material evidence that the appellant was the source of the old notes.
2. Legal Analysis: Admitted Possession vs. Criminal Intent
I. Confiscation of Admitted Amount (Section 27)
Under Section 27, once a property is determined to be benami, it is liable for confiscation and vests with the Central Government.
The Ruling: The court noted that the appellant admitted receiving and investing the ₹1 crore. Since the amount was in the appellant’s custody and its origin was linked to suspicious bank deposits in fictitious/benamidar companies, the court upheld the attachment and potential confiscation of the money. Even if the appellant’s “loan” story was plausible, the money itself remained “benami property” as its trail originated from untraceable cash deposits.
II. Insufficiency of Evidence for Prosecution (Sections 53 & 54)
Sections 53 and 54 provide for criminal penalties (imprisonment and fine) for entering into benami transactions or providing false information.
The Ruling: The court found a lack of definite evidence establishing that the appellant was the “Beneficial Owner” who personally provided the demonetised currency. The Revenue’s case was built on circumstantial statements rather than forensic or documentary proof linking the appellant to the physical cash.
Liberty to Investigate: Because the evidence was insufficient for a criminal conviction at this stage, the court set aside the immediate prosecution but granted the Initiating Officer (IO) liberty to conduct further investigation into material aspects of the case.
3. Final Ruling: Attachment Confirmed, Prosecution Stayed
The Court/Tribunal took a balanced view by protecting the Revenue’s interest in the funds while protecting the appellant’s civil liberties against unverified criminal charges.
Verdict: The provisional attachment of the ₹1,00,00,000 was confirmed under Section 27.
Directive: The matter was remanded for further investigation. The authorities cannot proceed with prosecution under Sections 53 and 54 until fresh, corroborative material is found.
Key Takeaways for Taxpayers
Admissions are Binding: If you admit to receiving a specific sum, that amount can be attached under Benami laws even if your “source” is a loan, provided the lender’s identity or cash-flow is found to be fictitious.
Civil vs. Criminal: There is a lower threshold for attachment/confiscation (civil) than for imprisonment (criminal). The Revenue can seize your property on “reason to believe,” but they need “beyond reasonable doubt” proof for prosecution.
Broker Liability: Relying on affidavits from third-party brokers is often insufficient to ward off an investigation if the bank trail shows demonetised cash deposits.
APPELLATE TRIBUNAL SAFEMA, NEW DELHI
Sugee Developers
v.
Deputy Commissioner of Income-tax*
BALESH KUMAR AND RAJESH MALHOTRA, MEMBER
FPA-PBPT-1456/MUM/2021
JANUARY 29, 2026
Ved Jain, Adv., Nikhil Kabra, Amrit Singhal and Rajesh Singh, CAs for the Appellant. Manmeet S. Arora, SPP, Camron Iqbal and Ms. Vertika, Advs. for the Respondent.
ORDER
Rajesh Malhotra, Member.- Present appeal under Section 46 of the Prohibition of Benami Property Transactions Act, 1988 (as amended till date) is filed by the appellant M/s Ambica Bullion against the order dated 02.09.2021 passed by the Adjudicating Authority, in Reference No.1756/2019, whereby the attachment of properties by the Initiating Officer (DCIT/ACIT), Benami Property Unit, Mumbai, vide Provisional Attachment Order dated 27.08.2019, were confirmed including the sum upto Rs.1,00,00,000/-, in account of the appellant as under:
| Sr. No. | Name of the entity holding bank account and PAN | Bank Name and Account No. | Amount (In Rs.) |
| 1. | M/s Sugee Developers | IDBI Bank A/c No. 0579102000007146 | To the extent of Rs. 1,00,00,000/- |
2. During the arguments, learned counsel for the appellant submitted that as per allegation of the Initiating Officer, huge demonetized currency was deposited in the accounts of Benamidars namely- M/s Altimax Venture Pvt. Ltd. and M/s Homeground Marketing Pvt. Ltd., for sum of Rs. 8,65,14,500 and Rs. 2,32,99,000 respectively, total amounting to Rs.10,98,13,500/-, as mentioned at Page 4 of the impugned order. Thereafter, part of the said amount amounting to Rs.1,00,00,000 was transferred to the account of present appellant M/s Sugee Developer, one of the alleged Beneficial Owner, in IDBI Bank A/c No. 0579102000007146 from the account of M/s Altimax Venture Pvt. Ltd. The remaining amount was transferred by the benamidar companies to the other entities, as mentioned at Page 4 & 5 of the impugned order. Learned counsel for the appellant contended that they have not given any demonetized currency to the said two benamidars, as alleged by the Initiating Officer, and in fact, the appellant company received the loan amount of Rs. 1 Crore in its account. He argued that M/s Sugee Developers a proprietorship concern of Proprietor- Nishant Deshmukh, who is a builder and had certain ongoing projects for which he had borrowed funds from M/s Altimax Venture Pvt. Ltd. through one Shri Pradeep Sawant (broker) on interest @ 11% for about 44 months. He submitted affidavit dated 30.7.2019 executed by Shri Pradeep Sawant was submitted to the IO vide letter dated 12.08.2009, in this regard. Investment of Rs. 1 crore was received by way of RTGS on 19.11.2016 into IDBI bank from Altimax Venture Ltd. and later a loan agreement was made on 19.11.2016 for 44 months. Pradeep Sawant would get 1% commission in due course and during the hearing it was stated by the advocate that the payment of this commission has already been made. He argued that from the records of the case and submissions of the advocate of the IO it is seen that the affidavit dated 30.07.2019 submitted by Pradeep Sawant authenticated their business transaction with Mr. Satish Pujari and his group of company M/s Altimax Ventures Pvt. Ltd., as a valid transaction. The investment of Rs. 1 Crore was used for construction project and payment of Rs. 1 crore was made to Sneh Asit Koticha, Landlord of “Narayan Sadan” on 23.11.2016. He also pointed out many loopholes in the investigation conducted by the IO and the contradiction in the statement of directors of benamidar companies namely, Kundan Bhingarde (23.11.2017, 25.07.2019 & 26.08.2019), Heman Parikh (14.06.2017 & 26.08.2019) & Kamal Singh (23.11.2017). In the statement (dt: 23.11.2017/14.06.2017) before the Income Tax Dept, both Kundan Bhingarde/Heman Parikh have stated that they were told by Satish Pujari to deposit cash in the Bank A/c of the Benamidar Company. This same statement is again mentioned in their letters dt: 06.08.2019 (by Kundan Bhingarde) & 05.08.2019 (by Heman Parikh) to IO. However suddenly on 25.07.2019, Kundan Bhingarde changed his stand and takes the name of someone called Mr. Manjeet Singh Khalsa (Phone No. 98671 45082) as an intermediary in the subject transaction. Similarly, Heman Parikh, after confirming his earlier stand through his letter dt: 05.08.2019 to IO, takes the name of Mr. Manjeet Singh Khalsa (Phone No. 98671 45082) as an intermediary in the subject transaction on the very next day vide his letter dt: 06.08.2019 addressed to the IO. He argued Mr. Manjeet Singh Khalsa was never summoned, nor examined, nor investigated, nor made a party to the reference by the IO. He remains a mystery in the transaction. Moreover, the statements of Kundan Bhingarde & Heman Parikh show that they were dummy directors acting on instructions of Satish Pujari & hence this Satish Pujari becomes a crucial link to establish the veracity of their claims.
He contended that the only evidence of the IO/AA against the Appellant is the statements of certain alleged Directors and there is no other evidence besides these statements. All investigations by the IO stop here, without digging the true facts. Out of these, the statement of Kamal Singh was not produced at the IO level, nor at the AA level and it has for the first time featured in the reply dt: 08.02.2024 in the Appellate proceedings. Hence it is additional evidence and not admissible. He contended that the Appellant’s name has not been taken by the namelending Directors/ex-Directors of the Benamidar Company i.e. Heman Parikh, Kundan Bhingarde & Kamal Singh in their initial statements recorded on different dates. In fact, Heman Parikh has stated at Q. No. 22 (Statement dt: 14.06.2017) that one Satish Pujari asked him to deposit cash in the bank account of the Benamidar & he does not know the source of these funds. Even Kundan Bhingarde has stated at Q. Nos. 43 & 44 (Statement dt: 23.11.2017) that Satish Pujari asked him and Hemant Parikh to deposit cash. Thus, the name of the Appellant was not taken anywhere by anyone. No proof is produced that Appellant gave Rs. 1 crore of demonetised currency in cash to Benamidar, or to anyone. Benami Law being punitive in nature, assumptions/presumptions have no place in this kind of punitive law. He contended that Kundan Bhingarde, Heman Parikh & Kamal Singh have accepted on oath that they were just “name lending” (Dummy) (read definition sec 2(10) of PBPT) Directors of the Benamidar Company at the behest of Satish Pujari. Hence, IO/AA should have made these dummy Directors party and looked for the whereabouts of Satish Pujari but this was not done, inspite of Appellants specific application to AA u/s 26(6) However, in-spite of being provided with telephone numbers of the CBI at Gujarat & Kolkata (vide Heman Parkih’s Letter dt: 06.08.2019 who are perhaps investigating Satish Pujari, the IO/AA failed to pursue the matter with CBI or examine the other Directors of the Benamidar Company to trace the whereabouts of Satish Pujari. He was not even made a party to the proceedings by the IO/AA and when the Appellant moved an application u/s 26(6), the same was rejected by the Adjudicating Authority.
He argued that the impersonation by Heman Parikh, as Hemant Parikh is apparent. Hence, which Heman Parikh was examined by the IT Deptt. or the IO is not known. The actual one or the imposter. The IO/AA has not even attempted to appreciate/examine the evidences provided & answer the dual identity/impersonation of Heman Parikh/Hemant Parikh. Hence, there is a serious identity crisis, which is criminal in nature and hence his statement cannot be relied upon.
He further contended that the IO & Adjudicating Authority have placed heavy weightage on the statement of Kundan Bhingarde, who was not even a Director of the Benamidar Company during the demonetization period, when the transaction of Rs. 1 Crores took place, nor was he a Director, on 23.11.2017, or on 25.07.2019/26.08.02019, when his statements were recorded. ROC records show that Kundan Bhingarde was a director of the benamidar only from 26.10.2015 to 20.06.2016 from 25.08.2016 to 28.10.2016 & from 04.04.2017 to 03.07.2017. Thus, Mr. Kundan Bhingarde was a mere 3rd Party and this was even pointed out by the Appellant vide its letter dt: 26-8-2019 to the IO & hence his statements hold no value.
Further, he pointed out that the IO & Adjudicating Authority has ignored the Loan Agreement dt: 19-11-2016, the Affidavit of the Broker (Mr. Pradeep Sawant) dt: 30-7-2019 & the TDS certificate dt: 10-12-2020 of the Brokerage payment which were critical evidences to justify the genuineness of the transaction. The AA states (as already stated by the IO) that there is no Agreement signed by the Broker & no payment of commission made or TDS deducted. The IO/AA fail to note the fact that the investment deal was done through the Broker (Mr. Pradeep Sawant), which fact was mentioned in the Loan Agreement of 19.11.2016 and following the generation of Broker Invoice dt: 30.03.2020, and on account of the commission, payment of Rs. 1 lakh was made by the Appellant on 24.08.02021 (after deduction of TDS, with TDS Certificate dt: 10-12-2020 duly generated) and much of this was filed before the AA. Also, the IO did not summon the broker and did not appreciate the Affidavit filed by the broker.
In fact, Kundan Bhingarde in his statement (Q. No. 43, dt: 23-112017) has stated that he knows Hemant Parikh and not Heman Parikh whose statement was recorded on 14.06.2017. While Heman Parikh states in his statement (Q. No. 12, dt: 14-6-17) that he knows Kundan Bhingarde. Further, Kundan Bhingarde stated in his letter to 10 dt: 06.08.2019 & Heman Parikh in his letter to IO dt: 05.082019 mentioned that Satish Pujari is the 100% shareholder of Benamidar Company (Altimax), but public domain ROC records show that the actual shareholders of Benamidar (Altimax) are Rajesh Ramgopal Garodia (40%). Rahul Ramgopal Garodia (40%) & Mamtadevi Garodia (20%). Strangely IO has stated in submissions before AA that Satish Pujari holds 98% shareholding as per IT Returns for A.Y 2016-17 & 2017-18. The IO & Adjudicating Authority have failed to consider the fact that Mr. Satish Pujari is NOT the shareholder of the Benamidar Company and sadly none of the actual shareholders were examined/summoned or even made party to the Reference in-spite of the Appellant requesting u/s 26(6) to the AA.
He argued that the IO & consequently the AA have also failed to examine the CS (Vijay Tiwari) and the Auditor (Girish Jain) of the Benamidar Company and have drawn conclusions made on the partial evidences available. He stated that without prejudice, Kamal Singh is himself also admitting to being made a “Dummy Director” in the Benamidar Company at the behest of Satish Pujari, which if anything gives even more credence to the claims/submissions of the Appellant.
The Benamidar has also been assessed under Income Tax and Assessment Orders have been passed for Assessment Year 2016-17 (F.Y 2015-16) and additions have been made in the hands of the Benamidar Company of around Rs. 8.93 crores. The Balance-Sheets of the Benamidar for F.Ys 2012-13 & 2013-14 are presented in the RUD. That was enough for the Appellant and was also standard market practice. He contended that though the IO has taken a stand that no prudent person would lend Rs. 1 crore & then never contact the Debtor and even become untraceable, however, the Appellant (a Builder) is the receiver and NOT the giver of amount in the concerned transaction of Rs. 1 crore. Appellant stated that in construction business parties do invest and sometimes do not contact for long.
The Appellant had made an Application u/s 26(6) of the PBPT Act, which sought to make 16 persons Kundan Bhingarde, Heman Parikh, Kamal Singh & the other alleged Directors of the Benamidar Company, as “Benamidars” and Satish Pujari and shareholders (including Garodia family as per ROC records) of the Benamidar Company as “Beneficial Owners” and thus Party to the Proceedings. In fact, Kundan Bhingarde, Heman Parikh, Kamal Singh had themselves accepted on oath that they were merely “name lending” Directors of the Benamidar Company, which means that they have openly admitted to being the Benamidars of Satish Pujari and/or the actual shareholders/related entities of the Benamidar Company passing a speaking order and only by making a casual remark (without any explanation) stated that the Appellant has to provide valid, sustainable and convincing grounds for Sec 26(6) and rejected this Application. He stated that it is a valid sustainable ground that these persons have themselves admitted that they are Benamidars and solely on basis of their statement, this Reference case has been developed by the IO. A draft copy of the Application u/s 26(6) which was filed by the Appellant before the AA is being attached as Exh-A along with written Arguments.
Further, he stated that the Appellant did a basic due diligence, checked if it was a Registered Company with a Registered office and PAN and incorporation certificate. Further the Benamidar is a company whose details are a matter of public record on the ROC website and it is not a fictitious or untraceable entity. A company as such cannot be a fictitious/ untraceable entity. Satish Pujari was not a director, nor a Shareholder as per ROC records and hence his being untraceable is of no relevance in this case. Moreover, the Appellant has sent out Notices dt: 16.03.2023 to the Benamidar Company/Related Entities followed by a Public Notice dt: 21.07.2023 in the Newspaper “Free Press Journal”, Mumbai and thus the Appellant has taken all possible efforts to trace down the Benamidar Company and Related Entities so as to make sure that the investment of Rs. 1 crore is settled out, but no one has responded. Thus, the Appellant has exhausted all efforts to trace down the Benamidar and cannot be blamed in any manner regarding the same.
Prayer is accordingly made to set aside the impugned order and thereby release the accounts of the appellant.
3. Ld. Counsel for the respondent pointed out para 6.2 to 6.10 of the PAO u/s 24(4) about the rebuttal of submissions given by the defendant (herein appellant). He submitted that Sh. Nishant Deshmukh (and his team) are perfectly capable of and inclined for doing the research on the parties with whom they deal. Therefore, it is inexplicable and implausible that no research was done by them at the time of availing the so-called loan dated 19.11.2016 of Rs. 1 Crore from the Altimax Ventures Pvt. Ltd. In his statement dated 23.08.2019 recorded u/s 19 of PBPT Act, Sh. Nishant Deshmukh, Proprietor of M/s Sugee Developers stated in response to Q. No.10, that no agreement was ever signed with the broker (Pradeep Sawant). In response to Q11-13, he stated that no payment was ever made to broker even though it was agreed between M/s Sugee Developers and Sh. Pradeep Sawant that the brokerage payment shall be made immediately upon receipt of loan. Almost 3 years lapsed, but no payment was made to the broker. No books of account and no TDS has been deducted, even though these are necessary conditions of any valid/ legal transactions. Though it has been stated by the advocate of the defendant during the hearing that the commission has been paid recently, it is not a proven fact, hence, it is just an afterthought arrangement to create defence. The appellant has not produced valid documents regarding the loan agreement as the same is not duly stamped and notarised. Also, the appellant’s contention regarding the broker’s affidavit after a period of 3 years from the loan agreement seems to be vague, as he in-fact preferred to abandon his small commission from the appellant, until the present proceedings were initiated almost 3 years from the transaction. Ld. Counsel for the respondent contended that Shri. Satish Pujari is not traceable, nor contactable on mobile. No prudent person would lend an amount of Rs. 1 crore to someone and then never contact the debtor and even become untraceable. This has exposed the whole story about Sh. Satish Pujari being introduced by a broker Pradeep Sawant as being an afterthought strategy and being an imaginary & unacceptable. Also, the appellant had the sources to know the of doing the recce on the parties with whom they deal. Prayer is accordingly made to dismiss the present appeal being devoid of any merits.
4. The Investigating Agency/Initiating Officer has not traced whereabouts of Shri Satish Pujari, who allegedly delivered the demonetised currency for deposit into the bank accounts of the said benamidar company M/s Altimax Ventures Pvt. Ltd. There is nothing on record when the said benamidar company were incorporated and who were the founder Directors of the said company. It is also not clear as to who were the shareholders of the said benami company at the time of incorporation and the change of shareholding pattern during the intervening period, till the commission of alleged benami transaction. Also, it is not known, as to who was signatory at the time of opening the bank A/Cs in the name of this benamidar company and as to when was the PAN card was obtained by the company. Further, it is also unknown, as to whether Satish Pujari was associated as a Director, at any point of time during the running of the said company. The Initiating Officer also has to verify the business transactions entered on behalf of the benamidar company with the other third entities, so as to check and verify, who was actually managing the affairs, through dummy directors. During the arguments, Ld. Counsel for the appellant pointed out that as per IO, Satish Pujari is the 100% shareholder of Benamidar Company (Altimax), but public domain ROC records show that the actual shareholders of Benamidar (Altimax) are Rajesh Ramgopal Garodia (40%), Rahul Ramgopal Garodia (40%) & Mamtadevi Garodia (20%). Strangely IO has stated in submissions before AA that Satish Pujari holds 98% shareholding as per IT Returns for A.Y 2016-17 & 2017-18. Thus, this material contradiction needs to be properly checked and verified by the IO from the record of ROC, only then the actual person running the said benamidar company can be traced and interrogated.
On the other hand, the appellant has produced the loan agreement, but the authenticity of the same also needs to be checked and verified in further investigation, as the date of sale of Stamp Paper by any stamp vendor is not mentioned in this document exhibit A10. The person putting his signature on behalf of M/s Altimax is also not ascertained during investigation of the case. Hence, there is nothing on record to express anything on the authenticity of loan agreement dated 19.11.2016 and further investigation needs to conducted in this regard.
Since it is admitted fact that the appellant received the amount of Rs. 1 Crore, which he invested further, hence, the same is rightly liable to be attached and can be confiscated being the benami property (amount) under Section 27 of the PBPT, being in custody of the appellant by way of investment. However, at this stage, there is no definite evidence that the appellant is a beneficial owner and he himself gave the demonetised currency to any agent of M/s Altimax. Thus, due to the lack of evidence, the appellant cannot be prosecuted under Section 53 & 54 of the PBPT, however, liberty need to be granted to the IO to conduct the further investigation on the material aspects, before proceeding for prosecution in this regard. The further investigation be concluded preferably within 6 months.
5. In view of our discussion in the preceding para, the present case is remanded for re-investigation on the material aspects, before launching any prosecution under Section 53 & 54 of the PBPT Act. However, the admitted amount of Rs. 1 Crore lying with the appellant proprietorship concern in the form of investment is rightly attached and can be confiscated under Section 27 of the PBPT Act. Copy of this order be sent to all the concerned parties including benamidars.