Cash is considered "property" under the wide definition in the Benami Act.

Cash is considered “property” under the wide definition in the Benami Act.

Issue

Does physical cash fall within the definition of “property” under Section 2(26) of the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act), making it subject to the provisions of the Act?

Facts

The case involved the seizure of a large amount of unaccounted cash, and a legal question was raised about whether physical currency could be treated as “property” for the purpose of initiating benami proceedings.

Decision

The court ruled in favour of the revenue.

It held that the definition of “property” in Section 2(26) of the Benami Act is extremely broad, covering “assets of any kind, whether movable or immovable, tangible or intangible.”
The court clarified that physical cash is a tangible movable property and is therefore squarely covered by this definition.
It concluded that unaccounted cash cannot escape the purview of the Benami Act.

Key Takeways

A Very Wide Definition: The Benami Act was intentionally drafted with a very broad and inclusive definition of property to ensure that all forms of assets, including cash, can be covered.
Cash is Tangible Property: Physical currency is a tangible movable asset. Its seizure can be the basis for initiating proceedings under the Benami Act.
Intangible Assets are Also Covered: The court also noted that while physical cash is tangible, other forms of money like bank deposits or electronic funds would be considered intangible property, but they are also covered under the Act’s wide definition.

A person cannot be treated as a benamidar if they neither possess the property nor claim ownership of it.

Issue

Can a person who was merely accompanying another individual from whom benami property (cash) was seized be treated as a party to the benami transaction, such as a benamidar or a beneficial owner?

Facts

Cash was seized from the possession of Appellant 1. Appellants 2 and 3 were with him at the time of the seizure but had no cash in their possession. The Initiating Officer proceeded against all three individuals. However, Appellants 2 and 3 consistently stated that they had no connection to the seized cash and made no claim of ownership over it.

Decision

The court ruled in favour of Appellants 2 and 3.

It held that since the cash was not recovered from them and they made no claim of ownership whatsoever, they could not be proceeded against as either benamidars (the person holding the property) or beneficial owners (the person for whose benefit the property is held) under the PBPT Act.
The proceedings against them were therefore invalid.

Key Takeways

Possession or Claim is Essential: To be treated as a benamidar, a person must be holding the property for another. To be a beneficial owner, they must have a right or interest in it. A person who is merely present at the scene does not fit into either of these legal categories.
Liability is Not by Association: The Benami Act targets individuals based on their specific role in the transaction. Liability cannot be established by mere association with the person from whom the property is seized.

A property is considered benami when the purported real owner denies their ownership of it.

Issue

Does a property become a “benami property” if the person from whom it is seized claims it belongs to a specific person or entity, but that named person or entity officially denies owning the property?

Facts

A cash amount of ₹70 lakhs was seized from the possession of Appellant 1. His explanation was that he was just a devotee carrying the cash, which he claimed belonged to a spiritual organization called SATSANG and was generated from donations. However, when the authorities made inquiries, the accountant of SATSANG provided an official statement that the seized cash did not belong to them.

Decision

The court ruled in favour of the revenue.

It held that since the purported real owner (SATSANG) had formally denied ownership of the cash, the property squarely fell within the definition of a “benami property” under the Act.
Specifically, it met the conditions of Section 2(9)(C) (where the owner is unaware of or denies knowledge of the ownership) and Section 2(9)(D) (where the person who provided the funds is not traceable).
Therefore, the person found holding the property, Appellant 1, was correctly proceeded against as the benamidar.

Key Takeways

Denial by the Named Owner is a Key Test: A crucial test for a benami transaction is the denial of ownership by the person who is claimed to be the real owner. This denial is very strong evidence that the transaction is a sham.
The Onus is on the Person in Possession: The person who is found in possession of the property has the primary responsibility to prove the identity of the real owner and to get that claim confirmed. If their explanation is contradicted by the alleged owner, their defense fails.

No prior approval from a higher authority is needed for an inquiry if a show-cause notice has already been issued.

Issue

Is prior approval from the Approving Authority a mandatory prerequisite for an inquiry under the Benami Act, especially in a situation where a show-cause notice has already been issued?

Facts

The appellant challenged the proceedings on the ground that the Initiating Officer did not take prior approval from the Approving Authority before conducting the inquiry, as would be required under Section 23 of the Act.

Decision

The court ruled in favour of the revenue.

It referred to an Explanation that was added to Section 23 in 2018.
This Explanation clarifies that once a show-cause notice has already been issued in a case, the requirement to take prior approval for conducting the inquiry does not arise.
The court also held that this Explanation is clarificatory in nature and is therefore effective retrospectively from the year 2016.

Key Takeways

A Retrospective Clarification: The Explanation to Section 23 is considered a clarificatory amendment. This means it doesn’t create a new law but simply explains the original intent of the law, and so it can be applied to past cases.
Procedural Requirement is Dispensed With: The issuance of a formal show-cause notice is a significant step in the process. The law now clarifies that this step itself subsumes the need for a separate, prior approval just for conducting the inquiry that follows.

An SCN is valid if based on existing material; no fresh, independent inquiry is needed in every case.

Issue

Can benami proceedings be quashed on the grounds that the Initiating Officer’s “reasons to believe” were inadequate, or because the officer did not conduct a fresh, independent investigation before issuing the show-cause notice?

Facts

The appellant challenged the validity of the show-cause notice issued under Section 24(1), arguing that the “reasons to believe” recorded by the Initiating Officer (IO) were not sufficient and that the IO had failed to conduct a separate, independent investigation before issuing the notice.

Decision

The court ruled in favour of the revenue on both points.

It held that while the law requires the existence of “reasons to believe,” the adequacy or sufficiency of those reasons is not subject to judicial review by the Tribunal or a court.
It also clarified that the IO is not mandatorily required to conduct a separate independent investigation in every single case. If sufficient credible material to form a belief already exists on the record, the IO can legally proceed to issue a notice based on that existing material.

Key Takeways

Limited Scope of Judicial Review: Courts will only look to see if there is some material that has a rational connection to the formation of the officer’s belief. They will not step into the shoes of the officer to weigh the sufficiency or adequacy of that material.
No Need for a Redundant Investigation: The law does not require the Initiating Officer to reinvent the wheel. If credible information and material are already available (for example, from another agency’s investigation or from documents already on record), a fresh and separate inquiry is not a mandatory prerequisite for issuing a valid notice.

APPELLATE TRIBUNAL SAFEMA, NEW DELHI

Uttam Kumar Saha

Initiating Officer, DCIT, BPU, Guwahati

Rajesh Malhotra and G.C. Mishra, Member

FPA-PBPT-964/GWH/2019

SEPTEMBER 8, 2025

Arun Kr. Aggarwal and Subham Aggarwal, Advs. for the Appellant. Manmeet S. Arora, Adv. for the Respondent.

ORDER

1. The present appeal under Section 46 (1) of Prohibition of Benami Property Transaction Act, 1988 (PBPT) (as mended till date) is filed by the appellant against the order dated 26.03.2019 passed by the Adjudicating Authority PBPT Act, 1988 in Reference No. R-907/2018, Zone: Guwahati, under Section 26 (3) of the Act, whereby the reference qua the attachment of seized cash amount of Rs.70,00,000/- was confirmed as benami property.

2. As per the facts of the case, on 02.01.2018 in a search and seizure operation conducted under section 132A of the Income Tax Act, 1961 by Deputy Director of Income Tax (Inv), Unit-2, Guwahati, in the office of the Officer-in-charge, Guwahati, GRPS, Assam Railway Station Guwahati, the Inspector of Police, Officer-in-charge, Guwahati, GRPS, Assam, handed over cash amounting to Rs.70,00,000/-, which was seized from the possession of Shri Uttam Kumar Saha (herein appellant no.1) on the same day, for the purpose of taking further action as per the provisions of the Income Tax Act, 1961.

Statement of Shri Uttam Kumar Saha under section 131 of the Income Tax Act, 1961 was also recorded on 02.01.2018 by the office of the Officer-in-charge, GRPS, Guwahati Railway Station, Guwahati. He has stated that he is a SATSANG devotee and worker, who is authorized to carry cash, and cash amounting to Rs. 70 Lakhs found with him, belongs to SATSANG, which was generated out of donations given by different persons/devotees during Utsav/mela/festival and same was carried by him to headquarter of SATSANG at Deoghar, Jharkhand. However, he was not having authorization letter from SATSANG or any books of accounts, or any other document. It was further noted that seized amount consist of only Rs.500 and Rs.2000/- denomination donation, while offering from devotees normally are in very small denominations. Despite being asked he was unable to tell from whom same was exchanged. In his statement he has also given names of Shri Nishith Ranjan Bhattacharjee & Shri Narayan Das c/o SATSANG, Agartala who may explain about cash.

Subsequently, statement under section 131 of the Income Tax Act, 1961 of Shri Narayan Das, who was also accompanied by Shri Nishith Ranjan Bhattacharjee was recorded on 04.01.2018 in the office of the Dy. Director of Income Tax (Inv.), Unit 2(2), Guwahati, wherein he has stated that money of Rs. 70 lakhs carried by Shri Uttam Kumar Saha was actually the holy pranami offered by devotees in various denominations and even coins, which were later exchanged in local market (however no details were given) during Tripura Rajyik Utsav, which was claimed to be casually held on 24.12.2017. However, when specifically asked in question no. 7 that whether the seized amount of Rs. 70 lakhs are reflected in books or not, he has stated that they do not maintain any books of accounts at Tripura, and entries in books of accounts is made after receipt of money in books of accounts maintained at office at ‘Satsang, 57, Jatindra Mohan Avenue, Kolkata’. Shri Narayan Das, in response to question no.12, when specifically asked to produce Cash Book etc. of Satsang, had stated that he would ask Kolkata office to produce the same.

Statement of Shri Shekhar Sarkar, an accountant in Satsang Office at Kolkata, who was duly authorized by Shri Kartik Chand Sarkar, Secretary, SATSANG was recorded on 19.02.2018 at Aykar Bhawan Annexe, 5th floor, Kolkata by ADIT (Inv), Unit-3(1), Kolkata, wherein he has specifically stated that cash of Rs.70 lakhs seized from Shri Uttam Kumar Saha, does not belong to SATSANG. In his statement he has elaborately told the system of cash receipt according to which each cash receipt is filled by Donor, and deposit is made in bank in name of each devotee. Shri Shekhar Sarkar, denied the statement of Shri Nishith Ranjan Bhattacharjee about collection of cash and system of no receipts, and added that such type of festivals held once or twice every year at many places, and no instance of cash deposit for Utsav in Agartala in earlier years. Further, Shri Shekhar Sarkar has also stated that he does not know Shri Narayan Das & Shri Uttam Saha.

The above statement of Shri Shekhar Sarkar, was confronted to Shri Uttam Kumar Saha, and Shri Nishith Ranjan Bhattacharjee on 21.02.2018 by DCIT (Inv.), Unit-2(2), Guwahati, wherein both of them still held that cash belong to SATSANG.

In view of above facts, and evidences, the Initiating Officer concluded that it was clear that as per the version given by Shri Uttam Kumar Saha, Shri Narayan Das, & Shri Nishith Ranjan Bhattacharjee, the amount of seized cash of Rs.70,00,000/- belonged to Satsang, while as per statement of Shri Shekhar Sarkar, accountant of SATSANG, the seized cash of Rs. 70 lakhs did not belong to SATSANG. It is further important to reiterate here that statement of Shri Shekhar Sarkar is also confirmed by SATSANG on their letter head, duly signed by Shri Kartik Chand Sarkar secretary, SATSANG. Thus, it was evident that the entire cash amount of Rs.70,00,000/- falls under ‘benami properties’ within the meaning of section 2(9) (C) of the PBPT Act as a benami transaction, if SATSANG is considered owner of property as claimed by Shri Uttam Kumar Saha, Shri Narayan Das, & Shri Nishith Ranjan Bhattacharjee and SATSANG (Trust) had denied the ownership. The transaction also fell within meaning of section 2(9)(D) of the PBPT Act. As the claim of Shri Uttam Kumar Saha, Shri Narayan Das, & Shri Nishith Ranjan Bhattacharjee that cash belong to SATSANG had already been denied by SATSANG. This effectively meant that person providing the consideration was not traceable or was fictitious.

IO concluded that cash amounting to Rs. 70,00,000/- seized by Income-tax Department, which was being carried by Uttam Saha, was nothing but Benami Property, and Shri Uttam Kumar Saha Shri Narayan Das, Shri Nishith Ranjan Bhattacharjee and SATSANG were parties to benami transaction within the meaning of section 2 of the Prohibition of Benami Property Transaction Act, 1988. Accordingly, notice under Section 24(1) of the Act was issued.

SATSANG, in reply to the said show cause notice has categorically denied that the seized cash belonged to the society and has stated that the said show cause notice was not applicable for the society as the holding of the seized cash by somebody as the benamidar of the society did not arise. SATSANG also stated that it cannot be regarded as a party to benami transaction and requested that proceeding may be dropped/cancelled.

In his reply dated 29.04.2018 to the show cause notice Shri Uttam Kumar Saha has deviated completely from his earlier statements. He has stated that the cash amount did not belong to SATSANG, but was collected during utsav or festival by himself and his friends in their personal capacity. He and his friends were carrying the cash to another place to do some business or religious activity. He stated that the same was evident from the ticket of Rajdhani Express which never went to Deoghar or any nearby railway station. He however, failed to enclose any copy of the alleged ticket. He stated that he had given his earlier statements under mental stress. He had become nervous and had “steered” Shri Narayan Das and Shri Nishith Ranjan Bhattacharjee. He reiterated that Sections 2(9)(C) & 2(9)(D) were not applicable since he had accepted that the seized cash was income earned by him during utsav or festival during F.Y. 201718 and it wholly and exclusively belonged to him.

Shri Narayan Das and Shri Nishith Ranjan Bhattacharjee in their replies dated 29/04/2018 issued identical statements. They replied that the earlier statement was given in a stressful situation, in consultation and guidance with Shri Uttam Kumar Saha and the facts were not correctly disclosed. They both stated that they were not aware of the owner of such cash and were not aware whether the amount belonged to Shri Uttam Kumar Saha, SATSANG or any other person.

From the replies received, it is seen that only SATSANG has maintained a uniform stand that the cash amount did not belong to the society. Shri Uttam Kumar Saha, Shri Narayan Das and Shri Nishith

Ranjan Bhattacharjee have deviated completely from their earlier stand. Shri Uttam Kumar Saha is now stating that the said amount belonged to him, while Shri Narayan Das and Shri Nishith Ranjan Bhattacharjee are now stating that they are not aware of the owner of the said amount.

The replies given by Shri Uttam Kumar Saha, Shri Narayan Das and Shri Nishith Ranjan Bhattacharjee are not tenable in view of the facts as detailed below:

(i)

The statements of all three individuals were recorded after showing them the text of Sections 181 & 177 of the Indian Penal Code, 1860 and they all confirmed having seen and understood the above provisions and reiterated that their statements were truthful.

(ii)

The statements of Shri Uttam Kumar Saha & Shri Nishith Ranjan Bhattacharjee were recorded again on 21-02-2018 by the Deputy Director of Income Tax (Inv.), Unit-2 (2), Guwahati. They were shown the statement dated 19/02/2018 of Shri Shekhar Sarkar, Accountant of SATSANG office, Kolkata, which had denied that the money belonged to SATSANG. Despite this, they both reiterated that the money belonged to SATSANG.

(iii)

During the statements recorded on 21-02-2018, they submitted the following documents to substantiate that the amount in fact belonged to SATSANG:

(a)

A certificate from the Branch Manager, SBI, RMS Chowmuhani Branch stating that the maximum limit for cash deposit at non-Home branch in case of Power Jyoti Current Account like A/c No. 31478951316 (belonging to SATSANG) is Rs. 2,00,000/- per day.

(b)

A declaration dated 28/12/2017 on the letter head of Satsang Vihar, Agartala signed by Shri Nishith Ranjan Bhattacharjee, Shri Narayan Das and one Shri Jahar Lal Debnath (SPR) stating that they were the members of Administrative Committee of “TRIPURA RAJYIK UTSAV” held on 24 December, 2017. They had counted the “PRANAMIS” by disciples, which were of different denominations. These were subsequently converted to notes of Rs 2000 and Rs.500/- from various shops/business points of surrounding market area of Agartala. The total amount was sent through Shri Uttam Kumar Saha “escorted by other some disciples on 01.01.2018 by RAJDHANI Express from Agartala station to deposit directly cash to philanthropy office at Satsang Deoghar”. The declaration detailed the amounts collected from various donation boxes as well as the description of the notes totaling Rs. 70 Lakhs that were being sent. It may be noted here that the declaration was dated 28/12/2017, which was prior to the seizure of the said cash at Guwahati Railway station, which was on 02/01/2018.

(c)

Copies of various letters dated 14.12.2017 issued by the District Magistrate & Collector, West Tripura District, Agartala to various authorities regarding the said festival at Agartala on 24th December, 2017. (Copies of the letters were marked to Shri Nishith Ranjan Bhattacharjee).

(iv)

To quote the reply dated 29/04/2018 of Shri Uttam Kumar Saha, “I was carrying such cash with my friends to other place with intention to do some business or religious activity”. So, even as on 29.04.2018, he was not sure,

(a)

where exactly he was going with the said cash amount of Rs.70 lakhs and,

(b)

whether he was intending to do business or religious activity with the said cash. This is quite absurd.

(v)

It is also mysterious how Shri Nishith Ranjan Bhattacharjee and Shri Narayan Das could be so readily “steered” by Shri Uttam Kumar Saha as had been stated by Shri Uttam Kumar Saha in his reply dated 29.04.18 at the time of cash seizure when the matter involved was a serious one and their own reputation and the reputation of SATSANG could be at stake. They had nothing to gain by corroborating the statement of Shri Uttam Kumar Saha.

From the facts stated above and the various documents submitted by Shri Uttam Kumar Saha and Shri Nishith Ranjan Bhattacharjee on 21.02.2018 before the Deputy Director of Income Tax (Inv.), Unit 2(2), Guwahati, it is clear that they had tried their best to establish that the amount in fact belonged to SATSANG. There was a sufficient time gap between the first and second statements of Shri Uttam Kumar Saha and Shri Nishith Ranjan Bhattacharjee. Both individuals had enough time to think about the statement given earlier and to consider correcting any erroneous fact stated earlier, in their next statement. They were certainly not under any mental stress while giving their second statements. However, it is seen that both chose to stick to their earlier statement and even submitted details and documents to establish the same. The decision to change their stand was clearly made as an afterthought when the benami angle crept in. Moreover, while Shri Uttam Kumar Saha and Shri Nishith Ranjan Bhattacharjee had submitted many documents to substantiate that the money belonged to SATSANG, they have furnished no evidence whatever in support of their altered stand. The replies dated 29.04.18 given by Shri Uttam Kumar Saha, Shri Narayan Das and Shri Nishith Ranjan Bhattacharjee are vague, without any logic and given with the only objective of avoiding proceedings under the Prohibition of Benami Property Transactions Act, 1988.

To sum up the facts:

•

Shri Uttam Kumar Saha. Shri Narayan Das and Shri Nishith Ranjan Bhattacharjee were desperately trying to prove that the cash belonged to SATSANG when the cash was seized.

•

They submitted all available documents to prove the same.

•

They stuck to their stand even when confronted with the denial statement of Shri Shekhar Sarkar Accountant of SATSANG and Shri Kartik Chandra Sarkar, Secretary, SATSANG.

•

They dramatically changed their stand when proceedings under the PBPT Act were started.

•

Shri Uttam Kumar Saha was not sure, even when submitting his reply on 29.04.2018 whether the money belonged to him and his friends or him alone. He also did not know whether he was going to do business, or religious activity with the money. This is quite absurd.

•

Shri Nishith Ranjan Bhattacharjee was under no compulsion to bring the name of SATSANG into picture at the time of cash seizure. Yet, he did so and even submitted documents to prove it, merely to corroborate the statement of Shri Uttam Kumar Saha.

•

If SATSANG had no involvement with the money, the denial of knowledge about the cash which has been issued by Nishith Ranjan Bhattacharjee and Narayan Das on 29.04.2018 could have come much earlier, saving themselves and SATSANG so much trouble.

•

It is absurd that Nishith Ranjan Bhattacharjee and Narayan Das took such pains only to save Uttam Kumar Saha and were so easily influenced by him putting their own safety at stake.

Considering the above facts, it is clear that no credence can be given to the altered stand of Shri Uttam Kumar Saha, who is now claiming ownership of the said amount of Rs.70 Lakhs merely to avoid any proceedings under the Prohibition of Benami Property Transactions Act, 1988. Thus, it is evident that the entire cash amount of Rs.70,00,000/-falls under ‘benami properties’ within the meaning of section 2(9)(C) of the Prohibition of Benami Property Transaction Act, 1988, which defines “a transaction or an arrangement in respect of a property where the owner of property is not aware of, or, denies knowledge of, such ownership” as a benami transaction, if SATSANG is considered owner of property, as had been claimed earlier by Shri Uttam Kumar Saha, Shri Narayan Das and Shri Nishith Ranjan Bhattacharjee and SATSANG (Trust) had denied the ownership. The transaction also falls within meaning of section 2(9)(D) of the Prohibition of Benami property Transaction Act, 1988 which defines “a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious”, as benami transaction. The earlier claim of Uttam Kumar Saha, Shri Narayan Das, & Shri Nishith Ranjan Bhattacharjee that cash belonged to SATSANG had already been denied repeatedly by SATSANG. This effectively meant that person providing the consideration was not traceable or was fictitious.

It was also clear that cash amounting to Rs. 70,00,000/- seized by Income-tax Department, which was being carried by Uttam Saha, was nothing but Benami Property, and Shri Uttam Kumar Saha, Shri Narayan Das, Shri Nishith Ranjan Bhattacharjee and SATSANG were parties to benami transaction within the meaning of section 2 of the Prohibition of Benami Property Transaction Act, 1988.

In view of the above facts, IO the DCIT (BP), Guwahati, Initiating Officer under PBPT Act provisionally attached u/s 24 (4) (b) (i) of the Prohibition of Benami Property Transactions Act, 1988, the property the particulars of which are mentioned below, until such time as the order u/s 26(3) of the Prohibition of Benami Property Transactions Act, 1988 is passed by the Adjudicating Authority:

(i)

Cash amounting Rs.70,00,000/- in the above case deposited in the PD A/c of the Pr. Commissioner of Income Tax, Shillong.

The PAO was issued with the approval of Addl. CIT (BP), Guwahati, the Approving Authority on 20.06.2018.

Thereafter Deputy Commissioner of Income Tax and Initiating Officer (BPU) Guwahati send Reference No. 907/2018 to the Adjudicating Authority on the ground that Sh. Uttam Kumar Saha of Tripura & Ors. are benamidar with respect to seized cash of Rs.70,00,000/- deposited in PD account of Pr. DCIT Shillong and the beneficial owner is not identifiable.

On receipt of Reference, the Adjudicating Authority after perusal of the same issued notice to the Benamidar (herein appellants) asking them to furnish particulars, documents, evidences as may be considered necessary to explain why the said properties should not be hold as benami property under the provisions of PBPT Act, 1988. After receiving the replies and hearing the rival submissions the Adjudicating Authority PBPT, confirmed the attachment of Rs. 70,00,000/-, as benami property.

Aggrieved by the said order appellants filed the present joint appeal. It is pertinent to mention here that appellant no.2 Shri Nishith Ranjan Bhattacharjee expired during the present proceedings i.e. 30.05.2022. However, his LRs have not moved any application for substitution to press the present appeal, and even otherwise, Ld. Counsel for the deceased appellant no.2 pointed out that property of the appellant no.2 is not attached by the Department and share in Rs. 70 Lacs is not claimed by the LRs. Accordingly, proceedings qua appellant no. 2 stand abated vide order dated 11.08.2025.

3. During the arguments, Ld. Counsel for the appellants submitted that there is nothing on record to show that the seized and attached cash of Rs. 70,00,000/- is benami property, as appellant has specifically claimed the ownership of the said amount. He stressed that Section 29 Clause (C) or Clause (D) are not attracted in any manner. In fact, the entire proceedings are illegal because these two sections are simultaneously invoked, thereby making the SCN u/s 24 vague, as it does not specify the specific charge under which the impugned property is alleged to be benami and alleged to be held by four benamidars.

He stated that initiating officer has initiated the proceedings under Section 24 of PBPT Act, 1988 without mandatory statutory approval in terms of Section 23 of the PBPT Act, 1988 and therefore, the entire proceedings initiated under Section 24 of the PBPT Act, 1988 are illegal and without jurisdiction.

He argued that the impugned cash was collected from various devotees through box pranamis, attending the religious Utsav held on 24.12.2017 on the occasion of 130^th birth anniversary of Sree Sree Thakur Anukulchandra which is an admitted and undisputed event supported with the documentary evidence, which duly explain the source of impugned cash, and hence, the same is not a case where the source of the cash was not traceable, and thus, the provisions of sec 2(9)(D) of the PBPT Act does not apply.

He states that since the impugned cash comprising of box donations was held by appellant no.1 in the fiduciary capacity in trust. He cannot be held as benamidar and the same falls under the exception in terms of clause (ii) to Section 2(9) (A) of the PBPT Act.

He contended that Appellant 2 & 3 were wrongly implicated into the benami proceedings u/s 24 of the PBPT Act, as the impugned cash was recovered and seized from the possession of Appellant no.1 only. Thus, Appellant 2 & 3 are liable to be discharged u/s 26(6) of the Act.

He stressed that “cash” cannot be treated as property and that there was no transaction or arrangement and consideration against the impugned property being “cash”.

He further argued that the reasons to believe recorded by the initiating officer were arbitrary and without any tangible material holding as much as four different benamidars with respect to the same alleged benami property being cash of Rs. 70 lakhs already seized by the Income Tax Authorities.

He pointed out that no independent inquiry or investigation was conducted by the Respondent under the PBPT Act and it had merely borrowed the opinion of DDIT (Inv) and issued the SCN without any jurisdiction and against the authority and mandate as per provisions of the PBPT Act.

4. On the other hand, Ld. Counsel for the respondent controverted the contention of Ld. Counsel for the appellant on each and every issue, which will be reflected in our discussion in the following para.

5. On the basis of rival submissions, following issues emerge for decision:

(i)

Whether cash is not property?

(ii)

Whether Appellants 2 & 3 cannot be proceeded against under PBPT since no cash was recovered and seized from them?

(iii)

Whether Section 2(9)(C) and 2(9)(D) cannot be invoked in the present case, since the appellant no.1 has declared himself as the owner of the seized cash?

(iv)

Whether the provisions of PBPT Act are not attracted, seeing the fact that no independent investigation was carried out by the authority under PBPT Act?

(v)

Whether the mandatory statutory approval of the authority u/s 23 of the PBPT Act is compulsory to initiate proceedings u/s 24 of the PBPT Act?

(vi)

Whether it is mandatory on the part of the IO to supply the reasons to believe before issuing the Show Cause Notice u/s 24 (1) of the Act? If yes, whether failure to do so vitiates the entire proceedings?

Issue No. 1: Whether cash is not property?

6. Coming to issue no (i), we are of the view that property means any movable or immovable asset. The properties can also be divided as corporeal and incorporeal/ tangible or intangible. Cash (physical currency) is often considered as tangible movable property due to its physical nature. Bank deposits, electronic funds, investments or crypto-currencies are covered in the category of intangible property, because they represent value without physical form. In financial accounting, an asset is any resource owned or controlled by a business, or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset). Also, it is pertinent to note that the legislative intent in respect of the PBPT Act is that the black money be curbed. Regarding the same, a synopsis of debates held in Lok Sabha dated 27^th July 2016, the Extracts from the speech of Hon’ble FM are:

“The principal object behind this Act is to discourage benami transactions. It is predominantly an anti-black money measure that any transaction which is benami is illegal and the property is liable to confiscated.”

Thus, unaccounted cash or cash without ownership cannot go scot-free from the purview of the PBPT Act and the same will be covered under the Act. The recovered cash in the present case is thus covered under the nature of movable properties 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, being a pure liquid asset and same is a movable property because as per the definition of “property” under Section 2(26) of the PBPT Act,

“Property means assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property”.

Hence, cash is a property. The definition of property under the benami act is very wide and also includes cash. Hence such a transaction would also be termed as a benami transaction. Issue no.1 is accordingly answered in affirmative.

Issue No.2: Whether Appellants 2 & 3 cannot be proceeded against under PBPT since no cash was recovered and seized from them?

7. Coming to issue no. (ii), the appellants 2 & 3 have not claimed any ownership over the cash and the said cash was not recovered and seized from them by the authorities, but from the appellant no.1 and they were merely accompanying him. Hence, they cannot be proceeded against as the benamidars, or as the beneficial owner, per the provisions of the PBPT. This issue is thereby decided in favour of the Appellants 2& 3 and against the Respondent.

Issue No. 3: Whether Section 2(9)(C) and 2(9)(D) cannot be invoked in the present case, since the appellant no.1 has declared himself as the owner of the seized cash?

8. Initially, at the time of seizure, all the three appellants have taken the plea that the seized amount belongs to donation of SATSANG. To prove the stance, they even presented many documents to substantiate that the money belonged to SATSANG. However, there was no authorization letter or books of any account or any other document with the appellant no.1, issued from SATSANG, to prove his stance that the cash amounting to Rs. 70 Lakhs found with him belonged to SATSANG. In fact, as per the statement of Shri Shekhar Sarkar, the accountant of the SATSANG, it is evident that the seized cash did not belong to SATSANG and he did not even know the appellants, instead he stated that there was no procedure for collecting cash, rather receipts of cash were filled by donors, which were deposited in the bank in the name of each devotee. Moreover, as per the statement of Shri Narayan Das, the money of Rs. 70 Lakhs was actually holy pranami in various denominations and even coins, which was later-on exchanged in local market, of which no details were given by him. Further, as per his statement, he did not even maintain any books of account at Tripura. Thus, the entire story was concocted by the appellant no.1 to save the cash from being attached. Hence, it is a case that would fall under the Section 2(9)(C) of the PBPT, since the SATSANG denied the ownership. It will also attract the provisions of section 2(9)(D), since the person taking the ownership of the seized cash was not traceable or is fictitious, if the version of SATSANG is taken as true & correct.

But later-on, all the three appellants retracted from their earlier stance and stated that the cash belonged to appellant no.1. However, no credence can be given to the altered stand of Shri Uttam Kumar Saha, who is now claiming the ownership of the said amount of Rs. 70,00,000/-merely to avoid any proceedings under the PBPT Act, because, there was no instance of any coercion being exercised on the appellants to depose their earlier statements and it was merely a way-out afterthought strategy by them to avoid any action under PBPT, in addition to stake claim over the seized amount. In fact, initially Shri Uttam Kumar Saha and Shri Nishith Ranjan Bhattacharjee had submitted that the money belonged to SATSANG, but when SATSANG denied ownership, they took a U-turn to claim ownership of appellant no.1, without tendering any evidence whatsoever in support of their altered stand. Further, Shri Uttam Kumar Saha took the stand that the money was collected by him and his friends in their personal capacity and the same was being carried to another place to do some business or religious activity, but he failed to explain the exact place where it was being transported, nor did he explain his intention whether he intended to do business or some religious activity. Also, he was not even able to clearly establish as to whether the said cash belonged to him and his friends, or him alone. They changed their stand every time. Hence, the replies dated 29.04.2018 given by Shri Uttam Kumar Saha, Shri Narayan Das and Shri Nishith Ranjan Bhattacharjee are vague, without any logic and given with the only objective of avoiding proceedings under the Prohibition of Benami Property Transactions Act, 1988.

Thus, the entire cash amount of Rs. 70 lakhs fall within the definition of ‘benami property’, which defines “a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership” as a benami transaction, if SATSANG is considered the owner of property as had been claimed earlier by Shri Uttam Kumar Saha, Shri Naryan Das and Shri Nishith Ranjan Bhattacharjee and SATSANG had denied the ownership of the same. Thus, we are of the view that appellant no.1 is rightly proceeded against as a benamidar under section 2(9)(C) and 2(9)(D) of the PBPT and there is no illegality by attracting both the provisions, being equally applicable.

Hence, this issue is decided against the appellant no.1 and in favour of the respondent.

Issue No. 5: Whether the mandatory statutory approval of the authority u/s 23 of the PBPT Act is compulsory to initiate proceedings u/s 24 of the PBPT Act?

9. Coming to the issue no. 5, section 23 is reproduced hereby:

“23. Power of authority to conduct inquiry, etc.—The Initiating Officer, after obtaining prior approval of the Approving Authority, shall have power to conduct or cause to be conducted any inquiry or investigation in respect of any person, place, property, assets, documents, books of account or other documents, in respect of any other relevant matters under this Act.

[Explanation.- For the removal of doubts, it is hereby declared that nothing contained in this Section shall apply and shall be deemed to have ever applied where a notice under Sub Section (1) of Section 24 has been issued by the Initiating Officer.]”

We are of the view that as per the Explanation of Section 23, which was added in the year 2018, when a show cause notice has been already issued, then the requirement of prior approval of the Approving Authority does not arise and the same is effective retrospectively since the year 2016. In the present case, the SCN has already been issued, and thus, the contention of the appellant regarding failure of proceedings in absence of any prior approval does not stand good. Hence, this issue stands decided against the appellant and in favour of the respondent.

Issue No. 6: Whether it is mandatory on the part of the IO to supply the reasons to believe before issuing the Show Cause Notice u/s 24 (1) of the Act? If yes, whether failure to do so vitiates the entire proceedings?

Issue No. 4: Whether the provisions of PBPT Act are not attracted, seeing the fact that no independent investigation was carried out by the authority under PBPT Act?

10. Upon perusal of the SCN, it is evident that the “reasons to believe” are clearly cited by the Initiating Officer and whether or not they are satisfactory is not the arena of this tribunal to look into. However, it is evident from all the documents on the record that the present case falls well within the ambit of PBPT and merely reiteration of the DCIT’s observations does not vitiate the proceedings, as the purpose of reason to believe is to provide the appellant with the case made against him, for him to present a valid reply and defence. Section 24(1) of the PBPT contemplates a show-cause notice and the very expression “show cause” implicitly contains a right of the noticee to give a reply in writing disclosing his version of the matter. In the present case, the petitioner got such opportunity and he even filed replies to the said show-cause notice. Thus, it cannot be said that the petitioner was deprived of such opportunity.

Regarding the contention of independent investigation needed to be carried out by the IO, we are of the view that if there is enough material already on record in his possession to form a reason to believe, he may proceed to issue show cause notice without carrying out an independent investigation regarding the same, as is evident from the language of Section 2(1). Whether to carry out an inquiry or not is the prerogative or discretion of the IO, since he has to form a reason to believe, it is not a compulsion or mandate in every case to do the inquiry. In the present case, the documents on record are sufficient for the IO to proceed with the PBPT proceedings against the appellants and thus, the fact of not carrying out independent investigation will not vitiate the proceedings carried out against the appellants. Since the impugned cash was already being transferred to some other place and was caught in middle, the chances of it being disposed of by the appellants were quite high and that called for taking steps for immediate attachment of the same, hence, the IO had relevant materials, statements of the appellants and the SATSANG, to form reason to believe in the present matter and any independent inquiry not been carried out by him, does not call for any illegality.

Hence, issues 4 & 6 are also decided against the appellants and in favour of the respondent.

11. In sequel to our finding on all the issues as mentioned in para no.6 to 10 above, the present appeal is hereby dismissed against the appellant no. 1, Shri Uttam Kumar Saha, however, the relief sought by the appellants 2 & 3, namely, Shri Nishit Ranjan Bhattacharjee and Shri Narayan Das, is allowed, as they are neither the benamidars, nor they are claiming the ownership of the recovered and seized cash. Accordingly, order dated 26.03.2019, is hereby upheld only with respect to the appellant no.1, Shri Uttam Kumar Saha.