Provisional Attachment Under PBPT Act Extends Only to Actual Benami Properties, Not to Abettor’s Assets

ORDER

1. This Order disposes of the Appeal No. FPA-PBPT-761/AHD/2019 filed by Shri Shrenik Shah against the Order dated 30.05.2019 (Impugned Order) passed by the Ld. Adjudicating Authority under Section 26 (3) of the Prohibition of Benami Property Transaction Act, 1988 (PBPTA), New Delhi in Reference No. R-819/2018, whereby the Ld. Adjudicating Authority (AA) confirmed the Provisional Attachment Order dated 26.04.2018 (PAO) passed by the Initiating Officer, BPU, Ahmedabad under Section 24 (4) of PBPTA.

2. Ld. Counsel for the Appellant submitted that Smt. Shital Paresh Soni, Prop. of Shital Jewellers received RTGS of Rs. 59,00,000 through M/s The Visa Hub, Prop. Sameer Hussain Abbass Mithawala. Ld. Counsel further submitted that the statements of Shri Shrenik Shah and Shri Jigishbhai Shah Prop. of Parin Jewellers were recorded on oath on 14.08.2017 in which they stated that they did not transact any business with Shital Jewellers and Shivam Jewellers during the demonetization period (8.11.2017 to 31.12.2017). However, the statement of Shri Paresh Soni, Prop. M/s Shivam Jewellers was recorded on 18.08.2017 in which he stated that he received RTGS in lieu of delivery of gold to Shri Shrenikbhai. Shri Zahir Abbas K Mithawala in his statement recorded on 22.08.2017 stated that he received Rs 8-10 crores (approximately) in cash in Old High Denomination (OHD) notes from Faim Khan alias Shaileshbhai along with the paper slip on which the details of bank accounts were mentioned and after depositing the cash in benami accounts, the same was transferred through RTGS/NEFT to the bank accounts as mentioned in the paper slip. Faim Abdul Salim Khan alias Shaileshbhai in his statement recorded on 22.08.2017 stated that cash of Rs. 10 crores along with paper slip on which details of bank accounts were mentioned was received from Shri Shrenik Shah and the same cash was handed over to Zahir K Mithawala. The statement of Shri Shrenik Shah was recorded on oath on 01.09.2017 and cross examination was conducted among Shri Shrenik Shah, Faim Khan alias Shaileshbhai, and Paresh D Soni where Shri Shrenik Shah denied. On further verification it was found that Shri Sameer Hussain Abbas Mithawala Prop. of The Visa Hub was involved in money laundering activities with the help of middlemen as well as entry operators who were facilitating the fraudulent activities of converting unaccounted OHD notes through banking channel. On analysis of the bank account details of the firm, it was found that an amount of Rs. 59,00,000 was transferred from the account of M/s The Visa Hub to Shital Jewellers. Statements of Aftab Kazi, the entry operator was recorded on oath on 21.12.2016, 24.12.2016 and 06.01.2017, whereas the statement of Zahir Mithawala, another entry operator was recorded on 26.12.2016 and 06.01.2017. Both of them had stated on oath that they had received cash in old high denomination notes and the benami bank accounts were utilized for depositing the demonetized currency.

3. Ld. Counsel for the Appellant stated that the final show cause notice was issued to Sameer Hussain Abbas Mithawala (Prop. The Visa Hub) asking why he should not be treated as the Benamidar in respect of cash aggregating Rs. 59,00,000/- deposited in the bank account No. 915020049320870 of M/s The Visa Hub and subsequently transferred to M/s Shital Jewellers. In response to this, he did not submit any reply. Therefore, it became clear that he did not want to say anything. A search and survey action was carried out at the residence as well as the business premises of Smt. Shital Paresh Soni, on 24.01.2017. The statement of Smt. Shital Paresh Soni was recorded at her residence. When asked about the nature of business of her concern and account related details, she replied that her business was handled by her husband Shri Paresh Dwarkadas Soni. The statement of Shri Paresh Dwarkadas Soni was also recorded under Section 132 (4) of the IT Act on 24.01.2017. During the course of recording of his statement, he was shown the statements of Zahir Mithawala and Aftab Kazi wherein they had stated that they operate different benami accounts (bogus concerns) in which cash was deposited as received from a middleman named Shaileshbhai and as per Shailesh’s instructions the funds were transferred to the bank account of M/s Shital Jewellers. Further, the entry operators had confirmed that in these transactions there was no business activity involved. Shri Paresh D. Soni was asked to verify the same and provide an explanation. In response, Shri Paresh Soni stated that he did not know Zahir Mithawala, Aftab Kazi or Shaileshbhai and the money remmitted from the bank account of Shital Jewellers was against the sale of gold bullion to various other jewellers as Parin Jewellers, Atul Ornament/Snaihchain Pvt. Ltd, Joy Pintu and Man Ornament. All these firms/ concerns belong to Shri Shrenik Shah and his close family members. Ld. Counsel for the Appellant submitted that Shri Paresh Dwarkadas Soni in his case and in his wife’s case (as the business affairs of M/s Shital Jewellers were controlled by Shri Paresh Dwarkadas Soni) and Shri Faim Abdul Khan alias Shaileshbhai appeared on 01.09.2017 for cross examination with Shri Shrenik Shah. During the proceedings of cross examination Shri Shrenik Shah said that he did not carry out any business transaction with Paresh D Soni during the demonetization period. He also said that he had good relations with Paresh D Soni. Statement under Section 132 (4) dated 26.01.2017 and statement under Section 19 (1) of PBPT Act dated 18.08.2017 were perused by Shrenik Shah. Shri Shrenik Shah did not agree with the statement of Paresh D Soni wherein he stated that the delivery of gold was taken by Shri Shrenik Shah and RTGS payment was made through third parties viz SUKUN Enterprise, Aryan Corparation, The Visa Hub, Laston Enterprise, Metro Enterprise, Jolly Trading, Krystal Enterprise and Gujarat Enterprise, by Shri Shrenik Shah himself.

4. Ld. Counsel for the Appellant pleaded that Provisional Attachment Order under Section 24 (4) (b) (i) of the PBPT Act was passed for the amount of Rs. 59,00,000 to provisionally attach the properties in possession of Shri Sameer Hussain Abbas Mithawala till the passing of the order by the Adjudicating Authority under Section 26 (3) of the Prohibition of Benami Property Transactions Act, 1988. Hence the bank Account vide No.915020049320870 maintained with Axis Bank, Memnagar Branch, Ahmedabad in the name of M/s The Visa Hub was attached to the extent of Rs. 59,00,000 in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000. The Provisional Attachment Order under Section 24 (4) (b) (i) of the PBPT Act was also passed for the amount of Rs. 59,00,000 to provisionally attach the following properties in possession of Shri Shrenik Shah till the passing of the order by the Adjudicating Authority under Section 26(3) of the Prohibition of Benami Property Transactions Act, 1988. Ld. Counsel stated that these properties were already provisionally attached in 11 other benami cases where Sh. Shrenik Shah was held the beneficial owner:

(1) Bank Account vide No.805008001001405, 805008306000282 and 805008101000745 maintained with Sarvodaya Co. Op. Commercial Bank, Paldi Branch, Vraj Plaza, Bhatta Road, Paldi, Ahmedabad was attached in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(2) Bank Account vide No.0317201012869, 0317101029945 and 0317101028682 maintained with Canara Bank, Bhadra (Main) Branch, Krishna House, Opp. Advance Cinema, Ahmedabad was attached in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(3) Bank Account vide No.062163700000433 maintained with Yes Bank, Shop No.1, Gangaram Chamber, Relief Road, Ghee Katha Cross Road, Ahmedabad was attached in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(4) Immovable property (joint holder) situated at Shop No.4, Ground Floor, 24 Carat Building, Changispur, Ahmedabad vide Registration No. 8927/2016 (dated 23.12.2016) valued approximately Rs.11,00,000/- was attached in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(5) Immovable property (joint holder) situated at Bunglow No.29, Prernatirth Bunglows, T.P.No.4, F.P. No. 142 & 157, Survey No.72/3, 73/1 and 76, Ahmedabad vide Registration No. 7752/2017 (dated 06.09.2017) valued approximately Rs. 1,00,00,000/- was attached in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving of Rs. 59,00,000.

(6) CDSL Account vide No.1301520000085255 investment in Birla Sunlife Mutual Fund (Folio No.1030419785) and Canara Robacco Equity Folio No.1047110914 was attached in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(7) Bank Account vide No.000761900002881 maintained with Yes Bank, 102/103, C. G. Centre, C. G. Road, Ahmedabad was attached in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(8) Policies with No.139595621, 139625652, 139671584, 13902621, 139848631, 155950892 155952857, 155995136, 156001697, 156017816, and 316597478 maintained with Bajaj Allianz Life Insurance Corporation Ltd. 4th Floor, Turquoise Building, Nr. Parimal Garden, Panchwati, Ahmedabad was attached to the extent of premium paid after 28.11.2016 in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(9) Policy No.833331304 maintained with Life Insurance Corporation of India, Ahmedabad City, Branch Jeevan Prakash, 5th Floor, Tilak Marg, Ahmedabad was attached to the extent of premium paid after 28.11.2016 in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(10) Policy No.832091931 maintained with Life Insurance Corporation of India, Ahmedabad City, Branch Jeevan Prakash, 5th Floor, Tilak Marg. Ahmedabad was attached to the extent of premium paid after 28.11.2016 in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(11) Policy No.51842245 (Client Id 88945060) maintained with Reliance Nippon Life Insurance Co., 1″ -Block, 1 Floor, Dhirubhai Ambhani Knowledge City, New Mumbai, Maharashtra was attached to the extent of premium paid after 28.11.2016 in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(12) Policy No.851484067 maintained with Life Insurance Corporation of India, Naranpura, GHB Complex, Nr.Ankur Bus Stand Ahmedabad was attached to the extent of premium paid after 28.11.2016 in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

(13) Policy No.003270115 (Client Id – 4090695011) maintained with Canara HSBC OBC Life Insurance Company Ltd. 2nd Floor, Orchid Business Park, Sector-48, Sona Road, Gurugram, Haryana was attached to the extent of premium paid after 28.11.2016 in the case of Shri Shrenik Shah (Beneficial Owner) and Sameer Hussain Abbas Mithawala Prop. of M/s The Visa Hub (Benamidar) as against benami transaction involving Rs. 59,00,000.

5. Ld. Counsel for the Appellant stated that in the course of proceedings before the Ld. AA the Initiating Officer moved an application under Sections 26 (6) and 26 (5) requesting to treat Mrs. Shital Paresh Soni Prop. of M/s Shital Jewellers as beneficial owner of the benami property and Sh. Shrenik Shah as abettor in these transactions. After taking into the account the material brought on record by the Initiating Officer, Ld. AA issued statutory notices for inclusion of Smt. Shital Paresh Soni Prop. of M/s Shital Jewellers, as Beneficial Owner. Ld. AA on considering the material on record and facts and circumstances of the case considered that if the Initiating Officer has erred in appreciating any of the aspects i.e., the benamidar, benami assets or the beneficial owner, it can strike out the name of the person improperly joined and when a person improperly joined has been struck out, the right person has to be brought in and hence the mechanisms under the Act, as provided in Section 26 (6) empowers the Ld. AA to add a party or to strike out the name of any party. Ld. Counsel stated that the Ld. AA observed the following:

“Shri Shrenik, is the main person behind the whole transactions in question. It is crystal clear that Shri Shrenik Shah handed over his unaccounted cash to Mr. Faim Khan alias Shaileshbhai who in turn handed over the said cash to Zahir K Mithawala who in turn handed over the said cash to Aftab H Kazi. In turn Aftab H Kazi got these cash deposited in the account of M/s. The Visa Hub. It is important to mention here that the bills for sale of goods were issued in the name of M/s. The Visa Hub in whose account cash was deposited. Later this amount was transferred through RTGS to M/s Shital Jewellers who in turn delivered the gold to Shri Shrenik Shah. Thus, M/s. The Visa Hub had lent its name for carrying out the transactions i.e. Benami Cash was deposited in the bank account of M/s The Visa Hub and Benami gold was held in the name of M/s The Visa Hub. M/s. The Visa Hub is a benamidar and the asset under reference is actually owned by Shri Shrenik Shah, who is the abettor.”

6. Ld. Counsel for the Appellant further submitted that the Ld. AA has gone on to make the following observations:

“i. M/s Shital Jewellers accepted the cash from one account and delivered gold to other. Initially in her written submission, Smt. Shital Paresh Soni stated that the transactions were purely a business transactions and delivery of the gold was given to the proprietor of the firm M/s. The Visa Hub who had sent RTGS to her. However, on detailed investigation and on recording of statement under oath, she/her representative changed her stand and said that the delivery of gold had been taken by Shri Shrenik Shah and booking was also done by Shri Shrenik Shah, meaning thereby that the money was sent from M/s. The Visa Hub’s account to jeweller and delivery was given to Shri Shrenik Shah.

ii. No FIR/complaint against Shri Shrenik Shah was lodged by jeweller which shows that the jeweller was also a part of the conspiracy. The jeweller was fully aware that the RTGS was received had no connection with M/s. The Visa Hub. He should have taken legal course of action. Till now he has not taken any action.

In light of the above facts and after considering the provisions of The Prohibition of Benami Property Transactions Act, 1988 it can be construed that the transaction pertaining to the cash worth Rs. 59,00,000 deposited in the account of Sameer Hussain Abbas Mithawala and later transferred to the account of Smt. Shital Paresh Soni Prop. of Shital jewellers is a benami transaction.

In this case, cash of Rs. 59,00,000 deposited in the bank account of benamidar in the form of OHD notes during demonetization period. This transaction has been held as Benami transaction as per Section 2(9) of the PBPT Act, 1988.

As discussed above, the arrangement is held as a Benami transaction under the provisions of PBPT Act. In pursuance to this, the properties identified till now have been provisionally attached in this case.”

7. Ld. Counsel for the Appellant cited the Judgment dated 10.03.2025 of this Tribunal in 30 Appeals bearing similar facts. Of these 30 Appeals, 10 Appeals bearing Nos. FPA-PBPT-235-242/AHD/2019, FPA-PBPT-226/AHD/2019 & FPA-PBPT-229/AHD/2019 relate to Shri Shrenik Shah, who like the present case was initially treated as Beneficial Owner, but subsequently the Initiating Officer had found him to be the abettor. In this regard, he cited the following paragraphs of the Judgment (supra):

“So far as the factual issue involved in the present appeals are concerned, we have elaborately referred to it while narrating brief facts of the case. The appellant, beneficial owner, namely M/s Parker Bullion Pvt. Ltd, M/s Gayatri Jewellers, M/s Shreeji enterprises, M/s Patidar Bullion Pvt. Ltd., M/s M.S. Jewellers, Kundan Trading Company, M/s Shital Jewellers and M/s Shivam Jewellers has submitted that there was no benami transaction at their instance. It is submitted that not only books of accounts but stock register was produced to show the stock of gold with the appellant Companies and in fact was delivered to the purchaser who are now taken to be benamidars. It is with further statement that even the entry operators did not disclose the name of the appellant Companies named above for providing cash.

We have scanned the matter carefully to analyzed the issue and find that that appellant bullion Companies namely M/s Parker Bullion Pvt. Ltd, M/s Gayatri Jewellers, M/s Shreeji enterprises, M/s Patidar Bullion Pvt. Ltd., M/s M.S. Jewellers, Kundan Trading Company, M/s Shital Jewellers and M/s Shivam Jewellers had created back dated entries in the stock register and other documents which become clear from the FSL digital device report and schedule I to V. In fact, the bullion companies were not having matching stock of gold to pass it on to those firms who had transferred the amount through RTGS. The reference of audio recording to show the transaction has been given which has also been analyzed and mere recording of the transaction would not mean that actual transaction has taken. What is required is the actual happening and not just recording of happening to take place. It is not that the documents produced by the appellant bullion companies were casually ignored rather deep routed investigation was made. The alleged delivery of gold to the benamidars through the abettors was said to have been delivered further to one ‘Mohammad’ who has refused about delivery of gold. The respondent thus tried to reach to the complete chain to find out actual happening. It is further necessary to clarify that if the gold was purchased, the appellant bullion Company should have produced the payment towards the alleged gold but no such material was produced in a specific. The critical analysis of all the issues has been made in the order passed by the Adjudicating Authority and we don’t find any error therein to cause interference in the finding and accordingly the appeal fails and dismissed.

The argument against the attachment has been raised by the abettor. It is submitted that their property has been attached while they were not the beneficial owner or the benamidars. A reference of section 53 of the Act of 1988 has been given to show that abettors can be subjected to prosecution but there is no provision for attachment of their property. The counsel for the respondents made a contest to it. However, we find substance in the argument of the counsel for the abettors. As per the framework of the Act of 1988, what can we attached is the benami property. In the instant case, the property in the hands of abettor has not been taken to be benami property. Respondents have failed to prove that the property of the abettors is benami property as defined under the Act of 1988. In fact, the bullion Companies, namely M/s Parker Bullion Pvt. Ltd, M/s Gayatri Jewellers, M/s Shreeji enterprises, M/s Patidar Bullion Pvt. Ltd., M/s M.S. Jewellers, Kundan Trading Company, M/s Shital Jewellers and M/s Shivam Jewellers were taken to be the beneficial owner and the allegation against them was to channelize the demonetized money to convert into monetized money. The money was routed through the benamidars and ultimately reached to them as stated by the respondents themselves. There is no allegation that money came to that abettor and it remained with them.

The appeals of the abettors are thus allowed. The attachment of their properties is set aside for the reason that attached property could not be proved to be benami property however they are not excluded for their role in benami transaction with consequence of section 53 of the Act of 1988.”

Ld. Counsel therefore prayed to allow the Appeal along the same lines as the aforementioned Judgment.

8. Ld. Counsel for the Respondent while agreeing that the present case also bears similar facts as the cases disposed of by this Tribunal in its Judgment dated 10.03.2025, pointed out that the Ld. AA has ordered to continue with attachment of the properties of Shri Shrenik Shah in the present case. In this regard, he cited the following paragraphs from the Conclusion of the Impugned Order:

“Accordingly, PAO is confirmed holding the cash deposited in Bank Account No. 915020049320870 of Shri Samir Hussain Gulam Abbas Mithawala Prop M/s VISA HUBin Axis Bank as Benami Asset, Shri Samir Hussain Gulan Abbas Mithawala Prop M/s VISA HUB as Benamidar and Smt. Shital Paresh Soni Prop M/s Shital Jewellers as the Beneficial Owner of the Benami Asset with Shri Shrenik Shah (old Beneficiary owner) as the Abettor of the entire Benami transaction.

Pending attachment of the entire property that was the subject matter of the benami transaction, the provisional attachment of the properties being the bank balances, policies, immovable properties etc. made by the 10 holding D-2 i.e. Mr. Shrenik Shah as beneficial owner lying in different bank accounts in various names shall continue till the finalization of proceedings under the Act. “

Ld. Counsel therefore pleaded to dismiss the Appeal.

9. We have considered the rival submissions and the material on record. It is not disputed that Shri Shrenik Shah, the Appellant herein was initially treated as the Beneficial Owner, but was subsequently held as the Abettor. It is on record that the Initiating Officer moved the application before the Ld. AA during the adjudication proceedings for holding Smt. Shital Soni Prop. M/s Shital Jewellers as the Beneficial Owner and treat Shri Shrenik Shah as the Abettor. On perusal of the Impugned Order, it is clear that the Ld. AA after discussing the role of Shri Shrenik Shah and Smt. Shital Soni agreed with the prayer of the Initiating Officer under Section 26 (6) of the PBPTA. In this regard, the concluding paragraphs 19.3, 19.4 & 19.5 A, B & C are cited below:

“19.3 Accordingly, the new facts brought on record by the IO requesting to add Ms. Shital Soni, Prop Shital Jewellers as the beneficial owner, to strike out the name of Shrenik Shah as the beneficial owner, and to treat Shrenik Shah as the abettor having abetted the benamidar and the beneficial owner in entering into the benami transaction were accepted for consideration by this Authority and statutory notices were issued to all the parties and their detailed replies considered. The IO also provided them the requested detail/documents as per law in compliance of the directions issued to her in the open Court during the course of the proceedings. The oral arguments of the Ld. Counsels who appeared on behalf of respective defendants have also been taken into consideration by this Authority.

19.4 After careful appreciation of the facts on record including the new facts reported by the 10, we are fairly convinced that the IO has successfully concluded in the PO that the property of Rs 59,00,000/ being the demonetized high value currency notes was initially deposited post demonetization into the bank accounts of Shri Samir Hussain Gulam Abbas Mithawala Prop M/s VISA HUB, the benamidar. This property was ultimately transferred into the bank accounts of Ms Shital Soni, Prop Shital Jewellers on the false pretexts of sale of bullion. It constitutes a benomi transaction within the meaning of section of 2 (9) of The Act which is prohibited u/s 3. Shrenik Shah acted as abettor within the meaning of section 53 of The Act in facilitating these transactions

19.5 Accordingly, this Authority holds as under

10. We have no reason to disagree with the Judgment (supra) dated 10.03.2025 of this Tribunal in the connected matters. We therefore set aside the Impugned Order qua the attachment of the properties of the abettor Shri Shrenik Shah since there is no provision for attachment of the property of the abettors. Continuance of the provisional attachment of the properties of the Appellant, who was found to be abettor and not Beneficial Owner, without any specific finding that such property was Benami cannot be sustained. The PBPTA provides for attachment of the benami property in the hands of either Benamidar or Beneficial Owner, however, the Act does not provide for attachment of a property merely because it is in the hands of the abettor without it being benami. It is made clear that the Appellant abettor is not excluded from the consequences of Section 53 of the PBPTA for the role in benami transaction, even though his property could not be proved to be benami.

11. In view of the aforementioned discussions and analysis, we allow the Appeal No. FPA-PBPT-761/AHD/2019 filed by Shri Shrenik Shah. Applications pending, if any, are disposed of accordingly.