Unexplained cash qualifies as benami property under the PBPT Act, regardless of income tax filings.

By | May 27, 2026
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Unexplained cash qualifies as benami property under the PBPT Act, regardless of income tax filings.

Issues

  • Whether unexplained or unaccounted cash falls within the definition of “property” as a tangible movable asset under Section 2(26) of the Prohibition of Benami Property Transactions (PBPT) Act, 1988, and can be treated as “benami property”.

  • Whether a benami transaction strictly requires three distinct parties, or if two parties (a benamidar and a beneficial owner) are sufficient under Section 2(9)(D).

  • Whether Section 2(9)(D) can be invoked when the source of cash remains untraceable and unexplained, despite the lack of a separate investigation establishing a specific transaction or arrangement.

  • Whether filing or intending to file an Income Tax Return (ITR) offering the seized cash to tax bars the initiation of confiscation and prohibition proceedings under the PBPT Act.

Facts

  • The appellant was intercepted by the police in possession of cash amounting to approximately Rs. 50.13 lakhs.

  • The seized money was subsequently handed over to the Income-tax Department following an order by the Magistrate.

  • In an official statement and affidavit, the appellant claimed full ownership of the money, asserting that the cash was pooled from friends and relatives for a land investment.

  • The appellant failed to furnish any specific particulars, names, or documentary proof to substantiate the source of the pooled funds.

  • Due to the lack of any verifiable source, the Benami Prohibition Unit treated the seized cash as “benami property” under Section 2(9)(D) of the Act.

  • The appellant challenged this action, arguing that Section 2(9)(D) could not be applied without a detailed investigation proving a specific transaction, arrangement, or inquiry into the source.

  • The appellant further contended that offering or intending to offer the seized cash for taxation under the Income-tax Act should exonerate them from proceedings under the PBPT Act.

Decisions

  • Cash is Property: Cash is legally covered under the definition of tangible movable property under Section 2(26). Unaccounted or unexplained cash constitutes “benami property” within the meaning of Section 2(8).

  • Two Parties are Sufficient: A benami transaction does not require a minimum of three parties. A plain reading of Section 2(9)(D), alongside Sections 2(10) and 2(12), confirms that just two parties—a “benamidar” and a “beneficial owner”—are legally sufficient.

  • Untraceable Source Attracts the Act: The inability of the Initiating Officer to trace the original source of the cash directly attracts Section 2(9)(D). The appellant’s argument that an elaborate investigation into a specific arrangement is a prerequisite was rejected.

  • Income Tax Filings Do Not Bar PBPT Act: In view of Section 60, merely filing or intending to file an ITR to pay tax on seized cash does not halt or bar benami proceedings. An ITR is simply a self-declaration, and the two Acts operate independently in distinct fields (tax collection vs. property confiscation).

Key Takeaways

  • Broad Scope of “Property”: The definition of property under benami law is wide enough to encompass liquid cash. If you cannot explain the legitimate source of cash in your possession, it risks being classified and seized as benami property.

  • Dual-Party Sufficiency: The misconception that a benami transaction requires a complex three-party setup (such as a seller, a front name, and a real buyer) is cleared; a simple two-party arrangement is legally vulnerable.

  • Independent Operation of Tax and Benami Laws: Paying income tax or offering to tax unexplained wealth does not buy immunity from anti-benami laws. The Income-tax Act and the PBPT Act are parallel tracks; compliance with one does not wipe out a violation of the other.

APPELLATE TRIBUNAL SAFEMA , NEW DELHI BENCH
Yoosaf N A.
v.
Initiating Officer, (BPU)*
BALESH KUMAR and Rajesh Malhotra, Member
FPA-PBPT- No.1005 (KOCHI) of 2019
MAY  14, 2026
Ms. Vandana Sharma Bhandari, Adv. for the Appellant. Kanhaiya Singhal, Adv. for the Respondent.
ORDER
Rajesh Malhotra, Member.- The present appeal under Section 46 (1) of Prohibition of Benami Property Transaction Act, 1988 (PBPT) is filed by the appellant against the order dated 25.03.2019 passed by the Adjudicating Authority under Section 26 (3) of the PBPT Act, 1988 in Reference no. 599/2018, thereby confirming the Provisional Attachment Order (PAO) dated 12.03.2018 passed by the respondent ACIT (BPU) under Section 24 (4)(b)(i) of the PBPT Act, 1988. The detail of the said property is cash of Rs. 50,13,000/-seized from the possession of the appellant on 27.03.2017 and was stated to be transferred to ITO on 29.11.2018.
2. As per the facts of the case, two persons- Shri Yoosaf N. A and Shri Jamsheer P.K of Kozhikode were found in possession of cash of Rs.50,13,000 (Rupees Fifty lakhs and Thirteen Thousand only) by the Sub Inspector of Police, Kunnamangalam Police station on 27.03.2017. Since these persons were not able to explain the source of the cash, the same was seized by the Police. The amount was produced before JFCM Court, Kunnamangalam and a claim petition was filed before the Hon’ble Judicial First-Class Magistrate, Kunnamangalam by the Income-Tax Department. The said two persons failed to give any explanation for the source of the seized money amounting to Rs. 50,13,000/- before the Hon’ble JFCM-Kunnamangalam. Both could not furnish any legal and verifiable claim regarding the ownership and nature of the cash seized; could not furnish any evidence/proof with regard to the claim that they are from genuine accounted sources; and they have not even filed income tax returns. Thus, Ld. JMFC, after hearing the parties and the Income Tax Department, allowed the claim petition and thereby the amount of Rs. 50,13,000/- seized by police was handed over to the Income Tax Department on 04.12.2017.
On receiving the aforesaid information, verifications were made by the DDIT (Inv), Kozhikode. The sworn statement of Shri Yoosaf N A was recorded on 24.04.2017 wherein he claimed the full ownership of the seized cash of Rs. 50,13,000/- and also stated that Shri Jamsheer P.K has no concern with this cash. He has also stated that the total amount Rs. 50,13,000/- seized from him was in fact received from his friends & relatives as contribution towards investment in an immovable property at Koduvally, but he did not provide valid documents for this claim.
He also filed an Affidavit on 12.04.2017 that seized amount of Rs. 50,13,000/- was received from his friends and relatives towards investment in immovable property (land) and since those parties are hesitant to come forward before IT Department and make claims, therefore, deponent declares the entire amount of Rs. 50,13,000/- seized from him as his income for the Assessment year 2017-18. He further submitted that he has no objection in adjusting the applicable amount of tax on the said Income and thereby refunding the balance amount.
Shri Jamsheer P K has also filed an affidavit on 12.04.2017 stating that he has no relationship with the seized cash Rs. 50,13,000/- and he would not make any claim for the amount in future, as the entire cash seized belongs to Mr. Yoosaf N A.
Since both were not able to sufficiently explain the source of the seized cash of Rs. 50,13,000/-, it was held by the DDIT (Inv) that they have received money from shady sources.
In view of the above facts/statements, the DDIT(Inv.), Kozhikode concluded that the benamidar has no possible explanation for the origin and source of money seized ad accordingly, the amount was liable to treated as undisclosed income u/s 69 A of the IT Act, 1961 in the hand of both the persons.
In response to the notice, Shri Yoosaf N A e-mailed the copy of the letter addressed to DDIT(Inv), Kozhikode, stating that he had decided to invest in Real Estate business so he collected and pooled the funds from close relatives and friends and when he along with Shri Jamsheer P.K were on the way Police intercepted the vehicle and seized cash of Rs. 50,13,000/-. He also stated that as the persons from whom the money was collected are hesitant to come forward, he is requesting to accept the surrender of cash seized as Income from other sources for AY 2017-18. But he has not furnished any supporting documents/proof to substantiate his claims till date and accordingly, the same was treated as Benami property as per the provisions laid down under Section 2 (9)(D) of the PBPT Act, 1988. Based on these facts, the IO under Section 24(4)(b)(i) of the PBPT Act passed the provisional attachment order on 12.03.2018 wherein he found the same to be benami property.
After that a reference was filed by the IO under Section 24(5) for confirmation of the provisional attachment order. The SCN was issued to the appellant on 13.04.2018 by the ACIT, BPU, Kochi, in response to which appellant approached the hon’ble High Court of Kerala for challenging the order dated 12.03.2018 but is writ petition was dismissed and then, appellant was again given notice dated 27.06.2018 for appearance before the AA. The appellant submitted his objections on 30.7.2018 and after going through the reply and hearing the rival submissions, the Adjudicating Authority being not convinced with the replies & submissions allowed the reference No. 599/2018 vide order dated 25.03.2019.
Aggrieved the said order, appellant filed the present appeal.
3. During the arguments, Ld. Counsel for the appellant submitted that the proceedings u/s 24 of the Act can be initiated only when the Initiating Officer discharges the initial burden cast on him to prove that the cash found represents sale proceeds of “property held as benami” by the notice (herein appellant) for a “beneficial owner who is not traceable in the present case. In the instant case, there is not even a suggestion that the cash found represents “sale proceeds” of a property held as benami by the appellant. It is submitted that in the facts and circumstances of the case, the Initiating Officer is not justified in invoking the provisions of the Act in respect of the cash found in his possession by the Police on 27.03.2017 merely on the presumption that the said amount belongs to unknown person so as to cover it under Sec. 2[9][D], without conducting any investigation on this aspect. There is nothing on record to presume that the recovered cash from the possession of the appellant is a benami property. She argued that it is an admitted fact the Police found the Appellant in possession of an amount of about Rs. 50,13,000/- during a routine vehicle check and subsequently seized u/s 132 A of the Income Tax Act. The Appellant in his reply to the Notice U/s 24 (1) issued by the ACIT (Benami Prohibition unit) Kochi, has given the specific reply dated 08.03.2018. Appellant also submitted that he will be offering entire amount as his income for Financial Year 2017-18. She contended that the initiating officer went on presumption and surmises while considering that Rs 50,13,000/- was benami property without any evidence or material in support. She contended that the said cash amount cannot be branded as benami property simply because the persons who gave the amount to him for purchasing the land declined to give any affidavit/ document in this regard. She stressed that the concept of “benami property” involves the existence of a “benamidar” as defined by Sec. 2(10) as also a “beneficial owner” as defined under Sec. 2[11] of the Act and a “property” which can only mean “immovable property” or a “movable property” which is capable of being the subject matter of a transaction. In fact, Sec. 2[8] of the Act defines “benami property” as “any property which is the subject matter of a benami transaction and also includes the proceeds from such property”. She pointed out that the purpose of the introduction of the Amendment Act is for avoiding or preventing the activity of obtaining of properties in the name of fictitious and other persons. When viewed in this context, it is apparent that the legislature never intended that the Act would cover cash where the person in whose possession the same is found has explained the source of cash and other person claimed the cash and when adequate provision in this regard has been made in the Income Tax Act through Ss. 68 & 69 as well as other enactments. This is apparent by reading section 60 of the Act, that the application of other laws is not barred. The provisions of this Act shall be in addition to, and not, save as hereinafter expressly provided, in derogation of any other law for the time being in force. This clearly express the intention of legislature. Sec. 24(1) of the Act under which the Initiating Officer issued notice dated 13.12.2017 reads thus:
24: Notice and Attachment of Property involved in Benami Transactions:
[1]: Where the Initiating Officer, on the basis of material in his possession, has reason to believe that any person is a benamidar in respect of a property, he may, after recording reasons in writing, issue a notice to the person to show cause within such time as may be specified in the notice why the property should not be treated as benami property:
The basic requirement for the issue of notice is the “reason to believe” that a person is a “benamidar” in respect of a property. “Benamidar” in turn, is defined u/s 2[10] of the Act thus:
“[10]: “Benamidar” means a person or a fictitious person, as the case may be, in whose name the property is transferred or held and includes a person who lends his name.”
Accordingly, she argued that in order to invoke Sec. 24[1], there must exist, a “property” which is “transferred” by another person in the name of “benamidar” or a property that is “held” in the name of a fictitious or non-existent person by another person. She contended that the Initiating Officer has no legitimate and legally sustainable reason to “believe that the appellant was a benamidar” in respect of the cash found from his possession by the Police during vehicle check. She pointed out-
Sec. 2[9][D] “benami transaction” means: a transaction or an arrangement- …. [D]: a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious.
She submitted that apparently, there must exist a “property” with respect to which there is a transaction or arrangement involving “consideration” and the person providing the consideration is “not traceable” or is “fictitious”. It is therefore quite clear that the provision calls for the existence of a property either “immovable property or “movable” which is sought to be purchased with the purchaser paying consideration being “not traceable” or is “non-existent”. In the instant case, notice dt. 13.12.2017 as well as Proceedings/order dt. 12.03.2018 nowhere alleges the existence of a “property” which is sought to be purchased by a person who is either “not traceable” or “non-existent”. In fact, the proceedings do not refer to any “transaction” or “arrangement” with respect to the cash found and therefore it is clear that Sec. 2[9][D] has no application to the facts at all and the “cash” found in the possession of the Noticee cannot be the subject matter of proceedings u/s 24[1] of the Act. Proceedings u/s 24[4] of the Act passed by the Initiating Officer setting in motion adjudication proceedings are totally unfounded and are void ab-initio. The Initiating Officer has failed to note that “benami property is “property held by a “benamidar” (as defined u/s 2[10] of the Act) for and on behalf of a “Beneficiary owner” [as defined u/s 2[12] of the Act]” to whom he is answerable. When the term “benami property is defined as a property which is the subject matter of a “benami transaction” as well as “the proceeds from such property”, it is obvious that “unexplained cash or cash source regarding which is not explained with acceptable evidence will not come within the ambit of the term “benami property” that could be proceed against under Sec. 24[1] of the Act. She stressed that the Initiating Officer has failed to further note that presence of cash on the person of the appellant did not prove any “transaction or arrangement in respect of a property” involving consideration which alone is covered by Sec. 2[9][D] of the Act. The transaction or arrangement in respect of a property referred to in Sec. 2[9][D], it is apparent, covers the sale or transfer of a movable or immovable property involving passing of consideration from the buyer to the seller – where the buyer is either not traceable or is fictitious. As against this, in the instant case, the only case of the Initiating Officer is that the “source” for the cash found is not properly explained which cannot make the cash found, benami property that could be proceeded against u/s 24[1] of the Act. In the same manner, the Officer has no case that the cash found on the possession of the appellant by the police is sale proceeds of a property that was held by him on behalf of a “beneficial owner or a person who is not traceable or fictitious and consequently the said cash cannot constitute “benami property that could be proceeded against u/s 24[1]. There is nothing on record to show that the “cash” found in possession of appellant was “property involved in a benami transaction”, as the onus to prove the source for the cash seized is on the Initiating Officer and in absence of any investigation that appellant is a benamidar does not justify action u/s 24[1] of the Act.
She pointed out that as per section 2(26) 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. This means all these assets can be owned or controlled to produce value in simple words these can be converted into cash from the abovementioned property. Had the intention of the legislature to include the cash lying with/confiscated from a person to be treated as property, the same would have been mentioned in the definition of property. Therefore, cash found with a person, without any benami transaction of a property, cannot fall under the ambit of the Act. The intention of the legislature is not to include cash in definition of Section 2 (26), section 53 can be looked into:
“53. (1) Where any person enters into a benami transaction in order to defeat the provisions of any law or to avoid payment of statutory dues or to avoid payment to creditors, the beneficial owner, benamidar and any other person who abets or induces any person to enter into the benami transaction, shall be guilty of the offence of benami transaction. (2) Whoever is found guilty of the offence of benami transaction referred to in sub-section (1) shall be punishable with rigorous imprisonment for a term which shall not be less than one year, but which may extend to seven years and shall also be liable to fine which may extend to twenty-five per cent of the fair market value of the property. The fine may extend to 25% of the fair market value of the property not of the benami cash recovered.”
Ld. Counsel for the appellant also argued that the reason to believe must be in writing based on cogent material which ought to be supplied to the Noticee which were never communicated to him and therefore said proceedings are bad in law. She contended that it was incumbent upon the respondents to give reasons in writing to the noticee which must be relevant and germane.
She further pointed out that the seized amount of Rs. 50,13,000/- be taken as the income of the appellant for the FY 2017-18 and thus appellant is only liable to pay the Income Tax for the seized amount and after deduction of the same, the balance amount needs to be returned to the appellant.
She argued that the respondent is not concerned with the source of cash earned by the appellant by any means whatsoever and once appellant is ready to pay the Income Tax on the seized amount, the respondent department has no concern with the source of said income, but even then, appellant has also explained the same during investigation of the case being given by his friends and relatives.
Prayer is accordingly made to allow the present appeal.
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 for any Benami transaction three parties are required?
(iii) Whether Section 2(9)(D) cannot be invoked in absence of any investigation regarding the ownership of cash?
(iv) Whether the provisions of PBPT Act are not attracted, seeing the fact that appellant is ready to file ITR qua the seized amount?
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, or investments 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 27th 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.
7. Now coming to issue no. (ii), the relevant provisions are reproduced as under:
Sec. 2[8] of the Act defines “Benami property” as
“any property which is the subject matter of a benami transaction and also includes the proceeds from such property”.
“Benamidar” in turn, is defined u/s 2[10] of the Act thus:
“[10]: “benamidar” means a person or a fictitious person, as the case may be, in whose name the property is transferred or held and includes a person who lends his name.”
Section 2(12) of the PBPT Act defines “Beneficial owner” :
“means a person, whether his identity is known or not, for whose benefit the benami property is held by a benamidar.”
“Benami property” is thus a property held by a “benamidar” (as defined u/s 2[10] of the Act) for and on behalf of a “Beneficiary owner” [as defined u/s 2[12] of the Act]” to whom he is answerable.
Therefore, the contention of the Ld. counsel for the appellant that for any Benami transaction three parties are required is devoid of any merits, as the benami transaction requires only the ‘benamidar’ and ‘beneficial owner’, hence just two parties are sufficient to constitute a benami transaction, as apparent from the bare perusal of definition mentioned in Section 2 (9)(D) of PBPT Act, 1988.
8. Now coming to issue no. (iii), after hearing the rival submissions, we have given our thoughtful consideration of the same. The contention of the appellant that Section 2(9)(D) cannot be invoked in absence of any investigation regarding the ownership of cash. We are of the view that the appellant has not denied the fact that on 07.06.2018, the Sub-Inspector of Police Station Kunnamangalam has seized the cash of Rs. 50,13,000/-found from the possession of present appellant Shri Yossaf N A along with Shri Jamsheer P K without any valid document/evidence for the source of cash. Further, we cannot ignore the statement of appellant Sh. Yoosaf NA recorded under Section 131 of the Income Tax Act on 24.04.2017, wherein he stated that he claims full ownership to the seized cash of Rs. 50,13,000/- and also stated that Shri Jamsheer P K has no relationship with the cash and that the total amount of Rs. seized from him was received from his friends and relatives as contribution towards the investment in an immovable property at Koduvally. However, he did not provide the valid documents for his claim.
Appellant has not challenged the said statement. He has also not disclosed the persons from whom he received such huge amount, in support of his contention. The fact that the Initiating Officer of respondent could not trace out the source from where appellant collected the cash clearly attracts Section 2 (9) (D) of PBPT Act. As per under Section 2 (9)(D) of the PBPT, Act, 1988, “A transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictious, is a Benami Transaction”.
Thus, this issue is decided against the appellant and in favour of the respondent.
9. Now coming to issue no (iv), it is stressed by the appellant that the provisions of PBPT Act are not attracted, seeing the fact that appellant is ready to file the ITR qua the seized amount. However, we are of the view that firstly, the submission of Income Tax Return after being caught and proceeded against is an afterthought strategy to claim back at least 50% out of the seized amount. Secondly, the recovery of cash in absence of any explanation is duly covered under the scope of PBPT Act. The contention of the respondent that Section 60 of the PBPT Act prescribes that the provisions of this Act shall be in addition to any other laws in force and the right of action under the PBPT Act cannot be restrained just because appellant is ready to file ITR under the Income Tax Act. Moreover, the principal object of the Income Tax Act is to collect Income Tax, but the object of the PBPT Act is to prohibit the practice of benami purchases to check the accumulation of wealth in the name of benamidars for the use of beneficial owner without detection and to confiscate the property involved in a benami transaction. The Income Tax is being collected in respect of the “unexplained money” at the rate of 60% of the same along with 25% of the Surcharge on the Income Tax. But the PBPT Act provides for the confiscation of the benami property in 100% and the fine of 25% of the value of the benami property. Hence, both the acts are being enacted for different purposes. We agree with the contention of Ld. counsel for the respondent that ITRs is a self-declaration of the ACC and the Income Tax Authority have no business to check the source of the money and only the Authority under PBPT Act, 1988 can initiate the proceedings for Benami Property. In the ITR the appellant has not explained the source of accumulating of the huge amount. The appellant wants to declare the sum of Rs. 50,13,000/- as miscellaneous income in the ITR. Thus, merely filing or intent to file ITR, does not exonerate the person from the application of the PBPT Act, in case the source of that money is not known and unanswered for. Accordingly, this issue is also decided against the appellant.
10. In sequel to our discussion para 6 to 9, the present appeal is hereby dismissed being devoid of any merits.