Unexplained Demonetized Cash Deposits And Subsequent RTGS Transfers From Unknown Entities Constitute Benami Transactions Under PBPT Act

By | August 6, 2026
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Unexplained Demonetized Cash Deposits And Subsequent RTGS Transfers From Unknown Entities Constitute Benami Transactions Under PBPT Act

Issue

Whether unexplained deposits of demonetized currency and subsequent RTGS transfers into a proprietorship’s bank account from unknown entities, unsupported by independent trade evidence, constitute a ‘benami transaction’ under Section 2(9) read with Section 2(26), justifying provisional attachment and confirmation under Sections 24 and 26 of the Prohibition of Benami Property Transactions Act, 1988.

Facts

  • The appellant, a proprietorship concern engaged in trading gold bars and coins, received heavy deposits of demonetized currency (Rs. 500 and Rs. 1000 notes) followed by RTGS transfers into its bank account.

  • The funds originated from three separate firms managed and controlled by an individual (ADB) and were deposited through an intermediary (SMM).

  • The appellant claimed that the RTGS transfers represented genuine sales proceeds from the trade of gold.

  • The appellant failed to produce any evidence establishing a past business relationship with the three originating entities.

  • The suspicious transactions occurred within a very short window immediately following the 2016 currency demonetization.

  • The sales bills, purchase invoices, ledgers, and stock statements produced by the appellant lacked independent corroborative evidence to substantiate the claimed trading activity.

  • The bank statements confirmed the receipt of funds via RTGS from entities previously unknown to the appellant.

Decision

  • The Tribunal/Court held that the appellant failed to provide a credible, independent, and satisfactory explanation for the sudden influx of demonetized cash deposits and RTGS transfers.

  • The Tribunal/Court observed that self-serving invoices and stock ledgers without independent verification cannot override the clear financial paper trail showing fund transfers from fictitious or unrelated entities.

  • The Tribunal/Court held that such arrangement and routing of funds fall within the definition of a ‘benami transaction’ under Section 2(9) read with Section 2(26) of the Act.

  • Consequently, the Court/Tribunal upheld the Provisional Attachment under Section 24 and its subsequent confirmation under Section 26, deciding the issue in favor of the Revenue.

Key Takeaways

  • Standard of Proof for Genuine Trade: Self-generated internal documents (sales bills, stock registers, and internal ledgers) do not constitute independent evidence under the Benami Act when transactions involve suspicious cash flows during demonetization.

  • Absence of Prior Business Relationship: Sudden high-value transactions with unknown or newly introduced entities without prior commercial dealings serve as a major indicator of a benami arrangement under Section 2(9).

  • Scope of Section 24/26 Attachments: Money transfers and bank balances originating from unidentified or surrogate entities can be provisionally attached and confirmed as benami property if the beneficial owner or true nature of the funds is masked.

APPELLATE TRIBUNAL SAFEMA , NEW DELHI
Lakshya Jewels
v.
Initiating Officer, DCIT (BPU)
BALESH KUMAR and Rajesh Malhotra, Member
MP-PBPT-130/MUM/2018 Stay
FPA-PBPT-168/MUM/2018
JULY  2, 2026
Rajesh Sanghvi, A.R. for the Appellant. Manmeet S. Arora, Adv. for the Respondent.
ORDER
1. This Order disposes of the Appeal No. FPA-PBPT-168/MUM/ 2018 filed by M/s Lakshya Jewels, against the Order dated 27.09.2018 (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 Nos. R-151/2017 whereby the Ld. Adjudicating Authority (AA) confirmed the Provisional Attachment Order dated 19.06.2017 (PAO) passed by the Initiating Officer, BPU, Mumbai under Section 24 (3) of PBPTA. Rs. 98,00,000/- in the accounts in the Kotak Mahindra Bank, S V Road, Mumbai, in Dena Bank, Shushila Mayeka Shopping Centre, Mumbai, in HDFC Bank, Sumer Nagar, Mumbai and in Bank of India, Bullion Exchange, Mumbai in the name of M/s Lakhya Jewels were provisionally attached.
2. Ld. Authorised Representative (A R) for the Appellant submitted that the allegation is purely on the basis of the statement of Shri Asit B Doshi, the alleged Benamidar in the matter. No evidence has been provided to prove that the alleged illegitimate and ill-gotten cash belonged to the Appellant. The Initiating Officer (IO) did not allow any opportunity of cross examination of Shri Asit B Doshi or that of Shri Mahesh Mangal (986799907), who had allegedly contacted Shri Ashit B. Doshi, for depositing the old currency notes, as stated by Shri Ashit B. Doshi in his statement under Section 131 of the Income Tax Act, 1961. Thus, the PAO has been passed without proper inquiry or verification and without allowing any opportunity of being heard or cross-examinations of other parties alleged to have been involved and therefore, the Order is bad in law.
3. Ld. A R for the Appellant argued that the various entities controlled by Shri Ashit B Doshi, which had purchased gold from Lakshya Jewels, were having credit facilities from the banks. This point can be verified from the bank account of Marina Trading, Jay Ambe Enterprise and Aman Enterprise. In this context, it was submitted that the banks extend credit facilities only to the parties who are having sound credit standing and not to the persons who do not possess any income / resources required for repayment of the same. Therefore, this aspect also proves that Shri Ashit B. Doshi was having sound financial position and was capable of depositing the funds out of his own resources. It should also be considered that the said amount was paid by the Appellant to the parties from whom gold was purchased. The Appellant did not retain the funds received, but had paid to the supplier of the Gold. Ld. A R argued that the IO failed to appreciate the point that Shri Ashit B. Doshi had not provided any evidences in support of his statement recorded under Section 131 of the Income Tax Act, 1961.
4. Ld. A R for the Appellant further submitted that Shri Shitanshu Rindani is Proprietor of M/s. Lakshya Jewels and is in the business of trading in Gold Bars/coins. The Appellant typically buys and sell Gold bars of fixed purity i.e. 999 or 995 & denominations like 1 gms, 5 gms, 10 gms, 20 gms, 50 gms 100 gms etc. and similarly for silver. The Appellant is doing his business in the name & style M/s. Lakshya Jewels since the last 12 years, with an annual turnover as follows:
Approx Rs. 2.33 crs for the Financial year 2014-15
Approx Rs. 3.29 crs for the Financial year 2015-16
Approx Rs. 4.23 crs for the Financial year 2016-17.
The Appellant is registered under Maharashtra State Sales-tax (VAT) laws.
5. Ld. A R for the Appellant submitted that the Appellant realised that Shri Ashit B Doshi, Respondent No.2 was the back end controller of Jai Ambe Enterprises and that Shri Pradeep Laxman Pawar was the legal proprietor of M/s. Jai Ambe Enterprises, which was directly or indirectly operated/controlled by Respondent No. 2. Ld. A R explained the reason for change in the invoice. He submitted that on receipt of the gold and on seeing the Bill on 17.11.2016, the Appellant was told that the name of Aman Trading was wrong and that it had to be changed to Aman Exterprises. The Appellant accordingly made a new bill with Aman Exterprises on it printed and the bill number was edited to the same 0047, with the second zero struck off, depicting a figure of 0147. This was a technical issue and nothing beyond that. The Appellant thus purchased 3,000 grams and in turn, remitted payment to M/s. Vimalsom Jewellers on 16.11.2016 of Rs. 91,08,000/- from the Appellant’s Kotak Mahindra Bank. The Appellant issued Sales Bills to his customer on 17.11.2016 based on the remittance received and delivered the gold. Acceptance of the Gold was made by signing on the left side bottom of the Appellants’ bills. The Appellant stated that he knew the Respondent No.2 due to a Flat booking inquiry by the Appellant with the Respondent No.2 who is in the construction business. The Appellant did not know any Shri Pradeep Pawar or Shri Mahesh Mangal till these proceedings. The Appellant did not pay any cash to any Shri Mahesh Mangal, the Respondent No.2 or Shri Pradeep Pawar or anyone.
6. Ld. A R for the Appellant submitted that a small and medium sized businessman (SME segment) cannot do a KYC akin to what bankers do today. In fact, if he so does, he will not survive in business. It is extremely pertinent to note that the statement of the Respondent No. 2 recorded on 01.12.2016 does not contain the Appellant’s name nor any direct allegation of receiving cash directly or indirectly from the Appellant or even a claim or whisper that cash was received from the Appellant. This issue itself is very vital because neither does Shri Asit Doshi (Respondent No. 2) states that he got the cash from the Appellant nor does Shri Mahesh Mangal states so (in fact his statement was not recorded by the IO) and the Appellant also does not state that he gave any cash to Shri Asit Doshi or to any Shri Mahesh Mangal at any time. In blatant violation of the rules of natural justice, the IO did not provide the Appellant cross examination of Shri Asit Doshi or Shri Mahesh Mangal. To support its case, the Appellant produced the following evidences:
(i) The Purchase Bills from Vimalson Jewellers
(ii) The Appellant’s ledger Confirmation in the books of Vimalson Jewellers signed by Vimalson.
(iii) Sale bill issued by the Appellant to Jai Ambe Enterprises, Marina Trading and Aman Enterprise.
(iv) Bank statements of the Appellant.
(vi) Detailed Stock statements of the Appellant
(vii) Purchase & Sales register of the Appellant
(viii) VAT returns of the Appellant
(ix) IT returns and financial statements of the Appellant
Statement of Shri Asit Doshi, Respondent No.2, recorded on 01.12.2016 under Section 131 is flawed because such a statement under Section 131 cannot be recorded at the residence or office of any assessee.
7. Ld. A R for the Appellant submitted that the Ld. AA held that the sale of Rs. 98,00,000/- of gold as huge amount, which is not correct. It is submitted that Gold rates are published by many authorities and IBJA (Indian Bullion and Jewellers Association) is just one of them. Many other rates are available in the public domain, hence the price of gold taken by the Appellant cannot be rejected as true value. He further argued that the fact the Respondent No.2 (Benamidar) does not appear before the IO/AA nor makes any submissions nor retracts his submission, the same cannot be used adversely against the Appellant. He therefore prayed for allowing the Appeal.
8. Ld. Counsel for the Respondent submitted that the office of Initiating Officer received information from the Investigation Directorate of Mumbai, related to benami transactions of M/s. Lakshya Jewels (PAN:AGJPR5813R). According to the information received, the cash was deposited in the bank account of Shri Ashit B Doshi after 08.11.2016 in the form of old denomination notes of Rs.98,00,000/- and the same was transferred to M/s Lakshya Jewel, a proprietor concern of Shri Shitanshu Pradyuman Rai Rindani through banking channel. It is pertinent to mention here that in his statement dated 01.12.2016, Shri Ashit Balwant Doshi S/o Shri Balwant Pitamberdas Doshi (PAN:AACPD8921F) admitted that cash was deposited in the bank account of entities managed and controlled by him. He further stated that he received total cash amount of Rs.98,00,000/- from Shri Mahesh Mangal of Vile Parle (mobile no. 986799907) for giving RTGS entries to M/s. Lakshya Jewels, and after deducting around Rs.5,00,000/- as commission @5%, he gave RTGS entries of around Rs.92,50,000/- to M/s. Lakshya Jewels (Rs.18,88,041/- from M/s. Aman Enterprises, Rs.36,82,561/- from M/s. Marina Trading and Rs.36,88,576/-from M/s. Jai Ambe Enterprise).
9. Ld. Counsel for the Respondent stated that on verification of the details filed by the Beneficiary Owner (BO) (M/s Lakshya Jewels), it is seen that it submitted three bills bearing Sl. No. 047, 046 and 0147 on 17.11.2016 to the Firms of Shri Ashit B Doshi namely M/s Aman Trading, M/s Jai Ambe Enterprises and M/s Marina Trading. Further it is seen the bill bearing Sl. No. 0147 was over written with pen and clearly look like a manipulated one. Ld. Counsel argued that from reading of Section 2(9) and 2(26) of PBPTA, it is clear that transaction entered into by Shri Ashit Balwant Doshi with M/s Lakshya Jewels is a benami transaction under Section 2(9) of PBPTA, as the cash for such deposit did not belong to Shri Ashit Balwant Doshi and was provided by M/s Lakshya Jewels. This cash was deposited into bank accounts of the entities managed and controlled by Shri Ashit Balwant Doshi and transferred back to the bank account of the actual beneficiary i.e. M/s Lakshya Jewels. So, in view of the above, Shri Ashit Balwant Doshi was treated as a Benamidar and M/s Lakshya Jewels was treated as a beneficiary as the consideration for such transaction was provided by M/s Lakshya Jewels through Firms of Shri. Ashit Balwant Doshi, for its future benefit. In the present case the benami transaction has been carried out in a very systematic and planned manner. As per planning, cash of the Appellant was deposited in the bank accounts of Shri Ashit Doshi, entry of sales was made in the books of Appellant and the bills were issued, then, Shri Ashit Doshi routed the money to the bank of the Appellant through RTGS. Ld. Counsel argued that as such, just like in the case of entry operators, the Appellant was also very well equipped with the documentary evidences, which in-fact are not the genuine evidences but are the fabricated entries in the books and papers. Ld. Counsel further argued that it is clear that the rates given by S.P. Rindani on bill dated 17.11.2016 are far different than the prevailing rates in the market on 15th or 17th Nov. 2016. The rate of gold without VAT was worked out at Rs. 30,017/- per 10 grams, which was far below the market rate. The weight of gold bars reflected on the bills was illogical and odd. These facts also establishes that the documents created by the Appellant were not at all reliable and were mere paper entries created to give the colour of genuine business transaction to the benami transaction and to mislead the I.T. Authority.
10. Ld. Counsel for the Respondent submitted that nobody denies the facts that the amount of Rs. 98,00,000/- was received by Shri Asit B. Doshi in old demonetised currency. He deposited this amount after deducting 5 percent commissions in his directly controlled & managed entities. It is also not in dispute that he was asked to transfer it by RTGS to the beneficiary account Kotak Mahindra Bank, SV Road opposite Pentaloon, Borivali (west) Mumbai, and accordingly after depositing in his entities, the RTGS was made to the beneficiary account. The entire amount had been given by the Beneficiary through one Shri Mahesh Mangal to the Benamidar, Shri Ashit B. Doshi who had deposited the money in his managed and controlled entities. The Beneficiary Owner had projected the receipt of RTGS money in his account against sale of gold to the 3 parties of Shri Asit B. Doshi and all other formalities of genuine sale were worked out. But it is not clear how could the sale be made to any unknown person for such huge amount of gold. It is also not clear how the rate of gold can be different from the standard rate of gold notified by the IBJA. The Benamidar did not come forward to make any submissions as he did not have any stake in the seized money as he had already taken his 5% share. Therefore, it appears that the contention of the Initiating Officer for treating the transaction as benami under the PBPTA appears to be reasonable and supportable. Ld. Counsel therefore pleaded to dismiss the Appeal.
11. We have considered the rival submissions and the material on record. First and foremost, we observe that the Impugned Order under consideration, was issued on 27.09.2018 in the Ref. No. R-151/2017. Three other Orders were issued by the Ld. AA on 27.09.2018 in Ref. No. R-146/2017, in Ref. No. R-149/2017 and in Ref. No. R-148/2017. We further observe that in all the four References there are striking similarities in the facts of each case. While the Benamidar in all four cases has been Shri Asit B Doshi, the alleged Beneficial Owners are Firms viz M/s Lakshya Jewels in Ref. No. R-151/2017, M/s Vrajendra Enterprise in Ref. No. R-146/2017, M/s Shree Nakoda Gold in Ref. No. R-149/2017 and M/s Raksha Bullion in Ref. No. 148/2017. We have decided to deal with each of the four References separately because of separate PAO issued by the IO, distinct Impugned Orders issued by the Ld. AA and the Appellants, being the alleged Beneficial Owners, having filed separate Appeals viz Appeals Nos. FPA-PBPT-168/ MUM/2018 filed by M/s Lakshya Jewels, FPA-PBPT-169/MUM/ 2018 filed by M/s Vrajendra Enterprise, FPA-PBPT-170/MUM/ 2018 filed by M/s Shree Nakoda Gold and FPA-PBPT-178/MUM/ 2018 filed by M/s Raksha Bullion.
12. We cannot refrain from making the preliminary observations that the facts in each of the four cases relate to allegation of deposit of demonetized currency in the near proximity of the date of 8th November, 2016 when the Notes of denomination of Rs. 500 and Rs. 1000 were demonetized and were withdrawn out of circulation through the Orders of the Government of India. In each of these four cases, Shri Asit B Doshi was approached through an intermediary for deposit of demonetized currency in the Banking Channel, so as to entail transfer of the said amounts through RTGS to the bank accounts of one of the four Appellants named in the preceding paragraph of this Order. Shri Asit B Doshi identified the names of the Firms in whose bank accounts the demonetized currency had to be deposited, so as to effect the desired RTGS. None of the Appellant in any of the Appeals has denied having been credited the RTGS amount in the bank account of its Firm. However, the Appellants have taken the defence that such amounts were received against payment for sale of gold bullion. We have examined the pleadings in each of the four Appeals made by the Appellants along with the evidence advanced by them as to deny the allegation that they indulged in benami transaction.
13. In the present matter, the Respondent has alleged that cash amounting to Rs. 98,00,000/- was deposited in the bank account of entities managed and controlled by Shri Asit B Doshi. It is further alleged that the said cash comprised of the demonetized currency and was deposited through one Shri Mahesh Mangal of Vile Parle. It is on record that Rs. 92,59,500/- was credited through RTGS in the account of the Appellant in Kotak Mahindra Bank, S V Road opposite Pantaloon, Borivali (West), Mumbai. It is further on record that on 15.11.2016 RTGS was received from M/s Marina Trading in two tranches of amount Rs. 18,07,600/- and Rs. 18,74,600/-. M/s Jai Ambe Enterprises transferred through RTGS on 15.11.2016 amounts of Rs. 18,17,400/- and Rs. 18,72,400/-. M/s Aman Enterprises transferred through RTGS on 15.11.2016 Rs. 18,87,500/-. Shri Asit B Doshi in his statement under Section 131 of the Income Tax Act, 1961 tendered before the Investigation Wing of the Income Tax Department confirmed that he had received total cash amount of Rs. 98,00,000/- from Shri Mahesh Mangal for giving RTGS entry to the Appellant, after deducting Rs. 5,00,000/-as commission at the rate of 5 percent. Therefore, in so far as transfer of Rs. 92,59,500/- as RTGS from the aforementioned three Firms at the behest of Shri Asit B Doshi to the bank account of the Appellant Firm is not in dispute.
14. The Appellant has furnished the explanation for the aforementioned transfers through the RTGS, as being proceeds from sale of gold. In this regard, the Appellant has referred to the Invoices No. 46, 47 & 48 all dated 17.11.2016. It is on record, that vide letter dated 07.09.2017 the Bill No. 48 was replaced by Bill No. 1047 dated 17.11.2016. It is also on record that the Bill No. 0147 has been over written. The Respondent has alleged manipulation of records in view of the mismatch in the bills submitted by the Appellant. The Respondent has also alleged that the rates given by the Appellant on the said bills are very different from the prevailing rates in the market either on 15.11.2016 when the credit on account of RTGS was received or on 17.11.2016 when the Appellant has claimed to have issued the bills. The Respondent has further argued that as per the Indian Bullion and Jewellers Association Website, the rates on 15.11.2016 and 17.11.2016 were markedly different from those which are reflected on the bills. Moreover, the weights of gold bars which were supposedly sold were illogical and odd.
15. The Respondent has further argued that in the present case the benami transaction has been carried out in a very systematic and planned manner. As per planning, cash of the Appellant was deposited in the bank accounts of Shri Ashit Doshi, entry of sales was made in the books of Appellant and the bills were issued, then, Shri Ashit Doshi routed the money to the bank of the Appellant through RTGS. Just like in the case of entry operators, the Appellant was also very well equipped with the documentary evidences, which in-fact are not the genuine evidences but are the fabricated entries in the books and papers.
16. The fact that deposit of cash amount of Rs. 98,00,000/- with Shri Asit B Doshi has not been denied. Even the RTGS to the bank account of the Appellant from three Firms which are linked to Shri Asit B Doshi is matter of record. There is nothing produced by the Appellant as to show that it had business relationship, from the past, with the three Firms. The claim that Shri Asit B Doshi was known to the Appellant because of property enquiry made from him cannot explain the present business transactions. Occurrence of such transactions within short period of the demonetization of the currency Note of denomination of Rs. 500 and Rs. 1000 cannot be overlooked. Moreover, the Investigation Wing of the Income Tax Department had intelligence to this effect. The statement of Shri Asit B Doshi under Section 131 of the Income Tax Act, 1961 taken under oath is admissible evidence. To challenge the said statement on the grounds that it was not taken in office of the Income Tax Department falls since such ground is frivolous and cannot be accepted. The explanation in terms of bills and other documents like purchase bills, ledger and stock statement suffer from being independent evidence as to substantiate the explanation offered by the Appellant. The bank statements in fact corroborate the transfer through the RTGS from unknown Firms.
17. The Appellant has alleged the violation of the principles of natural justice, in view of denial of opportunity to cross examine Shri Mahesh Mangal and Shri Asit B Doshi. We find that there is no statement on record of Shri Mahesh Mangal, hence the question of his cross examination cannot arise. In so far as Shri Asit B Doshi is concerned we find that the Appellant has been furnished copy of his statement and in any case Shri Asit B Doshi was summoned for the purpose of cross examination, but he failed to appear. The relevant paragraph in the decision of the Hon’ble Supreme Court in Kanungo & Company v. Collector of Customs AIR 1972 SC 2136, which has laid down that in all cases cross-examination of a witness may not be necessary may be quoted as follows:
“12. We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the show-cause notice issued on August 21, 1961, all the material on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them. In our-opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. Accordingly, we hold that there is no force in the third contention of the appellant.”
18. Another decision of the Hon’ble Supreme Court in Dharampal Satyapal Ltd. v. CCE 51 GST 197 (SC)/(2015) 8 SCC 519: (2015) 33 GSTR 1: 2015 SCC OnLine SC 489 at page 538, opined that law on natural justice has evolved and every violation of principles of natural justice need not result in setting aside an order, unless and until, prejudice has been established by the aggrieved party. The relevant paragraphs are extracted herein:
“We are not concerned with these aspects in the present case as the issue relates to giving of notice before taking action. While emphasizing that the principles of natural justice cannot be applied in straight-jacket formula, the aforesaid instances are given. We have highlighted the jurisprudential basis of adhering to the principles of natural justice which are grounded on the doctrine of procedural fairness, accuracy of outcome leading to general social goals, etc. Nevertheless, there may be situations wherein for some reason – perhaps because the evidence against the individual is thought to be utterly compelling – it is felt that a fair hearing ‘would make no difference’-meaning that a hearing would not change the ultimate conclusion reached by the decision-maker – then no legal duty to supply a hearing arises. Such an approach was endorsed by Lord Wilberforce in Malloch v. Aberdeen Corporation [(1971) 2 All ER 1278 (HL)], who said that a ‘breach of procedure……………..cannot give (rise to) a remedy in the courts, unless behind it there is something of substance which has been lost by the failure. The court does not act in vain’. Relying on these comments, Brandon LJ opined in Cinnamond v. British Airports Authority [(1980) 2 All ER 368 (CA)] that ‘no one can complain of not being given an opportunity to make representations if such an opportunity would have availed him nothing’. In such situations, fair procedures appear to serve no purpose since ‘right’ result can be secured without according such treatment to the individual. In this behalf, we need to notice one other exception which has been carved out to the aforesaid principle by the Courts. Even if it is found by the Court that there is a violation of principles of natural justice, the Courts have held that it may not be necessary to strike down the action and refer the matter back to the authorities to take fresh decision after complying with the procedural requirement in those cases where non-grant of hearing has not caused any prejudice to the person against whom the action is taken. Therefore, every violation of a facet of natural justice may not lead to the conclusion that order passed is always null and void. The validity of the order has to be decided on the touchstone of ‘prejudice’. The ultimate test is always the same, viz., the test of prejudice or the test of fair hearing.”
19. The Judgment of the Hon’ble Supreme Court in Telestar Travels (P.) Ltd. v. Special Director of Enforcement  (SC) [2013 AIR SCW 1304], has held that denial of request to cross-examine the witnesses by the Ld. Adjudicating Authority does not violate the principles of Natural Justice.
“20. Coming to the case at hand, the Adjudicating Authority has mainly relied upon the statements of the appellants and the documents seized in the course of the search of their premises. But there is no dispute that apart from what was seized from the business premises of the appellants the Adjudicating Authority also placed reliance upon documents produced by Miss Anita Chotrani and Mr. Raut. These documents were, it is admitted disclosed to the appellants who were permitted to inspect the same. The production of the documents duly confronted to the appellants was in the nature of production in terms of Section 139 of the Evidence Act, where the witness producing the documents is not subjected to cross examination. Such being the case, the refusal of the Adjudicating Authority to permit cross examination of the witnesses producing the documents cannot even on the principles of Evidence Act be found fault with. At any rate, the disclosure of the documents to the appellants and the opportunity given to them to rebut and explain the same was a substantial compliance with the principles of natural justice. That being so, there was and could be no prejudice to the appellants nor was any demonstrated by the appellants before us or before the Courts below. The third limb of the case of the appellants also in that view fails and is rejected.”
20. In this regard, we find support from the three Judge Bench Judgment of the Hon’ble Supreme Court in State of U.P. v. Sudhir Kumar Singh (2021) 19 SCC 706. The relevant paragraphs are extracted below:
“42. An analysis of the aforesaid judgments thus reveals:
42.1. Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused.
42.2. Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest.
42.3. No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which the Court finds on facts that no real prejudice can therefore be said to have been caused to the person complaining of the breach of natural justice.
42.4. In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person.
42.5. The “prejudice” exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice.”
21. On perusal of these judgments, it would be reasonable to make the following inferences:
(a) There does not appear to be any straight-jacket framework as to when cross-examination can be granted. To lay down any rigid rules as to when in compliance of principles of natural justice, opportunity to cross-examine should be given is almost impossible. It all depends on the subject matter. In the application of the concept of fair play there has to be flexibility. The application of the principles of natural justice depends on the facts and circumstances of each case.
(b) While it is true that quasi-judicial proceedings are also subject to adherence to the principles of natural justice, the need for providing the opportunity of cross-examination will arise where the denial of such opportunity would cause prejudice to the interest of the party who has been denied the opportunity. The Court cannot grant in vain any remedy merely because there is a breach of procedure unless it is demonstrated that such breach has caused loss of something of substance.
(c) The Courts have taken consistent stand that the cross-examination of the Investigating Officers is not necessary unless compelling reasons are brought forth. In fact, cross-examination of those witnesses who have produced documents has also not been found necessary. The disclosure of the documents to the Appellants and the opportunity given to them to rebut and explain the same has been regarded as substantial compliance with the principles of natural justice.
22. We observe that under the facts and circumstances of the present case the denial of cross examination has neither resulted in prejudice to the Appellant nor caused violation of principles of natural justice.
23. In view of the aforementioned discussions and analysis, we dismiss the Appeal No. FPA-PBPT-168/MUM/ 2018 filed by M/s Lakshya Jewels and uphold the Impugned Order in the Reference No. R-151/2017. Applications pending, if any, are disposed of accordingly.