Reviews applicants' routing of demonetized cash through

Reviews applicants’ routing of demonetized cash through benamidars back to themselves constitutes a valid benami transaction

Issue

Whether the definition of a ‘benami transaction’ under Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988 requires concealment of the beneficial owner or future benefit to a third party, or whether providing consideration for property held for future benefit satisfies the statutory provision.
Whether the arrangement involving cash transfers to benamidars to route demonetized currency through banking channels and return it to the review applicants (including their firm, Gyanjyot Coaching LLP) constitutes a benami transaction.

Facts

The review applicants initiated cash transfers to certain individuals (benamidars) following the demonetization period.
The primary objective of these transactions was to route and convert high-value demonetized currency into acceptable legal tender.
The funds were deposited into banking channels via the benamidars.
Subsequently, the routed money was transferred back to the review applicants, as well as to their firm, Gyanjyot Coaching LLP.
An order was passed treating this financial arrangement and routing of funds as a benami transaction, which the review applicants sought to review.

Decision

Interpretation of Section 2(9)(A): The court held that Section 2(9)(A) does not strictly require the concealment of the ultimate beneficial owner or a future benefit accruing to a third party. It is sufficient that consideration for the property is paid/provided by the beneficial owner and held for their future benefit.
Legality of the Arrangement: The court held that using benamidars to route demonetized cash through banks and back into the review applicants’ entities clearly fits the definition of a benami transaction.
Dismissal/Upholding of Impugned Order: The court held that the impugned order rightly treated the entire arrangement as a benami transaction under the Prohibition of Benami Property Transactions Act, 1988.

Key Takeaways

Broader Scope of Section 2(9)(A): Concealment of identity is not a mandatory prerequisite to attract Section 2(9)(A); the core test lies in who provided the consideration and for whose benefit the funds/property are ultimately held.
Demonetization Money-Routing Schemes Covered: Attempting to legitimise or re-route demonetized currency using third-party banking channels/accounts will be treated as a benami transaction if the ultimate beneficiary remains the provider of the funds.
Substance Over Form: Circular movement of money—where funds travel from the beneficial owner to a third party and return to the owner or their firm—falls squarely within the regulatory crosshairs of the Benami Act.

APPELLATE TRIBUNAL SAFEMA , NEW DELHI

Smt. Sunita Babubhai Prajapati

Initiating Officer, BPU Ahmedabad

Justice Munishwar Nath Bhandari, Chairman
and V. Anandarajan, Member

MP-PBPT No. 3809 & 3811 (AHD) of 2025 REVIEW
MP-PBPT No. 3810 & 3812 (AHD) of 2025 CoD
FPA-PBPT No. 2213 & 2214 (AHD) of 2022

SEPTEMBER 3, 2026

Vanshul Pali and Ms. Ayushika Mishra, Advs. for the Appellant. Kanhaiya Singhal, S.P.P. and Ms. Amrita Kumar, Adv. for the Respondent.

ORDER

MP-PBPT-3809/AHD/2025 REVIEW

MP-PBPT-3811/AHD/2025 REVIEW

1. This order would decide the two Review Applications preferred by the Review Applicants for challenge to the order dated 08.07.2025 passed by this Tribunal dismissing the appeals challenging the order of the Adjudicating Authority.

2. The brief fact taken into consideration by this Tribunal while passing the order was in reference to the arguments raised by the appellants (the Review Applicants herein). The case involves two transactions of Rs. 25,00,000/- each. The amount of Rs.50,00,000/- was transferred by the applicants (beneficial owners) to the benamidar, Mohd. Rizwan Saiyed and Kalubhai Dashrathbhai Kureshi during the course of demonetization of currency notes of Rs.500/- and Rs.1000/-in the year 2016. The transfer of money may be for the reason that it was unacceptable currency after demonetization, thus, it was given to the benamidar so as to route it to make it acceptable currency. The benamidar deposited the money in the bank accounts of M/s Gujarat Enterprise and M/s Aryan Corporation. It was by way of cash deposits. The money was transacted through the banking channels so as to make it acceptable currency.

3. The respondent (the non-applicant herein) found a case of benami transaction because the beneficial owners passed on the property (demonetized money) to the benamidars for their future benefit. It accrued after deposit of cash amount by the benamidars in the bank account of two entities named above and thereupon the said amount was transferred to the beneficial owner towards his future benefits because with the involvement of banking channels, the demonetized currency became acceptable. This Tribunal dismissed the appeals preferred by the Appellants/ Review Applicants, referring to the facts of the case. However, the Review Applications have been filed and accordingly we would consider the issues raised by the review applicants and would pass an appropriate order.

4. Ld. Counsel for the Review Applicants submitted that the property in question was self-acquired property and with simple deposit of cash during demonetization, it could not have been taken to be a case of “benami transaction”. It lacked the essential element of concealment or for future benefit to a third party. Therefore, on the aforesaid ground itself, the impugned order deserves to be reviewed.

5. We have considered the first ground raised by the Review Applicants. The argument has been raised that element of concealment or future benefit to a third-party are missing. A perusal of the definition under Section 2(9)(A) of the Prohibition of Benami Transactions Property Act, 1988 (in short “the Act of 1988”) does not require concealment or for future benefit of third-party. It requires payment of consideration for the property by the beneficial owner to the benamidar for his future benefit. It is not for the benefit of a third-party, as stated by the Review Applicants and even concealment of the beneficial owner. Thus, the first ground raised by the Review Applicants is not made out for causing review of the impugned order.

6. Ld. Counsel for the Review Applicants further submitted that to make out a case of benami transaction, the legal ingredients of Section 2(9)(A) of the Act of 1988 must be proved. A monetary transfer or legitimate financial arrangements, in the absence of any intention or concealment of beneficial ownership would not fall within the mischief of benami transaction.

7. We have considered the aforesaid argument of the Review Applicants also and find it to be without appreciation of the definition of “benami transaction” under Section 2(9)(A) of the Act of 1988. There is no requirement of concealment of beneficial owner of the property rather it requires transfer of consideration by the beneficial owner for purchase or holding of the property in the name of benamidar for future benefit of the beneficial owner. It may be transfer of legitimate money. A benami transaction may not require concealment of the beneficial owner and even involvement of illegitimate money, rather, in a given case, the money may be transacted by the beneficial owner through banking channel then an issue of concealment and involvement of illegitimate money would not arise. There is no requirement to have an element of concealment. In fact, after purchase of property by the benamidar, it may remain for the immediate or future benefit of the beneficial owner as per Section 2(9)(A) of the Act of 1988. The provision aforesaid does not require concealment of the beneficial ownership, rather, if the beneficial owner is fictitious, the case would fall under Section 2(9)(D) of the Act of 1988 which is not the case herein. Thus, even the second ground raised by the Review Applicants is not sustainable.

8. The Review Applications have otherwise been filed in ignorance of the limited jurisdiction of this Tribunal. The Review Application can be accepted only when an error in the order apparent on the face of the record is shown. The Review Applicants have failed to show a case of a mistake apparent on the face of the record and even otherwise the amount of Rs.50,00,000/- admittedly belonging to the review applicants. The currency was demonetized at the relevant time which necessitated the review applicants to transfer the money to the benamidars to get it converted in acceptable currency and therefore only the cash amount was deposited in the bank accounts of the entities by none-else but the benamidars and thereafter it was transferred to the review applicants for their immediate and future benefit because after conversion of the currency, it was acceptable for all purposes. The review applicants have projected the case as if transfer of money was for the sake of it suppressing the fact that at the time of demonetization of old currency notes of Rs. 500/- and Rs. 1000/- by the Government of India, the said currency notes became unacceptable. Therefore, to convert the said currency in acceptable currency, the process of benami transaction was used, otherwise the review applicants would have given reason for transfer of a sum of Rs.50,00,000/- to the benamidar. It was deposited in the bank account of M/s Gujarat Enterprise and M/s Aryan Corporation. The amount was thereupon transferred to the bank accounts of appellants’ firm, Gyanjyot Coaching LLP. The review applicants have admitted the fact about the currency exchange. It has to be considered with the timeline of the transaction. It has not been disputed by the Review Applicants that at the relevant time, currency notes of Rs.500/- and Rs.1000/- were demonetized by the Government of India. Accordingly, the respondent/nonapplicant has rightly taken up the matter of benami transaction.

9. The Review Applicants in para 22 of their Review Applications have admitted that to preserve the review applicants’ own cash holdings on an unprecedented event of demonetization, a transaction took place but ultimately element for passing of future benefit to the third-party was not made out. The element of transfer of money to the third-party is not an essential ingredient to make out a case under Section 2(9)(A) of the Act of 1988 and in any case the applicant has admitted about the cash holding at the time of demonetization. The currency notes of Rs.500/- and Rs. 1000/- were not acceptable and consequently it was transferred to the benamidars and after routing it through the bank accounts of the entities, it became acceptable and accordingly transferred back and remained for the future benefit of the review applicants and thereby a case of benami transaction was taken.

10. Ld. Counsel for the Review Applicants has given a reference to the judgment of the Apex Court in the case of Valliammal v. Subramaniam (2004) 7 SCC 233 to indicate that for making out a case of benami transaction, six tests have to be satisfied. The argument has been raised in ignorance of the judgment which has laid down guiding factors for determination of a benami transaction. Those factors are illustrative in nature and not exhaustive. In fact, the benami transaction is to be satisfied in reference to the provision under which it has been taken. For illustration under Section 2(9)(A) of the Act of 1988, the ingredients to satisfy the benami transaction are different than in a case taken under Section 2(9)(D) and similarly under Section 2(9)(B) and Section 2(9)(C) of the Act of 1988. The fact of each case has to be examined in reference to the provision under which a case of benami transaction is taken. One and same principle is not applicable universally in all set of cases.

11. In view of the discussions made above and finding no manifest error in the impugned order to cause interference, the Review Applications fail and are dismissed.