Provisional Attachment Upheld as Fund Transfer for Alleged Gold Sale During Demonetization Constituted Benami Transaction
Provisional Attachment Upheld as Fund Transfer for Alleged Gold Sale During Demonetization Constituted Benami Transaction
Issue
Whether the receipt of ₹25 lakhs via RTGS from a benami entity’s bank account—allegedly towards the sale of gold without proper KYC, delivery proof, or genuine underlying purchases—constituted a benami transaction, justifying the attachment of the appellant’s property as a beneficial owner.
Facts
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Fund Flow: The appellant received ₹25 lakhs into its bank account via RTGS from ‘A Enterprises’ during the demonetization period, claimed to be against the sale of gold.
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Source Investigation: The Initiating Officer discovered that ₹25 lakhs in demonetised currency was deposited into the bank account of A Enterprises—a firm operated by an individual, JK—and subsequently transferred to the appellant.
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Procedural Action: The Initiating Officer issued a show-cause notice under Section 24(1) and passed a Provisional Attachment Order under Section 24(3), which was later confirmed by the Adjudicating Authority.
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Account Misuse & Bogus Entries: Investigations revealed that the bank account of A Enterprises was misused by JK for benami transactions during demonetization.
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Unsubstantiated Purchases: The appellant showed gold purchases from ‘CPL’ but failed to discharge its outstanding liabilities towards CPL even after the alleged re-sale, indicating that bogus purchase and sale invoices were created to disguise the transfer as a genuine transaction.
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Lack of Due Diligence & Delivery Proof: The appellant did not obtain any KYC documents or PAN card details of A Enterprises or its proprietor from the broker, nor could it produce proof regarding the physical delivery of the gold.
Decision
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The Appellate Tribunal/Authority held that the receipt of ₹25 lakhs was not a genuine commercial transaction for selling gold bars, but a planned strategy to convert demonetized currency into legitimate transfer entries.
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The appellant was held to be a beneficial owner involved in a benami property transaction under the Prohibition of Benami Property Transactions Act, 1988.
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The attachment order passed against the appellant’s property was upheld, deciding the matter in favor of the Revenue [Paras 9, 10, and 13].
Key Takeaways
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Substance Over Form: Creation of paper invoices for gold sales during demonetization without verifiable trade practices (like KYC or delivery proof) will be treated as sham entries to integrate demonetized funds.
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Scope of Benami Property: Money transferred through banking channels via accommodation entry providers/benami accounts falls squarely within the definition of benami property under Section 2(8)/2(9).
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Failure of Commercial Rationale: Inability to prove physical movement of goods or settle vendor liabilities undermines claims of genuine business transactions, validating attachment under Section 24.
APPELLATE TRIBUNAL SAFEMA , NEW DELHI
Myrah Trade and business
v.
Deputy Commissioner of Income-tax (BPU-1)*
BALESH KUMAR and Rajesh Malhotra, Member
PBPT -12 (MUM) of 2018
JULY 2, 2026
Rajesh Sanghvi, CA AR for the Appellant. Manmeet Singh Arora, SPP and Camran Iqbal, Adv. for the Respondent.
ORDER
Rajesh Malhotra, Member.-The present appeal u/s 46(1) of the Prohibition of Benami Property Transactions Act, 1988, is filed by the appellant against the Order dated 09.02.2018 passed by the Adjudicating Authority u/s 26(3) of the PBPT Act, in reference No. 41/2017, whereby following bank account of appellant was confirmed for attachment.
| S. No. | Particulars of the property | Value of property (Rs.) | Name of the entity in possession |
| 1 | Cash | To the extent of 25,00,000/- | Myrah Trade and Business Account No. 000820110002774 in Bank of India, Kalbadevi, Mumbai |
2. As per the facts of the case, the O/o BPU, Mumbai, received an information from the Investigation Directorate of Mumbai that Bank account of Shri Mumtaz Ali Mohd. Shaikh has been used by Shri Jagdish Khandelwal, who deposited de-monetized currency in the denomination of Rs. 500/- and Rs. 1000/- belonging to M/s Myrah Trade & Business. The said currency was deposited in the bank account of the proprietorship concern of M/s. Abhishek Enterprises in IndusInd Bank, Kalbadevi, Mumbai, having account No. 201000613601. The amount so deposited was later-on transferred to the account of M/s Myrah Trade and Business, in Bank of India, Kalbadevi, Mumbai, having account No. 000820110002774. It is also mentioned that Shri Mumtaz Ali Mohd. Shaikh during the course of his statement recorded on 01.12.2016 under oath u/s 131 of the Income Tax Act has accepted that the bank account of his proprietorship concern M/s. Abhishek Enterprises has been used by Shri Jagdish Khandelwal for transactions. The said material part of statement is reflected in para 3 of the impugned order.
The bank statement of proprietorship concern, M/s. Abhishek Enterprises reflects cash deposit of Rs. 15 lacs and Rs. 10 lacs, which was transferred to M/s Myrah Trade and Business on 23.11.2016 and 24.11.2016, respectively. The Initiating Officer, on the basis of investigation conducted by him passed the Provisional Attachment Order dated 27.01.2017 u/s 24(3) of the PBPT Act, 1988 and thereafter issued the show-cause notice dated 27.01.2017 u/s 24(1) of the Act. His office also received one more statement dated 08.02.2017, wherein the benamidar has accepted that bank account of his proprietorship concern, M/s. Abhishek Enterprises has been used by Shri Jagdish Khandelwal. The office of Initiating Officer served summons u/s 19 of the Act on benamidar on 12.04.2017 for recording his statement u/s 19 of PBPT Act. Accordingly, IO decided that provisional attachment of the bank account of the ‘Beneficiary’ should continue u/s 24(4)(a)(i) of the Act, till the passing of the order by the Adjudicating Authority u/s 26(3) of the PBPT Act. Thereafter, reference No. R-41-2017 was sent to the Adjudicating Authority for confirmation of the PAO. On notice by the Adjudicating Authority, the benamidar and beneficial owner filed their respective replies and the rejoinder was also filed by the Initiating Officer. Thereafter, after hearing the rival submissions, the Adjudicating Authority confirmed the PAO u/s 26(3) of the Act.
Aggrieved by the said order, appellant filed the present appeal.
3. We heard the rival submissions and have also gone through the documents on record. Ld. Counsel for the appellant argued in verbatim to the grounds of appeal and Ld. Counsel for the respondent department controverted the same on each & every aspect. On the basis of rival submissions, following issues needs to be decided:-
| (i) | Whether appellant is not a beneficial owner in absence of any evidence of giving the demonetized currency of Rs. 25 lakhs for the purpose of conversion into credit entries? |
| (ii) | Whether appellant received Rs. 25 lakhs from M/s Abhishek Enterprises as genuine business transaction for selling gold bars? |
| (iii) | Whether the delivery of gold through broker Mr. Rakesh B. Rathod is duly proved? |
| (iv) | Whether appeal needs to be allowed on the basis of affidavit filed by Mr. Rakesh B. Rathod, the alleged broker? |
| (v) | Whether appeal needs to be allowed for non-examination of Sh. Jagdish Khandelwal, the operator of bank account of M/s Abhishek Enterprises? |
| (vi) | Whether appeal needs to be allowed for not giving opportunity for cross-examination of Sh. Mumtaz Ali Mohd. Sheikh, proprietor of M/s Abhishek Enterprises? |
Now, we will decide the above issues in the following paras:-
4. Issue no. (i) to (iv) are taken up together being interconnected. During the arguments, Ld. Counsel for appellant pointed out the three statements of benamidar Shri Mumtaz Ali Mohd. Shaikh recorded on 01.12.2016, 05.12.2016 & 08.02.2017 u/s 131 of the Income Tax Act to the Investigation Directorate, wherein he specifically submitted that IndusInd Bank and Kotak Mahindra Bank accounts were used by one Shri Jagdish Khandelwal. He pointed out that there is nothing on record that the appellant through Shri Amrit Dhakad, or, any other member of HUF tendered any amount demonetized Indian Currency to the aforesaid benamidar during the period of demonetization, as alleged. He argued that in absence of any evidence against the appellant proprietorship concern for tendering the amount to alleged benamidar, Shri Mumtaz Ali Mohd. Shaikh or to Shri Jadish Khandelwal, the appellant cannot be branded as beneficial owner. He argued that no efforts were made by the Initiating Officer to summon Shri Jagdish Khandelwal and record his statement to verify the true facts as to the ownership of demonetized currency. He stressed that in absence of any evidence of handing over the custody of demonetized currency by the appellant, or any member of the HUF, the appellant proprietorship concern is not beneficial owner in the eyes of law.
Learned Counsel for the appellant pointed out that as per statement of Shri Mumtaz Ali Mohd. Shaikh, Shri Jagdish Khandelwal appears to be the actual benamidar of M/s Abhishek Enterprises, and thus, only Sh. Jagdish Khandelwal could have revealed the truth or the name of the actual beneficial owner, if was interrogated by the IO. Learned Counsel for appellant, pointed out that in the present case appellant concern M/s Myrah Trade & Business is wrongly impleaded as beneficial owner, just because it received sum of Rs. 25 Lakhs in its bank account, without appreciating the fact that said amount was received for selling gold bars to M/s Abhishek Enterprises. He submitted that it is the business practise in the wholesale gold industry that agents/brokers often form the front face and strike a business deal between the persons buying and selling gold, and accordingly, the said brokers act as intermediary agents. He submitted that thereafter, the invoice is then prepared as per the instruction of the party or agent. He pointed out the appellant M/s Myrah Trade and Business purchased gold bars from M/s Ekdant Commercial Pvt. Ltd. and thereafter sold gold bars on cheque payment basis to M/s Abhishek Enterprises. He pointed out that in the present case, Shri Rakesh B. Rathod acted as broker and the deal of sale of gold bars was conducted through him.
He pointed out that Mr. Rakesh Rathod, broker had also procured sales for the Appellant in June to Aug 2016. Mr. Rakesh B. Rathod filed Affidavit dt: 10.10.2017 narrating the transaction with the Benamidar especially Sh. Jitubhai, which is at page 122 to 125 of the appeal paper book. As per affidavit, in mid-November, 2016, after demonetisation one Mr. Jitubhai (Jagdish Khandelwal), expressed interest to Mr. Rakesh Rathod, to buy 1 kg of gold bars, because Gold was turning out to be a lucrative investment in the demonetisation period. Rakesh Rathod agreed to help. In turn Rakesh Rathod checked with the Appellant (and perhaps with others also) about the prevailing gold prices, which was quoted to him by the Appellant. The Appellant had not seen, nor met, nor knew, Jitubhai (Jagdish Khandelwal) and the inquiry was routed through Rakesh Rathod, who was the front person for the Appellant. When Rakesh Rathod (in turn for Jitubhai) confirmed the rate quoted by the Appellant for 1 Kg of Gold bars, the terms of payment was stated as advance to which Rakesh Rathod agreed. But on 23.11.2016, the Appellants received RTGS payment of Rs. 15 lakhs i.e half of the amount agreed. Hence, the Appellant being upset gave delivery of half the quantity i.e. of 500 grams gold bars to Rakesh Rathod duly acknowledged/signed by Rakesh Rathod, and accordingly, made a Sale Bill (Bill No. M-T&B/04/16-17/GB) of Rs. 14.50 lakhs + VAT (total Rs. 14,67,400/-) in the name as told by Rakesh Rathod in the name of M/s. Abhishek Enterprises (Prop: Jitu Khandelwal) and the address and PAN as per provided by Rakesh Rathod because he alone knew the end customer/party. Rakesh Rathod told the Appellant to wait for the balance payment of 500 grams which would come the next day i.e. on 24.11.2016. Thereafter on the next day i.e. 24.11.2016, the Appellant received another RTGS payment of only Rs. 10 lakhs. Hence the Appellant made a proportionate Sale bill (Bill No. M-T&B/05/16-17/GB) for 350 grams of Rs. 10,22,000/- + VAT (total Rs. 10,34,264/-) on 24.11.2016 based on the amount received. Overall, an amount of 1,664/- was receivable and hence it was debited (shown as receivable) to Rakesh Rathod, the broker. The broker Rakesh Rathod took delivery of these gold bars of 350 grams from the Appellant (duly signed acknowledged by Rakesh Rathod) and as per him (Rakesh Rathod). He pointed out all the relevant documents filed with the present appeal in support of his contention.
The Appellant knew nothing neither of Abhishek Enterprises, nor of its Proprietor, nor did the Appellant see the proprietor, or Benamidar, or Jitubhai, nor know anything of their bank account, or the PAN card, nor there was any need to do any due diligence of this Ashishek Enterprises, as this is not the practice in the Gold Wholesale Industry at Dagina Bazaar in Mumbai, nor anywhere in India. The Appellant states that in day-to-day business at Zaveri Bazar Mumbai, the gold industry businessmen, do business through agents, or known customers, or common references, or friends, but they do not do a detailed KYC on each business contacts, the way the banks do. But delivery is given only when payment is received, unless when parties are known to one another. The Appellant received full payment, and then parted with the gold. This is not wrong or illegal in any manner.
He argued that Appellant have done a simple business dealing and have received payment for sale of Gold. This was the only deal with M/s Abhishek Enterprises. The Appellant had no reason to know who was the true proprietor of M/s Abhishek Enterprises, or visit their office, or see their faces, or verify the true owner, or check if they had deposited any demonetised cash in their bank account, prior to the remitting of funds to the appellant, or check who is the effective/actual real owner of M/s Abhishek Enterprises. The Appellant has other dealings especially on commission basis with Rakesh Rathod and believed what he stated, and even otherwise, the Appellant received 100% advance, and only then delivered the gold. He argued that IO needs to examine business realities and step into the shoes of the businessman to see realities.
Ld. Counsel for the appellant stressed that the Benamidar has nowhere stated that he received any cash from Appellant, which in turn he deposited in his proprietary concern account of M/s. Abhishek Enterprises, with an understanding to return back to the Appellant later-on. He pointed out that no circular transaction is proved by the IO in the present case. He argued that no intention of benami is found by Ld. AA. There is no claim till date from M/s Abhishek Enterprises that no goods (gold bars) were received by them in-spite of making RTGS payment. No statement by Benamidar that he acted as a conduit, or Benamidar of Appellant, or that he even knew the Appellant, or dealt with the appellant directly. The alleged benamidar has not even taken the name of the Appellant is his statement. The benamidar has only stated that he acted for and on behalf of Jitubhai, and hence, there is privacy of relation between him and Jitubhai.
In order to prove the said business transaction as genuine, the appellant relied upon following documents:-
| (i) | Ledger confirmation by M/s Ekdant Commercial Private Limited of M/s Myrah Trade & Business at page 112, |
| (ii) | Text Invoices of M/s Ekdant in favour of M/s Myrah Trade & Business at page 113-118, |
| (iii) | Letter of confirmation of account dated 01.04.2017 purported to be issued to Rakesh B. Rathod reflecting commission of Rs. 2472 on account of transaction with M/s Abhishek Enterprises, page 121m, |
| (iv) | Affidavit of Rakesh B. Rathod at page 122-125, |
| (v) | Tax Invoice issued by Myra Trade & Business in favour of M/s Abhishek Enterprises at page 126 & 127, |
| (vi) | Confirmation of accounts letter dated 01.04.2017 issued by Myrah Trade & Business to M/s Abishek Enterprises, at page 128 |
| (vii) | Stock register of gold bar of M/s Myrah Trade & Business at page 129 & 130, |
| (viii) | Stock register of gold ornaments at page 131-132 |
| (ix) | Ledger account of Myrah Trade & Business at page 137174 |
| (x) | Sales register at page 175-181 |
| (xi) | Purchase register at page 183-190 |
| (xii) | Bank statement of M/s Abhishek Enterprises at Induslnd Bank at Page 191-199 |
| (xiii) | Bank statement of Myrah Trade & Business at page 235236 |
| (xiv) | Reply dated 09.02.2017 to notice u/s 24(1) of PBPT Act, at page 247-248. |
Prayer is accordingly made to allow the present appeal on the above grounds, as appellant entered into genuine business transaction, but not benami transaction as alleged.
5. The dealers engaged in purchasing & selling the gold bars have to make the many compliances. For purchase of gold bars, the dealers must typically maintain the following registers and documentation:
| • | Daily Stock Register: Comprehensive records of all gold bar purchases, sales, and transfers (usually maintained digitally via ERP or physical stock books). |
| • | Purchase Ledger: Specific details for every “old gold” purchase, including the seller’s KYC (Name, Address, PAN/Aadhaar) and purity assessment test results. |
| • | Tax Invoices: Trackable invoices for every transaction, breaking down the metal value and associated taxes. |
| • | Hallmarking / HUID Records: If the dealer sells smaller denominations, gold bars and coins must conform to BIS standards, and HUID (Hallmark Unique Identification) numbers must be tied to the inventory register. |
For selling high-value gold bars, the dealers are required to make the following compliances:-
Mandatory Documentation (KYC)
| • | PAN Card: Mandatory for all gold sales exceeding ?2 lakhs. Buyers will also report this to tax authorities. |
| • | Proof of Identity and Address: Valid government documents such as Aadhaar card, Passport, Voter ID, or Driving License of buyers. |
| • | Proof of Purchase/Source: While not always mandatory, providing the original purchase bill or customs duty receipt (if the bar was imported) simplifies the process. |
Income Tax and Capital Gains
| • | Short-Term Capital Gains (STCG): If a person sells the gold bar within 24 months of purchasing it, the profit is added to his taxable income and taxed as per his applicable income tax slab. |
| • | Long-Term Capital Gains (LTCG): If held for more than 24 months, the profit is taxed at a flat rate of 12.5%. |
| • | Wealth Tax: There is no wealth tax in India, but the Income Tax Department allows buyer to hold gold without scrutiny as long as he can justify the source of the income or prove inheritance. |
Cash and Transaction Limits
| • | Banking Transactions: To avoid scrutiny and comply with antimoney laundering regulations, always request direct bank transfers or account payee cheques. |
| • | Cash Limits: Under the Income Tax Act, accepting large amounts of cash for a single transaction or from a single person can trigger reporting requirements. It is best to avoid cash for high-value sales entirely. |
Purity and Valuation
| • | Testing and Melt Value: Certified buyers (such as MMTC-PAMP, banks, or large-scale jewellers) will test the bar’s purity via XRF (X-ray fluorescence) or melt it down to determine the exact weight and purity. |
| • | Assay Certificates: If gold bar came from a recognized refinery with an intact assay certificate, the testing process will be much faster. |
6. Now, coming to the legal provisions of PBPT Act, Section 2(10) defines the term “Benamidar” as under:
“Benamidar” means a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name;
We are of the view that cash is a movable property, which can be used to buy any other movable or immovable property. Therefore, if the business transaction is not genuine, then there is clear transfer/ holding of the amount with M/s Abhishek Enterprises on behalf of the appellant company (for the purpose of conversion from demonetized currency to transfer entries in favour of the appellant in the garb of business transactions, and thereby, lend his name to the said demonetized cash. In such situation, M/s Abhishek Enterprises is clearly the Benamidar through its proprietor Shri Mumtaz Ali Mohd. Shaikh and its alleged operator Shri Jagdish Khandelwal.
Now, coming to the definition of “Benami Transaction” as defined u/s 2(9)(A) of the PBPT Act, same is reproduced as under:
| (a) | Where the property is transferred, or is held by a person, and further the consideration for such property has been provided, or paid by another person and |
| (b) | The property is held for the immediate or future benefit, directly or indirectly of the person who has provided the consideration. |
Clause (a) of Section 2(9)(A) has two parts. As far as first part of clause (a) is concerned, the same is already discussed by us in the definition of “benamidar”. Now coming to second part of clause (a) (further the consideration for such property has been provided, or paid by another person), we are of the view that cash is a pure liquid asset and same is a movable property, as per the definition of “property” under Section 2(26) of the PBPT Act,
“Property means assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property”.
Hence, cash is a property. Further, as per the definition of ‘consideration’ as provided under the Indian Contract Act, 1872 is:
“Section-2(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”.
In contract law, consideration refers to the exchange of value between parties that makes a promise enforceable. Consideration is an important element to fulfil the entire requirements of a legitimate contract. If the promised consideration fails to materialize, it can result in a breach of contract. In a benami transaction, the consideration (payment or value exchanged) for a property is provided by one person, but the property is held by another, who is the benamidar, the person in whose name the property is registered/acquired. This means the benamidar does not own the property for himself, but holds it on behalf of the real owner, the beneficial owner, who paid the consideration. During demonetization, there were many instances of persons depositing old notes into their bank accounts which belonged to another person and then exchanging them for new notes or bank transfers to show it as real business transaction. The definition of property under the PBPT Act, is very wide and also includes cash or transfer entries. Hence, such a transaction would also be termed as a benami transaction.
In the present case, as per allegation the demonetized currency notes were allegedly handed over by appellant company to deposit the same in bank account of M/s Abhishek Enterprises, and thereafter, to return the same to appellant company by way of RTGS/through banking channel, so as to project the same as legal business transaction. Since cash can be used for purchasing any property and any property can be sold to get cash, under such situation, cash is consideration for the property and vice-versa. A property can be exchanged with any property without involving any cash. In this situation both the properties are consideration for each other. In the present case, tendering of demonetized currency for transfer entry (in absence of genuine business transaction) will be consideration for each other. The commission or service charge for such transactions is immaterial.
7. In the present case, as per allegation, the cash was provided by the appellant to Jagdish Khandelwal, the operator of bank account of M/s Abhishek Enterprises. Even otherwise, the said demonetized cash currency was deposited by Sh. Jagdish Khandelwal, the operator of account in the bank account of M/s Abhishek Enterprises, out of which sum of Rs.25,00,000/- was allegedly given by the appellant company and at this stage of transition, the cash of appellant becomes consideration and the amount held in the bank account of the benamidar M/s Abhishek Enterprises becomes the property. Therefore, both the parts of clause (a) are discernible, in case business transaction is not genuine.
Now, coming to clause (b), which is also covered in the present case, as the said amount from the bank account of benamidar M/s Abhishek Enterprises was later-on transferred to the account of appellant company, on different dates. It is immaterial whether the said property is held for a sufficient long period or immediately transferred after serving the purpose. The fact that property is re-transferred to the beneficial owner/appellant, after completion of the purpose for which it was given to benamidar, the provisions of the PBPT Act are clearly attracted and it does not exonerate any party to the benami transaction, if it is not a genuine business transaction.
8. We find that on 12.04.2017, the Mumtaz Ali Mohd. Shaikh has submitted in his statement on oath recorded u/s 19 of the PBPT Act, 1988 that the bank account of his proprietorship concern M/s Abhishek Enterprises has been misused by Mr Jagdish Khandelwal, the Operator of the bank account, during demonetisation period for the benami transactions. The bank statement of proprietorship concern, M/s. Abhishek Enterprises reflects cash deposit amounting to Rs. 10,92,50,000, after demonetization of old Indian Government Currency, and thereafter, transfer of amounts to different entities, out of which sum of Rs. 25 Lakhs was transferred to the account of present appellant, as under:
| Date | Cash Deposit | Amount Transfer | Transfer to |
| 10.11.2016 | 50,00,000 | ||
| 10.11.2016 | 41,00,000 | Updhayan Multitrade Pvt. Ltd. | |
| 11.11.2016 | 1,00,00,000 | ||
| 11.11.2016 | 25,00,000 | ||
| 11.11.2016 | 50,00,000 | ||
| 11.11.2016 | 1,02,50,000 | Updhayan Multitrade Pvt. Ltd. | |
| 11.11.2016 | 41,00,000 | Updhayan Multitrade Pvt. Ltd. | |
| 11.11.2016 | 15,00,000 | Malto Enterprises | |
| 11.11.2016 | 9,00,000 | Malto Enterprises | |
| 11.11.2016 | 14,00,000 | Malto Enterprises | |
| 22.11.2016 | 1,00,00,000 | ||
| 22.11.2016 | 85,00,000 | ||
| 22.11.2016 | 42,00,000 | Vision Agencies Pvt. Ltd. | |
| 22.11.2016 | 48,00,000 | Vision Agencies Pvt. Ltd. | |
| 22.11.2016 | 50,00,000 | Vision Agencies Pvt. Ltd. | |
| 22.11.2016 | 40,00,000 | Vision Agencies Pvt. Ltd. | |
| 23.11.2016 | 50,00,000 | ||
| 23.11.2016 | 70,00,000 | ||
| 23.11.2016 | 60,00,000 | ||
| 23.11.2016 | 25,00,000 | ||
| 23.11.2016 | 50,00,000 | ||
| 23.11.2016 | 55,00,000 | Unique Trading Company | |
| 23.11.2016 | 50,00,000 | Unique Trading Company | |
| 23.11.2016 | 50,00,000 | Unique Trading Company | |
| 23.11.2016 | 40,00,000 | Vision Agencies Pvt. Ltd. | |
| 23.11.2016 | 40,00,000 | Vision Agencies Pvt. Ltd. | |
| 23.11.2016 | 10,00,000 | Vision Agencies Pvt. Ltd. | |
| 23.11.2016 | 15,00,000 | Myrah Trade & Business | |
| 24.11.2016 | 35,00,000 | ||
| 24.11.2016 | 10,00,000 | Myrah Trade & Business | |
| 24.11.2016 | 24,47,000 | Vision Agencies Pvt. Ltd. | |
| 25.11.2016 | 25,00,000 | ||
| 25.11.2016 | 50,00,000 | ||
| 25.11.2016 | 25,00,000 | Vision Agencies Pvt. Ltd. | |
| 25.11.2016 | 49,00,000 | Unique Trading Company | |
| 28.11.2016 | 60,00,000 | ||
| 28.11.2016 | 20,00,000 | ||
| 28.11.2016 | 10,00,000 | Vision Agencies Pvt. Ltd. | |
| 28.11.2016 | 49,00,000 | Unique Trading Company | |
| 28.11.2016 | 19,55,000 | Biogen Global | |
| 29.11.2016 | 23,50,000 | ||
| 29.11.2016 | 23,36,500 | Roy Enterprises | |
| 30.11.2016 | 55,00,000 | ||
| 30.11.2016 | 19,00,000 | ||
| 30.11.2016 | 40,00,000 | ||
| 30.11.2016 | 1,00,00,000 | ||
| 30.11.2016 | 19,00,000 | Roy Enterprises | |
| 30.11.2016 | 48,50,000 | Global Enterprises | |
| 30.11.2016 | 34,25,000 | Global Enterprises | |
| 30.11.2016 | 6,00,000 | Classic Enterprises | |
| 30.11.2016 | 30,00,000 | Classic Enterprises | |
| 30.11.2016 | 25,75,000 | Parshavnath Gems | |
| 30.11.2016 | 40,00,000 | Parshavnath Gems | |
| 30.11.2016 | 10,00,000 | Mehta Marketing | |
| Total | 10,92,50,000 | 10,86,38,500 |
9. During the arguments, the alleged beneficial owner/appellant has submitted that the amount of Rs. 25 lakhs transferred to its bank account was against the sale of gold, which was duly reflected in its books of accounts and the same is a genuine business transaction. On the other hand, respondent department has contended that the same is not a genuine business transaction, but a devise to transform the demonetized currency into transfer entries in its books of accounts through M/s Abhishek Enterprises. Now coming to the Stock Register of Appellant M/s Myrah Trade & Business, the opening stock of gold is reflected as ‘Nil’ in the month of June, 2016, however, in order to show the past trading in gold bars (prior to demonetization) a purchase Voucher no.298 dated 29.06.2016 is introduced to show purchase of gold from M/s Ekdant CPL. Thereafter, reverse entry is shown in favour of M/s Ekdant CPL on 03.07.2016, to show the stock as ‘Nil’ on the said date. Admittedly, thereafter there is no purchase of gold bars for three & half months. On 24.10.2016, the appellant has shown the purchase of gold bars of 500 gms from M/s Ekdant CPL in the stock register. The said stock of 500 gms was shown as intact, till the period of demonetization. Again on 11.11.2016, appellant has shown the purchase of 500 gms of gold bars from M/s Ekdant CPL and thereby, increasing the stock to 1000 gms, even though there was no sale during this intervening period, as per stock register. Appellant has shown sale of 20gms of gold to Nayana Minde on 22.11.2016 and thereby reducing the stock balance to 980 gms as per Stock Register. Therefore, the question of entering into any promise to sell one Kg gold to M/s Abhishek Enterprises, through alleged broker Rakesh B. Rathod does not arise.
Statement of bank account of appellant is at page 235 reflects that appellant received Rs. 33 lakhs & 20 lakhs on 09.11.2016 from Kamal, out of which sum of Rs. 15,93,900 was transferred to M/s Ekdant CPL on 11.11.2016. This bank statement does not reflect any other payment to M/s Ekdant CPL in the month of October, or November, 2016.
Ledger confirmation by M/s Ekdant Commercial Private Limited to M/s Myrah Trade & Business at page 112, clearly reflects that after payment of Rs.15,00,000, on 27.09.2016, the appellant was liable to pay balance sum of Rs.20,38,161 to M/s Ekdant Commercial Private Limited. It appears that as per ledger out of said balance amount, the appellant has paid sum of Rs.15,93,900 on 11.11.2016, and thereby, the balance liability was reduced to Rs.4,44,261.
However, in the confirmation of accounts statement, the appellant has shown the purchase of 500 gms of gold bar on 24.10.2016 for sum of Rs.15,23,060 from M/s Ekdant CPL and thereby increasing the outstanding book liability, as Rs.35,61,221. Thereafter, the appellant has shown payment of Rs.15,93,900 on 11.11.2016, against the purchase of gold bar for sum of Rs.15,93,900 on 11.11.2016, and thereby showing the maintenance of same outstanding balance as Rs.35,61,621 payable to M/s Ekdant CPL.
Appellant has filed five Tax Invoices to show the purchase of gold bars, out of which two invoices are dated 24.10.2016 & 11.11.2016, whereas remaining three are for the month of January & February. The Invoice dated 24.10.2016 reflects purchase of gold bar of 500 gms @ 3010/gm amounting to Rs.15,05,000 plus VAT of Rs.18,060, totalling to Rs.15,23,060. The Invoice dated 11.11.2016 reflects purchase of gold bar of 500gms @ 3150/gm amounting to Rs.15,75,000, plus VAT of Rs.18900, totalling to Rs.15,93,900.
Now, coming to the Tax Invoice dated 23.11.2016 issued by appellant in favour of M/s Abhishek Enterprises, it reflects delivery of 500 gms gold Bar @ 2900/gm on 23.11.2016 for sum of Rs.14,50,000 and VAT of Rs.17,400, totalling to Rs.14,67,400. The Tax Invoice dated 24.11.2016 issued by appellant in favour of M/s Abhishek Enterprises, it reflects delivery of 350 gms gold bar @ 2920/gm on 24.11.2016 for sum of Rs.10,22,000 and VAT of Rs.12,264, totalling to Rs.10,34,264. The total value of sale w.r.t. these two invoices is Rs. 25,01,664.
It is interesting to note that as per record produced by the appellant, the appellant has not discharged the outstanding balance liability of Rs.35,61,621 towards M/s Ekdant CPL, even after the sale of gold bars on 23.11.2016 & 24.11.2016, which points towards the direction that bogus purchase & sale invoices were created during the demonetization period to show it as genuine business transaction, though in fact the transfer of Rs.15,93,900 to M/s Ekdant was apparently towards the balance old liability of Rs.20,38,161, as on 11.11.2016, as per ledger.
We also notice that the two Tax Invoices in favour of M/s Abhishek Enterprises, reflects the name of proprietor, as Jitu Khandelwal, however gold bars were stated to be delivered to Rakesh B. Rathod, without production & submission of any Authority Letter, in favour of said broker by M/s Abhishek Enterprises, or by Sh. Jitu Khandelwal. Appellant has not obtained any KYC document alongwith PAN card of the said purchaser M/s Abhishek Enterprises, or its proprietor, from the broker Rakesh B. Rathod, though he knowingly & admittedly received the payment from M/s Abhishek Enterprises. Appellant cannot escape from its statutory liability of taking the KYC & PAN card of the alleged purchaser by taking the plea that he entered into transaction at the instance of broker, without any direct contact with the purchaser. The affidavit of broker obtained by the appellant is clearly a procured document to create defence, in absence any Authority Letter in favour of Sh. Rakesh B. Rathod and absence of any KYC & PAN card of purchaser M/s Abhishek Enterprises. The said Rakesh B. Rathod, the broker introduced by appellant was not traceable during the investigation and he was not produced by appellant to the investigation, as pointed out by Ld. Counsel for the respondent department.
We cannot ignore the contention of Ld. Counsel for the respondent department that present appellant is the sister concern of M/s Ekdant CPL, being managed by same family members, and hence, giving of accommodation entries to show the stock in hand with appellant to for showing conversion of demonetized currency into genuine business transaction is not ruled out.
10. In view of our discussion in paras 5 to 9, we hereby hold that
| (i) | Appellant is a beneficial owner, even in absence of any evidence of giving the demonetized currency of Rs. 25 lakhs for the purpose of conversion into credit entries, on the basis of documentary and circumstantial evidence, which points towards the direction that this is not a genuine business transaction. |
| (ii) | Hence, the appellant received Rs.25 lakhs from M/s Abhishek Enterprises, which is not a genuine business transaction for selling gold bars, but a strategy to convert the demonetized currency to transfer entries. |
| (iii) | The delivery of gold through broker Mr. Rakesh B. Rathod is not proved. |
| (iv) | The appeal cannot be allowed on the basis of affidavit procured from Mr. Rakesh B. Rathod, the alleged broker. |
Hence, issue no. (i) to (iv) are decided against the appellant.
11. Now, coming to issue no. (v), Mumtaz Ali Mohd. Shaikh was afforded opportunity to produce Sh. Jagdish Khandelwal for verification of his existence and role. However, Mumtaz Ali Mohd Shaikh could not locate Mr. Jagdish Khandelwal or give his present address or produce him before the I.O., till the passing of Provisional Attachment Order u/s 24(4)(a) (i) of the PBPT Act, 1988. Hence, the contention of the appellant that the concerned person, Jagdish Khandelwal @ Jitubhai was not traced and no efforts were made for the same does not hold good in absence of his true identity and present whereabouts. Ld. Counsel for the respondent department contended that when the said Sh. Jagdish Khandelwal @ Jitu Khandelwal was not traceable during the investigation of the case, and hence, his very existence is doubtful and some fake personality might be introduced. Therefore, when a person is not traceable even during the investigation of the case, question of any enquiry from him does not arise. Hence, this issue is also decided against the appellant.
12. Now, coming to issue no. (vi) Sh. Mumtaz Ali Mohd. Sheikh during the investigation has clearly taken the plea that he is not aware about the business transactions of M/s Abhishek Enterprises as bank account of this concern was opened by Sh. Jagdish Khandelwal by obtaining his signatures and thereafter, Sh. Jagdish Khandelwal has obtained his signatures on the blank cheque leaves of cheque book. Hence, when a person is not aware of the transactions, then no useful purpose will be served by calling him for cross-examination. Even otherwise, there is nothing on record to show that any prejudice was caused to the appellant for non-examination of Sh. Mumtaz Ali Mohd. Sheikh. Appellant could have produced him in his defence, if he was so essential to prove any material fact. Even otherwise there can be no cross-examination without recording the examination in chief or tendering of evidence by way of any affidavit of a witness by any party. Hence, this issue is also decided against the appellant.
13. In sequel to our discussion in the para 5 to 12, the impugned order qua the attachment of property of the appellant Beneficial Owner, is hereby upheld for attachment to the extent of Rs. 25,00,000/-. However, the impugned order is hereby modified to the extent that M/s Abhishek Enterprises, through Mumtaz Ali Mohd Shaikh as its proprietor and Jagdish Khandelwal as its operator is a Benamidar. Hence, the appeal is hereby dismissed, with liberty of being heard as per section 27(1) of PBPT Act, at the stage of confiscation proceedings, if any.
Appeal Dismissed.
.