ORDER
1. This appeal has been filed to challenge the order dated 11.09.2024 passed by the Adjudicating Authority confirming the Provisional Attachment Order (“PAO”) while answering the reference.
Arguments of the Ld. Counsel for the appellant:
2. Ld. Counsel for the appellant made a reference of the facts to the case for challenge to the order alleging it to be not involving benami transaction. It was submitted that the appellant proposed to purchase flats in a building to be constructed in the name of ‘Prathamesh Galaxy’. The developer, namely, M/s Sailee Developers issued allotment letters on 24.07.2002 and 26.01.2003 in the name of the appellant confirming and reserving four flats on different floors. The amount of consideration was paid and mentioned in the allotment letters. The Agreement to Sell was entered with the developer and was registered in the name of third-parties. The appellant duly disclosed it in the survey carried out under Section 133A of the Income-tax Act. In fact, the appellant disclosed total additional income of Rs.1.71 Crore bifurcated in four different financial years when survey was conducted. This was with inclusion of the cost of the four flats including stamp duty. A sum of Rs.49.51 lakhs was disclosed towards the payment for four flats + stamp duty aggregating to Rs.5.71 lakhs.
3. The transaction of flats booked and registered in the name of third-parties was also disclosed to the Income Tax Department. However, since the appellant accepted the transaction and paid taxes, no further action was to be taken which includes under the Prohibition of Benami Property Transactions Act, 1988 (in short “the Act of 1988”). A reference of one flat alleged to have been sold in the year 2005-2006 was given, however, with the admission that during the search and seizure under Section 132 of the Income-tax Act on 11.10.2022, Gift Deeds were found in respect of four flats for gifting it to the appellant by the parties in whose names registered Agreements existed. It was to revert back the property to the appellant. The Gift Deed was, however, taken to be basis for alleging a case of benami transaction without any reason. In fact, the flats were booked in the name of the appellant but were registered in the name of third-parties for the reason that construction of the building was yet to be completed, rather, it did not start due to dispute. Thus, even the property does not exist in absence of construction so as its transfer to make a case of benami transaction. The Gift Deed was taken by the appellant in his favour due to his age and ill-health, though, with the admission that agreement was registered in the name of third-party for which consideration was paid by the appellant.
4. Ld. Counsel for the appellant, however, submitted that the transaction being the year of 2002-2003 onwards and much before the amendment in the Act of 1988 by the Amending Act of 2016 defining “benami transaction” under Section 2(9) of the Act of 1988 could not have been applied retrospectively. A reference of the judgment of the Apex Court in the case of Union of India v. Ganpati Dealcom (P.) Ltd.(SC)/[2025] 474 ITR 354 (SC) was given. It is with the further submission that when the property is not even existing, an action for its provisional attachment should be rendered illegal and accordingly prayer was made to set-aside the impugned order.
5. Ld. Counsel for the appellant also made a reference of the order of this Tribunal in the case of Prism Scan Express (P.) Ltd. v. Initiating Officer, Dy. CIT (BPU-2) (SAFEMA – New Delhi) Appeal No. FPA-PBPT-1079/MUM/2020 decided by the order dated 15.12.2023. It was with the prayer that the judgement (supra) should not be made applicable to the facts of the case when no element of transfer of property exists.
6. Ld. Counsel for the appellant closed his arguments with the aforesaid, though he was called upon to make any other legal or factual issues but Ld. Counsel for the appellant restricted his argument to what has been narrated above.
Arguments of the Ld. Counsel for the respondent:
7. Ld. Counsel for the respondent vehemently contested the appeal and prayed for its dismissal as no case is made out to cause interference in the impugned order. It is a case of involving benami transaction and accordingly, the Adjudicating Authority has rightly confirmed the PAO. Elaborate arguments were made by the Ld. Counsel for the respondent. It would be referred while dealing with the arguments of the Ld. Counsel for the appellant to avoid repetition of same facts and for the sake of brevity.
Findings of the Tribunal:
8. The brief facts pertaining to the case have been disclosed by the Ld. Counsel for the appellant which involves allotment of four flats between the period starting from 24.07.2002 to 26.01.2003. It is with the further submission that the construction of flats could not be completed by the builder and therefore agreement to sell of the four flats was registered in the name of benamidars, namely, Shri Devendrasingh Rajput, Shri Rajesh S. Chhaparia, Shri Vijay S. Chhaparia and Shri Shailendra R. Gupta. It is with the further admission that consideration on allotment of flats was paid by the appellant and not by the persons named above. The agreement to sell of the flats said to have been entered at the instance of the appellant in favour of the benamidar on account of noncompletion of the construction. However, the fact remains that an amount of Rs.49.51 lakhs was paid by the appellant towards consideration for the aforesaid four flats which was excluding a sum of Rs.5.71 lakhs towards stamp duty and agreement to sell was registered in the name of benamidar. The facts given above are sufficient to make out a case of benami transaction because consideration of the property held by the benamidars was paid by the appellant. It was for his future benefit and accordingly the Gift Deeds were later on taken. It was endorsed by none-else but the benamidars in whose name the agreement was registered in respect of four flats.
9. The next issue raised by the appellant is in regard to the period because prior to the amendment by the Amending Act of 2016, the definition of “benami transaction” was different and if it is applied then it would not cover the transaction in the case in hand and for that the reference of the judgment of the Apex Court in the case of Ganpati Dealcom Pvt. Ltd. (supra) was given. It was, however, with the fair admission that the judgment aforesaid has been recalled by the Apex Court vide its order dated 18.10.2024. The fact, however, remains about application of Amending Act of 2016, even if it is taken prospective in nature. The case is made out against the appellant for the reason that property was “held” as on the date of amendment and subsequent thereto. A detailed judgment has been given by this Tribunal in the case of M/s Prism Scan Express Pvt. Ltd. (supra) for interpretation to the definition of “benami transaction” under Section 2(9)(A) of the Act of 1988 is relevant in the case in hand and thus quoted hereunder:
“36. The appellants were holding the shares on the date of initiation of action and it could not be disputed by the appellants. The perusal of the definition of “Benami Transaction” not only makes a reference of transfer of property to fall in the definition of “Benami Transaction” but even its holding section 2 (9) (A) of Amending Act, 2016 has two parts to consider a transaction to fall within the purview of Benami Transaction, as defined under section 2 (9) (A) of the Act. The first is about the transfer of the property to a person of which consideration was paid or provided by another person. The second part has been separated from first part by putting word “or” in between. Under the second part of definition, if the property is held by a person whose consideration has been provided or paid by another person then also it would be a “Benami Transaction”.
37. The appellant has referred to the definition only by taking the first part, i.e. transfer of shares ignoring the second part of the definition regarding holding of property. If a person is holding a property as on the date of the amendment or subsequent to it, whose consideration was paid or provided by another person, then it will fall under the definition of “Benami Transaction”. The consideration of definition of “Benami Transaction” by dividing it into two parts was not made earlier.
38. In the case of Nexus Feeds Limited & Others (supra), we do not find a specific argument in reference to holding of property by a person of which consideration was paid or provided by another person.
39. For the aforesaid purpose, we refer para 69, 69.1, 70, 71, 73 and 93 of the said judgement and are quoted here under.
69. We have already noted above as to how the definition of benami transaction as finding place in the unamended 1988 Act has undergone a qualitative change post the Amendment Act of 2016. Under Section 2 (a) of the unamended 1988 Act, benami transaction was defined to mean any transaction in which property is transferred to one person for a consideration paid or provided by another person. Thus, for a transaction to come within the ambit of benami transaction under the unamended 1988 Act, it must be a transaction in which property is transferred; such property must be transferred to one person by another person; and such transfer of property must be for a consideration paid or provided by the transferor. Under the Amendment Act of 2016, the definition of benami transaction has been expanded which we have already dealt with in paragraphs 49 and 50 of this judgment. Since the specific allegation and finding of the respondents against the petitioners is that the transaction entered into by the petitioner with the third respondent on 14.12.2011 is a benami transaction within the meaning of Section 2 (9) (A) read with Section 2 (9) (C) of the 1988 Act as amended by the Amendment Act of 2016, we may once again analyze the said provisions.
69.1 Admittedly, these two provisions were not in the statute either on the date when the 1988 Act was enacted or when the transaction took place on 14.12.2011. It has been brought into the statute book vide the Amendment Act of 2016. Question for consideration is whether the aforesaid definitions can be applied to the above transaction which took place on 14.12.2011?
70. As per Section 2 (9) (A), a benami transaction would mean a transaction or an arrangement – (a) where a property is transferred to or is held by a person and 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, direct or indirect of the person who has provided the consideration barring the four exceptions carved out with which we may not be concerned.
71. Thus, as per Section 2 (9) (A), there must be a transaction or an arrangement; as per such transaction or arrangement, a property is transferred to or is held by a person; the consideration for such property is provided or paid by another person. Pausing here for a moment, on a comparative analysis of this definition with the definition of benami transaction under the unamended 1988 Act, we find that there is a subtle but significant difference in the later definition even at this stage itself. As per the amended definition, the property need not be transferred by ‘another person’. The property can be transferred to by any person or held by a person on behalf of any person. But the consideration for such property is provided or paid by the ‘another person’. The amended definition proceeds further; such transferred property must be held for the immediate or future benefit of the person who has provided the consideration and such benefit may be direct or indirect. It is equally significant to note that under the unamended 1988 Act there was no definition of ‘benamidar’ and ‘beneficial owner’. These two expressions are defined under the Amendment Act of 2016 and must be read in conjunction with the new definition of benami transaction as provided in Section 2 (9). Benamidar is the person, real or fictitious, in whose name the benami property is transferred or who holds such benami property; this would include a person who lends his name to such transfer or holding of benami property. Again, beneficial owner means, the person for whose benefit the benami property is held by a benamidar, whether his identity is known or not.
73. From the above analysis, it is beyond any doubt that Section 2 (9) (A) and Section 2 (9) (C) are substantive provisions, inasmuch as if a transaction or an arrangement comes within the ambit of the aforesaid two provisions, then it would be a benami transaction which is not only prohibited under Sub Section (1) of Section (3) but is also an offence punishable under Sub-Sections (2) and (3) thereof as well as under Section 53 of the 1988 Act as amended. It is interesting to note that under Sub-Section (2) of Section (3), the penalty for the offence of benami transaction is imprisonment which may extend to three years or with fine or with both. However, Sub-Section (3) of Section (3) clarifies that whoever enters into any benami transaction after coming into force of the Amendment Act of 2016 i.e., after 01.11.2016, shall be punished in accordance with Section 53 notwithstanding anything contained in Sub Section (2) which provides for a stiffer penalty of 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 percent of the fair market value of the property. We may, even at the cost of repetition, mention that it is not the case of the respondents that the transaction in question is a benami transaction within the meaning of Section 2 (a) of the unamended 1988 Act. If it is a benami transaction under Section 2 (a) of the unamended 1988 Act, then it would attract the lesser penalty under Section 3(2). But if it is a benami transaction under Sections 2 (9) (A) and 2 (9) (C) of the 1988 Act as amended by the Amendment Act of 2016, then it will attract the stiffer penalty under Section 3 (3).
93. From the conspectus of the discussions made above, it is apparent that Section 2 (9) (A) and Section 2 (9) (C) are substantive provisions creating the offence of benami transaction. These two provisions are significantly and substantially wider than the definition of benami transaction under Section 2 (a) of the unamended 1988 Act. Therefore, Section 2 (9) (A) and Section 2 (9) (C) can only have effect prospectively. Central Government has notified the date of coming into force of the Amendment Act of 2016 as 01.11.2016. Therefore, these two provisions cannot be applied to a transaction which took place prior to 01.11.2016. Admittedly, in the present case, the transaction in question is dated 14.12.2011. That being the position, we have no hesitation to hold that the show cause notice dated 30.12.2019, provisional attachment order dated 31.12.2019 and the impugned order dated 30.03.2021 are null and void being without jurisdiction. Consequently, the impugned order is set aside and quashed.
40. The Hon”ble High Court, no doubt propounded a ratio of prospective operation of the Amending Act of 2016 and even refers to the definition of “Benami Transaction”. But, the specific argument in reference to holding of the property by a person whose consideration was paid or provided by another person was not raised rather emphasis was in regard to the transfer of the property prior to the amendment by the Amending Act of 2016. The specific argument aforesaid was not raised even before us in any of the appeals decided by this Tribunal earlier rather the decision therein was based on the admission of the counsel for the respondents that Benami Transaction involved therein was of the period prior to 01.11.2016. The orders were passed on the admission of the parties that Benami Transaction is prior to 01.11.2016.
41. In the instant case, a contest was made by the counsel for the respondents who submitted that if anyone is holding a property after the amendment by the Amending Act, 2016 though transfer of property is prior to 01.10.2016, such a transaction would fall in the definition of “Benami Transaction” as given under section of 2 (9) (A) of the Act of 2016.
42. We find force in the arguments of the learned counsel for the respondents. The Tribunal or for that even a court cannot ignore the statutory provision and for that to miss any word used in the statute. The word “held” has to be given true meaning and that too after proper reading of the definition, otherwise we would be giving interpretation to the provision going contrary to the definition of “Benami Transaction”. It can be explained by an illustration for clarity of the issue.
43. If a property is transferred to a person whose consideration was paid or provided by a person prior to 01.11.2016 and such a property is not held by the person on date or subsequent to the amendment then such a Benami Transaction would not be affected by the Amending Act 2016.
44 However, if transfer of property took place prior to 01.10.2016 and property is “held” by the person even subsequent to the date aforesaid who has not paid the consideration, rather it was paid or provided by another person, then irrespective of the date of transfer of the property, its holding would be a “Benami Transaction”.
45. We cannot ignore the word, “held” for giving proper interpretation of the definition of “Benami Transaction”. Accordingly, while we rely upon the Judgement of Hon” ble Apex Court in the case of Ganpati Dealcom Private Limited (supra) but with clarity that if a person holds the property even after the amendment then even if transfer was prior to 01.11.2016, such a Amending Act of 2016 and it would apply to such a transaction.
46. In the case of Nexus Feeds Limited & Others, the Division Bench of Telangana High Court has recorded admission of the respondents about the Benami Transactions of a period prior to the Amending Act 2016.
47. The perusal of para 71 otherwise makes it clear that if the property is transferred to any person or held by a person on behalf of any other person of which consideration was provided or paid by another, then it would fall under the definition of “Benami Transaction”. The emphasis was made even in regards to the transfer of the property held immediately or for future benefit of the person who has provided the consideration. It would also fall in the definition of “Benami Transaction”.
48. According to the Division Bench of the High Court, the two expression words, “transfer” and “held” under the amended provision need to read in conjunction and conclusions have been drawn in para 71 in the case (supra) that “Benamidar” is a person, real or fictional, in whose name the Benami property is transferred or who holds such Benami property.
49. The conclusion therein are against the appellants who referred subsequent paras, which are literally based on the admissions of the party where it was agreed that the Benami Transaction was of the period prior to the amendment by the Amending Act, 2016. That being the position, the judgement supra, does not support the appellant.
50. The appellants have referred to the judgement of the Apex Court in the case of Suresh Seth (supra). It is to submit that there cannot be a continuous offence. If the offence is committed on a particular day, it ends on the same day. The arguments have been made in the ignorance of the facts in the case of Suresh Seth. If an offence is complete in all respect on a particulars day or days, then obviously the judgement in the case Suresh Seth (supra) would apply. It would however depend on the nature of the offence and even the provision. In the instant case, the definition of “Benami Transaction” has two parts. One is on the transfer of the property and another on its holding. The use of the word “held” under section 2 (9) (A) (a) is of significance and would make a transaction to be a Benami Transaction, if a person holds a property even on the date of amendment or subsequent to it of which consideration has been provided or paid by another person prior to the amendment. We have given illustration for the aforesaid to hold that if a property was transferred prior to the amendment by the Amending Act, 2016 and is not held by the transferee as on the date of the amendment, then the amended provision would not apply but after transfer of the property prior to the amendment if it is held by the Benamidar as on the date of the amendment or subsequent thereto, it would fall within the definition of “Benami Transaction” and registration of case for that would not be considered to be a continuous offence but becoming an offence in reference to the amended definition of “Benami Transaction”. Accordingly, the judgement in the case of Suresh Seth (supra) would not apply to the case.
51. The first issue is accordingly decided against the appellant and in the favour of the respondents because property was “held” even after the amendment by the Amending Act of 2016.
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10. The para quoted above gives interpretation to the definition of “benami transaction” given under Section 2(9)(A) of the Act of 1988 where not only the “transfer” of property to make out a case of benami transaction was taken into consideration but if such property is “held”, then also the definition would be applicable and it would be as on the date of amendment or subsequent thereto. Thus, even if the allotment of flats was prior to the amendment, since it was held even subsequent to the amendment in the year 2016, the definition of “benami transaction” under the Amending Act of 2016 would be applicable.
11. The Ld. Counsel for the appellant contested that there is no property involved in this case. If that is so then what was the necessity for filing the appeal could not be explained. Ld. Counsel for the appellant then conceded that the allotment letters for the flats were issued and consideration of which was paid by the appellant, though agreement was registered in the name of the benamidars who did not pay a single penny and the property was held till the year 2016 and subsequent to the amendment. In view of above, it cannot be said that the provisional attachment is of non-existence of the property, rather, Ld. Counsel for the appellant himself later on admitted that allotment letter has been issued for the four flats booked by the appellant, though registered in the name of his friends and relative.
12. The next question raised by the appellant was to give definition of ‘transfer’ used under Section 2(9)(A) of the Act of 1988. It was submitted that there is no element of transfer of property. The argument has been raised in ignorance of the definition of ‘benami transaction’, as amended by the Amending Act of 2016. It makes reference not only to the “transfer” of property but is ‘held’ by a person for which consideration has been paid or provided by another. If the definition of aforesaid is applied to the facts of the case, it has not been disputed that the property is still held after entering into the benami transaction and thus the provisional attachment is not offending the definition of ‘benami transaction’ given under Section 2(9)(A) of the Act of 1988, as amended.
13. In the light of the discussions made above, we do not find a case in favour of the appellant so as to cause interference in the impugned order. Accordingly appeal fails and is dismissed.
