M/s Om Samriddhi Banquet & Hospitality LLP vs The Initiating Officer ACIT Benami Prohibition Unit Mumbai

Headnote:(A) Prohibition of Benami Property Transactions Act, 1988 - Sections 2(9)(A), 2(10), 2(26), 24(1), 24(3), 24(4)(a)(i), 26(3), 46 - Benami transaction - Demonetization - Cash as property - Consideration - Burden of proof - Supply of reasons to believe - Right of cross-examination - Provisional attachment - Whether deposit of demonetized currency notes in bank account of another person and subsequent transfer back constitutes benami transaction - Held, cash is movable property within definition of property under Section 2(26); where cash is provided by one person and held by another, it satisfies conditions of Section 2(9)(A) - The words 'consideration' and 'property' merge when cash is involved - Transfer of cash to benamidar and retransfer to beneficial owner after purpose served does not exonerate parties - Supply of reasons to believe not mandatory under Section 24(1) - Failure to supply does not vitiate proceedings if material exists - Statements recorded behind back without opportunity of cross-examination can be disregarded if admitted facts and documentary evidence support the conclusion - Attachment order for full amount valid irrespective of balance on date of attachment. (Paras 6-9)

(B) Appeal - Scope - Appellate Tribunal under SAFEMA - Findings of fact and law - No interference unless perverse or illegal. (Para 10)

Facts of the case:
During demonetization, the appellant gave currency notes of Rs.85,18,600 to two individuals to deposit into appellant's bank account. Instead, the notes were deposited into the bank account of a proprietorship concern of one of them, and later transferred back to appellant via RTGS. The Initiating Officer treated this as benami transaction, passed provisional attachment order, confirmed by Adjudicating Authority. Appellant appealed.

Findings of Court:
The Tribunal held that the transaction was benami. Cash is property under the Act. The consideration was provided by appellant, property held by benamidar, and ultimately transferred back for benefit of appellant. The purpose was to project demonetized currency as business receipts. The failure to supply reasons to believe did not invalidate proceedings. Even without statements, documentary evidence proved the case. Attachment for full amount was valid.

Issues: (i) Whether supply of reasons to believe before show cause notice is mandatory; (ii) Whether right to cross-examine witnesses whose statements were used; (iii) Whether cash was deposited against instructions; (iv) Whether transfer of cash falls under Section 2(9)(A); (v) Whether no action can be taken after transfer back; (vi) Whether attachment order for Rs.85,18,000 was without basis given low balance.

Ratio Decidendi: The definition of property under Section 2(26) includes cash. In a benami transaction, where cash is provided by one person and held by another, both consideration and property are cash, thus merging. The conditions of Section 2(9)(A) are satisfied. Supply of reasons to believe is not mandatory; non-supply does not vitiate if material exists. The right to cross-examine is not fatal if admitted facts suffice. The attachment of the full amount is valid irrespective of balance.

Result: Appeal dismissed; order dated 18.05.2018 upheld.

Legal Category Hierarchy

1. Appeal under Section 46 of PBPT Act against confirmation of provisional attachment order for alleged benami transaction involving cash. (Para 2 )

2. Appellant argued failure to supply reasons to believe and denial of cross-examination; transaction was bona fide business receipt. Respondent supported the order. (Para 3 , 4 )

3. Appeal dismissed and order dated 18.05.2018 upheld. (Para 10 )

4. Is it mandatory for the Initiating Officer to supply reasons to believe before issuing a show cause notice under Section 24(1) of the PBPT Act?

No, the Act does not mandate supply of reasons; proceedings not vitiated if IO had sufficient material. (Para 6 )

5. Does the failure to provide an opportunity to cross-examine witnesses vitiate proceedings under the PBPT Act?

Not necessarily; even if statements are discarded, documentary evidence and admitted facts can justify proceedings. (Para 7 )

6. Does cash constitute 'property' under Section 2(26) of the PBPT Act, and can a cash transaction be a benami transaction?

Yes, cash is movable property. A transaction where cash is held by a benamidar for beneficial owner falls under Section 2(9)(A). (Para 9 )

7. Can a transaction where cash is transferred back to the beneficial owner after deposit still be considered a benami transaction?

Yes, retransfer after serving purpose does not exonerate parties; provisions of the Act apply. (Para 9 )

8. Can the Initiating Officer attach a bank account for an amount exceeding the available balance?

Yes, attachment can be for the value of the benami property irrespective of current balance. (Para 9 )

FINAL ORDER

12.08.2025

Dictated by: Rajesh Malhotra

Present appeal under Section 46 of the Prohibition of Benami Property Transaction Act, 1988 , is filed by the Appellant against the Order dated 18.05.2018, passed by the Ld. Adjudicating Authority, in reference No. R-35/2017, under Section 26 (3), of the PBPT Act, 1988, whereby, the Provisional Attachment Order dated 21.04.2017 passed by the Initiating Officer (I.O.) under Section 24 (3) of PBPT Act, was confirmed.

The detail of the property of the Appellant is as under: -

2. As per the facts of the case, I.O. received information from Investigation Directorate of Mumbai that Mr. Bikramjeet Ram has used his bank accounts to deposit old notes of denomination of Rs 500/- and Rs. 1,000/- belonging to M/s Om Samriddhi Banquet & Hospitality LLP, Address: Banquet Hall No. 1, 5th Floor, Phirozshah Mehta Road, Santacruz West, Mumbai-54). The demonetized notes were deposited into bank accounts of his proprietorship concern, namely M/s Vikram Trading. The amount so deposited was later-on transferred to account of Cooperative Bank, Santacruz West, Mumbai - 400054 with account no. 002812100018645.

Mr. Bikramjeet Ram, during the course of his statement recorded by IO on 12-01-2017 under oath under section 131 of the Income Tax Act, 1961, has accepted that bank accounts of M/s Vikram Trading have been used to deposit cash.

Mr. Gurcharan Singh (partner of Om Samriddhi Banquet & Hospitality LLP), during the course of his statement recorded by IO on 07-12-2016 & 13-12-2016 and under oath under section 131 of the IT Act, 1961 has also accepted that bank accounts of M/s Vikram Trading have been used to deposit cash belonging to M/s Om Samriddhi Banquet & Hospitality LLP. Cash so deposited was later-on transferred into account of Om Samriddhi Banquet & Hospitality LLP in The Bharat Cooperative Bank Ltd, Mumbai. Total amount of such transfer was Rs. 85,18,100/-.

Accordingly, the Initiating Officer concluded that the transaction entered into by Mr. Bikramjeet Ram with Om Samriddhi Banquet & Hospitality LLP is a benami transaction u/s 2(9)(A) of PBPT Act, 1988 as the cash for such deposit has been provided by M/s Om Samriddhi Banquet & Hospitality LLP. This cash was held by Mr. Bikramjeet Ram and was later deposited into various bank accounts of his proprietorship concern namely M/s Vikram Trading on different dates for future benefit of M/s Om Samriddhi Banquet & Hospitality LLP, as money so deposited was ultimately transferred to beneficial owner M/s Om Samriddhi Banquet & Hospitality LLP. So, in view of the above, IO had reason to believe that Mr. Bikramjeet Ram is a benamidar and M/s Om Samriddhi Banquet & Hospitality LLP is a beneficiary. Accordingly, a show cause notice, dated 27-01-2017, u/s 24(1) of the PBPT Act, 1988 was issued by Initiating Officer to benamidar Mr. Bikramjeet Ram.

Accordingly, IO on the basis of material on record and reasons to believe that the said demonetized amount deposited by Mr. Bikramjeet Ram proprietor of M/s Vikram Trading was a benami property and thereby he passed the Provisional Attachment Order dated 21.04.2017. Thereafter, send the reference No. R-35/2017 before the Ld. Adjudicating Authority for confirmation of the same.

The Ld. Adjudicating Authority being satisfied with the allegations mentioned in the reference issued Show Cause Notice to the Defendants to file their reply. Defendant No.1 Sh. Bikramjeet Ram failed to appear and file his reply and was proceeded against ex-parte, whereas reply is filed on behalf of Defendant No. 2 (herein appellant company).

After going through the reply and documents and the respective submissions, the Ld. AA confirmed the PAO vide detailed order dated 18.05.2018.

Aggrieved by the said Order, appellant filed the present appeal.

3. During the arguments, Ld. Counsel for the Appellant pointed out the facts of the case, as mentioned in his list of dates & events as under:-

At the time of demonetization, the appellant discovered currency

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2025 Supreme(Online)(ATFP) 13305

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
G.C. Mishra, Member, Rajesh Malhotra, Member
M/s Om Samriddhi Banquet & Hospitality LLP – Appellant
Versus
The Initiating Officer ACIT Benami Prohibition Unit Mumbai – Respondent
FPA-PBPT-84/MUM/2018

Cash is property under PBPT Act; depositing demonetized currency in another's account and later transferring back constitutes benami transaction when consideration provided by beneficial owner.

Legal Category Hierarchy

Table of Contents

4. Is it mandatory for the Initiating Officer to supply reasons to believe before issuing a show cause notice under Section 24(1) of the PBPT Act?

5. Does the failure to provide an opportunity to cross-examine witnesses vitiate proceedings under the PBPT Act?

6. Does cash constitute 'property' under Section 2(26) of the PBPT Act, and can a cash transaction be a benami transaction?

7. Can a transaction where cash is transferred back to the beneficial owner after deposit still be considered a benami transaction?

8. Can the Initiating Officer attach a bank account for an amount exceeding the available balance?

2025 Supreme(Online)(ATFP) 13305

APPELLATE TRIBUNAL FOR FORFEITED PROPERTYG.C. Mishra, Member, Rajesh Malhotra, MemberM/s Om Samriddhi Banquet & Hospitality LLP – AppellantVersusThe Initiating Officer ACIT Benami Prohibition Unit Mumbai – RespondentFPA-PBPT-84/MUM/2018

Cash is property under PBPT Act; depositing demonetized currency in another's account and later transferring back constitutes benami transaction when consideration provided by beneficial owner.

Legal Category Hierarchy

Table of Contents

4. Is it mandatory for the Initiating Officer to supply reasons to believe before issuing a show cause notice under Section 24(1) of the PBPT Act?

5. Does the failure to provide an opportunity to cross-examine witnesses vitiate proceedings under the PBPT Act?

6. Does cash constitute 'property' under Section 2(26) of the PBPT Act, and can a cash transaction be a benami transaction?

7. Can a transaction where cash is transferred back to the beneficial owner after deposit still be considered a benami transaction?

8. Can the Initiating Officer attach a bank account for an amount exceeding the available balance?

Cases Referred (1)

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
G.C. Mishra, Member, Rajesh Malhotra, Member
M/s Om Samriddhi Banquet & Hospitality LLP – Appellant
Versus
The Initiating Officer ACIT Benami Prohibition Unit Mumbai – Respondent
FPA-PBPT-84/MUM/2018