2025 Supreme(Online)(ATFP) 13377

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
G. C. Mishra, Member, Rajesh Malhotra, Member
1. Shri Uttam Kumar Saha 2. Shri Nishit Ranjan Bhattacharjee (abated since deceased) 3. Shri Narayan Das – Appellant
Versus
The Initiating Officer DCIT BPU Guwahati – Respondent
FPA-PBPT-964/GWH/2019

Headnote:(A) Prohibition of Benami Property Transactions Act, 1988 - Sections 2(9)

(C), 2(9)

(D), 2(26), 23, 24, 26(3), 46(1) - Definition of property - Cash held as tangible movable property - Benami transaction - Owner denying ownership - Person providing consideration not traceable - Retraction of statements - Credibility - Procedural requirements - Prior approval under Section 23 - Explanation retrospective - Supply of reasons to believe - Independent investigation - Not mandatory if sufficient material - Liability of persons not in possession.

(B) Benami Property - Cash seized from possession of appellant no.1 - Initially claimed to belong to a religious organization - Organization denied ownership - Later appellant no.1 claimed ownership - No credence given to altered stand as it was an afterthought - Earlier statements consistent and supported by documents - Transaction falls under Section 2(9)

(C) and

(D) - Appellants 2 and 3 not liable as cash not recovered from them and they did not claim ownership - Proceedings against them discharged.

Facts of the case:
During a search and seizure operation under the Income Tax Act, cash of Rs.70 lakhs was seized from the possession of appellant no.1. In his initial statement, he claimed the cash belonged to a religious organization. Other appellants also supported this claim and provided documents. The organization, through its accountant and secretary, denied any ownership. Subsequently, when proceedings under the PBPT Act were initiated, all three appellants retracted their earlier statements. Appellant no.1 claimed the cash belonged to him, while the other two claimed ignorance. The Initiating Officer provisionally attached the cash and the Adjudicating Authority confirmed the attachment. Aggrieved, the appellants filed an appeal before the Tribunal.

Findings of Court:
The Tribunal held that cash is a tangible movable property under Section 2(26) of the PBPT Act. The initial claim that the cash belonged to the religious organization, coupled with the organization’s denial, brought the transaction within the definition of benami transaction under Section 2(9)

(C) and

(D). The retraction of statements by the appellants was not credible, as it was made only after proceedings began, and no evidence was provided to support the altered stand. The Tribunal further held that no independent investigation is mandatory if sufficient material exists; prior approval under Section 23 is not required if a show cause notice has already been issued (Explanation retrospective); and failure to separately supply reasons to believe does not vitiate proceedings if the notice itself contains them. Appellants 2 and 3 were not in possession of the cash and did not claim ownership, hence they cannot be treated as benamidars or beneficial owners.

Issues: (1) Whether cash is property under the PBPT Act. (2) Whether appellants 2 and 3 can be proceeded against. (3) Whether Sections 2(9)

(C) and

(D) can be invoked when appellant no.1 later claimed ownership. (4) Whether the PBPT Act is attracted without independent investigation. (5) Whether prior approval under Section 23 is mandatory. (6) Whether failure to supply reasons to believe before show cause notice vitiates proceedings.

Ratio Decidendi: The Tribunal reasoned that the definition of property under the PBPT Act is wide and includes cash. A benami transaction exists where the claimed owner denies ownership or the source of consideration is untraceable. The credibility of a retraction is low when it is made after proceedings commence and contradicts earlier consistent statements supported by documents. Procedural requirements such as prior approval for inquiry are not mandatory if a show cause notice has already been issued, and reasons to believe need not be separately supplied if the notice contains them. Persons not in possession of the property and not claiming ownership cannot be treated as parties to a benami transaction.

Result: Appeal dismissed against appellant no.1, upholding the order of the Adjudicating Authority confirming the attachment of Rs.70 lakhs as benami property. Appeal allowed in respect of appellants 2 and 3, who are discharged from the proceedings. Note: The appeal of appellant no.2 abated due to his death during proceedings, as no legal representatives sought substitution or claimed interest in the attached cash. This aspect is reflected in the judgment but does not alter the substantive findings.", "main_legal_point": "Cash is tangible movable property under PBPT Act. A benami transaction arises when the claimed owner denies ownership or the source is untraceable. Retracted statements after proceedings commence lack credibility if earlier statements were consistent and supported by documents.", "category": "Benami Property Law", "sub_category": "Prohibition of Benami Property Transactions Act, 1988", "keywords": ["property definition", "movable property", "retraction of statements", "credibility of evidence", "ownership denial", "untraceable source of consideration", "procedural requirements", "prior approval retrospective", "reasons to believe", "liability of non-possessors"] }