2026 Supreme(Online)(ATFP) 200

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Rajesh Malhotra, Judicial Member
M/s Rishabh Trading Company through Proprietor Ankit Jain v. Initiating Officer Asst. Commissioner of Income Tax New Delhi
FPA-PBPT-1480/DLI/2021

Cash handed over during demonetization to be deposited and returned via banking channels constitutes a benami transaction under Section 2(9)(A) PBPT Act; payment of income tax does not bar confiscation, but attachment must be reduced by tax paid.

Headnote:(A) Prohibition of Benami Property Transaction Act, 1988 - Sections 2(8), 2(9)(A), 2(10), 2(12), 2(26), 6, 23, 24(3), 26(3), 46, 60 - Indian Contract Act, 1872 - Section 2(d) - Indian Evidence Act, 1872 - Section 103 - Bharatiya Sakshya Adhiniyam, 2023 - Section 11 - Income Tax Act, 1961 - Section 131(1A) - Cash as movable property can be both 'property' and 'consideration' under the PBPT Act - A transaction where unaccounted cash is handed over to a person who deposits it in his entities and later returns the same amount via banking channels to the original owner constitutes a benami transaction under Section 2(9)(A) - The fact that the beneficial owner paid income tax on the amount does not bar proceedings under the PBPT Act, as the objects of the two Acts are different - In a running business, benami property can be traced into converted forms (stock, book debts) for attachment - The attachment must be reduced to the extent of income tax paid on the benami amount. (Paras 23-27)

(B) Benami transaction - Essential ingredients under Section 2(9)(A): (a) property transferred or held by a person; (b) consideration provided by another person; (c) property held for the immediate or future benefit of the person providing consideration - Where demonetized cash is given to a benamidar who deposits it and later returns it via RTGS, the cash becomes both consideration and property, satisfying both clauses - The intention to conceal is not a prerequisite; the statutory definition is objective. (Para 23)

(C) Burden of proof - Under Section 103 of the Indian Evidence Act (now Section 11 BSA, 2023), the appellant failed to prove that the attached property was not purchased from the received benami amount - The department sufficiently established foundational facts. (Para 23)

(D) Section 60 of PBPT Act - Provisions are in addition to other laws - Payment of tax under Income Tax Act does not preclude confiscation under PBPT Act - Filing of ITR is an afterthought and does not explain the source of the money. (Para 24)

Facts of the case:
A search on 09.12.2016 revealed that a person was involved in money laundering and providing accommodation entries. A proprietorship firm (M/s Rishabh Trading Co.) was one beneficiary. The proprietor admitted giving unaccounted cash of Rs.7,81,40,000/- during demonetization to the person, who deposited it in bank accounts of his controlled entities and then transferred the same amount back to the proprietorship firm via RTGS/NEFT. The Initiating Officer provisionally attached the cash in its converted form (cut & polished gem stones worth Rs.1.36 Cr and outstanding book debts from two jewellers). The Adjudicating Authority confirmed the attachment. The appellant appealed under Section 46 of the PBPT Act, 1988.

Findings of Court:
The tribunal held that cash is movable property and can be both 'property' and 'consideration'. The arrangement fell squarely within Section 2(9)(A) of the PBPT Act. The benamidar (entities controlled by the person) held the cash for the benefit of the appellant (beneficial owner). Payment of income tax did not bar PBPT proceedings. However, the benami property in the hands of the appellant gets reduced by the amount of income tax paid on the sum. The attachment of converted forms (stock and book debts) is valid as the business is running and assets are dynamic. The appeal was dismissed with a direction to release the attachment to the extent of income tax paid.

Issues: (i) Whether transfer of cash from the alleged beneficial owner to the alleged benamidar is not covered under Section 2(9)(A) of PBPT Act? (ii) Whether no action can be taken under the PBPT Act after the transfer of amount by benamidar to the beneficial owner, on the ground of bona fide transaction? (iii) Whether the appellant needs to be exonerated on account of payment of tax under Income Tax Disclosure scheme? (iv) What is the total quantum of benami property in the hand of the appellant, whether utilized or not? (v) Whether the confirmation order qua attachment of cut diamonds and book debts has no connection with the alleged benami property? (vi) Whether any attached property needs to be released?

Ratio Decidendi: The definition of 'benami transaction' under Section 2(9)(A) does not require an intention to conceal; it is satisfied when property is held by one person but consideration is provided by another for the latter's benefit. Cash, being property, can be both the subject matter and the consideration. The PBPT Act and Income Tax Act serve different purposes; payment of tax does not preclude confiscation. In a running business, benami property can be traced into its converted forms (stock, book debts) and attached. The attachment must be reduced by the amount of income tax paid on the benami sum.

Result: Appeal dismissed with modification - the impugned order dated 27.09.2021 is modified to the extent that the attached property shall be released to the extent of income tax paid on the sum of Rs.7,81,40,000/-, and the remaining attachment shall continue for further proceedings. (Para 28)

FINAL ORDER

25.03.2026

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 27.09.2021, passed by the Ld. Adjudicating Authority, in Reference No. 2099/2020, under Section 26(3) of the PBPT Act, 1988, whereby the Provisional Attachment Order dated 29.07.2020 passed by the Initiating Officer (I.O.) under Section 24(3) of PBPT Act, was confirmed qua the following properties:

Cash amounting to Rs. 7.814 Cr. infused in the axis bank account (A/c No. M/s Rishabh 916020057721334) of Trading Company (Proprietorship firm of Sh. Ankit Jain) at 1157/1124 Ground Floor Kucha Mahajani, Chandni Chowk, Delhi-. 110006) converted into cut & polished gem. stones amounting to Rs.1.36 Crores and the amount outstanding with the debtors viz. Shri Mahavir Jewellers (Rs.1,97,40,488/-) and Shri Rajrani Jewellers Private Limited (Rs.99,98,731/-).

Facts of the case

2. As per the facts of the case, a search was conducted in case of Sh. Atul Tyagi, H. No. 202, 2nd Floor, Gali No. 6, Near Mohini Tent House, Rajapuri, New Delhi and his various concerns on 09.12.2016 wherein it was revealed that Sh. Atul Tyagi is involved into the practice of money laundering and providing accommodation entries. One of such beneficiary entities which took accommodation entries in lieu of cash deposited in the bank accounts of the concerns controlled by Sh. Atul Tyagi was M/s Rishabh Trading Co. (Proprietorship concern of Sh. Ankit Jain), 1157/1124, C. F., Kucha Mahajani, Chandni Chowk, Delhi. The name of M/s Rishabh Trading Co. came to the fore during analysis of bank accounts of the concerns controlled by Sh. Atul Tyagi. It was found that M/s Rishabh Trading Co. transferred its unaccounted cash to the Axis Bank account of M/s Mac Allied Sales Corp, a concern controlled by Sh. Atul Tyagi during the demonetization period and Sh. Atul Tyagi received unaccounted cash from Sh. Ankit Jain (Prop. M/s Rishabh Trading Co.) in the demonetized old currency and after depositing it in the bank account of his concern, M/s Mac Allied Sales Corp, M/s Kirpalu Enterprises, M/s Shree Krishna Enterprise and M/s Daksh Tradewell Pvt. Ltd. transferred the same to the beneficiary through RTGS/NEFT in lieu of commission. Details of transaction are as under:

3. During the course of investigation, the statement of Sh. Ankit Jain was recorded on oath u/s 131 (1A) of the Income Tax Act, 1961 on 03.12.2016 wherein Sh. Ankit Jain (Prop. M/s Rishabh Trading Co.) has accepted that he had given his unaccounted cash amounting to Rs. 7,81,40,000/ to Sh. Atul Tyagi, who deposited the same in the bank accounts of the entities managed and controlled by him and further transferred the same into the account of M/s Rishabh Trading Co. as beneficiary. During the course of investigation proceedings under PBPT Act, 1988, Summon was issued to Sh. Ankit Jain (Prop: M/s Rishabh Trading Co.) in response to which he attended the proceedings and filed his submissions. Details of the Income Tax Returns of Sh. Ankit Jian (Prop. M/s Rishabh Trading Co.) is as under:

Comparison of the profit declared over the years in the ITR:

4. In the statement recorded on oath during the search action carried on 09.12.2016, Sh. Atul Tyagi too reiterated the same fact stating that he had no actual business transaction with the party, M/s Rishabh Trading Co. and the cash was deposited and transferred to the beneficiary as an accommodation entry.

5. Approval u/s 23 of the PBPT Act, 1988 was duly granted on 29.03.2018 by the Approving Authority, BPU (Unit2), New Delhi for conducting enquiries in the said reference. Summon was issued to Sh. Ankit Jain (Prop. M/s Rishabh Trading Co.) in response to which he attended the proceedings and filed his submissions from time to time. In his submission dated 16.04.2018, he stated that the unaccounted money of Rs. 7,81,40,000/- earned by him during F.Y. 2016-17 was introduced by him in his own fir

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