P. Ezhilpandian & S. Arivazhagan v. Dy.
CIT, Chennai
ITA no. FPA/PBPT/15 & 24/CHN/2018, order
dated 17th October, 2018
by Appellate Tribunal for SAFEMA, FEMA, PMLA,
NDPS, PBPT Act at New Delhi
Ratio
:
In a recent ruling, the hon’ble Appellate Tribunal has held that the existence of the “benamiâ€
transaction has to be proved by the authorities i.e. the person who alleges the
transaction.
Decision cited :
In the case of ACIT v. Dhariya Construction Co. (2010) 328 ITR 515 (SC) and CIT v. Kelvinator India Ltd. (2010) 320 ITR 561 (SC) wherein the Apex Court held that the Investigation Officer must form a reason to believe based on application of mind and appreciation of the material on record.
Facts of the case :
St. Joseph College of engineering and St. Joseph institute of technology are two colleges run by two trusts. The Appellants are employed with the said college. A search action by the Income Tax Department commenced on 17.11.2016 u/s. 132 of the Act on the said college. During the course of search action, statement of the Chairman was recorded wherein he stated that salary advance was given to employees. Â The Appellant in his sworn statement deposed the receipt of Rs.15 Lakhs and its remittance to Chennai Football Association. As per directions of the Income Tax Department, on 19.11.2016, the Appellant collected back Rs.15 Lakhs from Chennai Football Association and handed it over to the Income Tax Department. The Appellant was merely a carrier of the said amount who following the directions of Income Tax Department. The same was admitted by the Appellant in reply to show cause notice issued by the Initiating Officer.
Proceedings before Initiating Officer :
The IO by vide order dated
13.03.2017 u/s. 24(4)(a)(i) of the Benami Act (“the Actâ€) held that the
chairman to be the beneficial owner and the Appellants as benamidars and
thereby attaching the salary bank accounts of the Appellants up to the value of
the alleged “benami†property.
Adjudicating Authority’s verdict :
The Adjudicating Authority by virtue of its order dated 27.03.2018 u/s. 26 (3) of the Act confirmed the order of the IO.Â
Appellate Tribunal’s verdict :
As
per section 2(9)A of the Act, a cash transaction can be termed as “benamiâ€
transaction on fulfilment of twin conditions 1) the property being held by a
person who has not provided the consideration, 2) the property is held by that
person for the immediate or future benefit, direct or indirect of the person
who has provided the said consideration.
The Appellant’s role in this case was simply that of a Carrier-collecting sum of Rs.15 Lakhs from the Trust and handing it over to Chennai Football Association. Other than this, no cash at all had been received by the Appellant. The said factual position is not denied by the respondent in its reply or even during the course of hearing of two appeals. Therefore, the question of any benami property lying with the Appellant did not arise at all.
The
ordinary citizens who are not involved under Benami Act cannot be harassed in
this manner. The Authority must be aware that end of law, criminal liability is
involved, thus, the authority must be very careful being sensitive matters.
The existence of the “benamiâ€
transaction has to be proved by the authorities i.e. the person who alleges the
transaction. The authorities have failed to discharge the burden of proof. The
authority has purely gone on the premise that cash is transferred from one
person to another, with an object to defeat demonetization. This is
insufficient to establish a “benami†transaction.
Disclaimer :
This information Memorandum is meant solely for the
purpose of information. Acelegal do not take any responsibility of decision
taken by any person based on the information provided through this memorandum. Please obtain professional advice before relying on this information memorandum
for any actual transaction. Without prior permission of Acelegal, this memorandum may not be quoted in whole or in part or otherwise referred to in any documents.
