Arpit Katyal v. Initiating Officer: Purchase from fictitious entity non-filer triggers Benami property prohibition provisions under Section 2(9)(B).

9. [2026] 188 taxmann.com 417 (SAFEMA– New Delhi)

Arpit Katyal v. Initiating Officer

Date of Order: 06.07.2026

Section 2(9)(B) applies to a transaction of purchase from a fictitious entity. The entity was held to be fictitious on the grounds that it was a non-filer of income-tax returns, its GST registration was for trade in metal but appellant claimed to have purchased cloth and fabrics from it, the entity was not found at the location, its bank account details were not shared by the appellant.

In a case covered by section 2(9)(B) i.e. where a transaction is a fictitious transaction, attachment would be in the hands of the beneficial owner who is involved in making fictitious transaction.

FACTS

The proceedings commenced as a result of the information that the Appellant was involved in purchase of material from fictitious entities one of whom was identified to be Sanmati Trading Co. (STC). The Appellant had recorded purchases of cloth and fabrics from STC for which payment was made through banking channels The Initiating Officer (IO) held the transaction to have been carried out in a fictitious name. Since the Appellant was