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Category: BePR Digest

Bandana Pattanayak v. Initiating Officer: Property purchased in relatives’ names using brother’s unevidenced loan funds constitutes a benami transaction, satisfying future benefit provisions.

11. 2026 (8) TMI 817 (SAFEMA – New Delhi)

Smt. Bandana Pattanayak, Shri Anup Majee and Shri Ashok Pattanayak v. Initiating Officer, Kolkata

Date of Order : 09.7.2026

In absence of the means to purchase the property by the Benamidar and in absence of documentary evidence to establish the amount given to the Benamidar as a loan by the Beneficial Owner, the property purchased in the names of the sister and brother in law (benamidars) from the funds transferred by the brother (brother-in-law) will be a Benami Transaction.

The condition regarding future benefit under section 2(9)(A) of the PBPT Act is not confined to a specified period and can take place any time in the future. Moreover, such condition need not be satisfied at the time of provisional attachment.

FACTS

The Appellants are Mr. Anup, Smt. Bandana and Mr. Ashok. It was the case of the Initiating Officer that Mr. Anup, who is the Beneficial Owner herein has purchased three properties in the names of his sister, Smt. Bandana and brother-in-law, Mr. Ashok who are the Benamidars. The consideration for purchase of properties was paid by Mr. Anup. Since the properties were purchased in the names of the sister and the brother in law of the Beneficial Owner, who did not contribute the consideration and otherwise could not show the means to purchase the three properties in a row for ₹2,65,00,000, the proceedings were initiated under the provisions of the PBPT Act.

The Adjudicating Authority, vide order dated 31.05.2025 confirmed the provisional attachment of the properties made under section 26(3) of the PBPT Act.

The Appellant filed appeal before the Tribunal challenging the order of the Adjudicating Authority and contending that:

(i.) The amount for purchase of the properties was transferred by way of a loan and therefore could not be considered as a benami transaction;

(ii.) The Beneficial Owner – Mr. Anup being the brother had a right to transfer the amount to his sister and brother in law out of natural love and affection; and

(iii.) The requirement of future benefit under section 2(9)(A) of the PBPT Act remained to be proved by the Respondent and in absence of the satisfaction of the basic requirement of the definition of Benami Transaction, the transaction was not a Benami Transaction and therefore the order of the Adjudicating Authority confirming provisional attachment deserved to be set aside.

HELD

The Tribunal held that the argument of the Appellant that the amount was transferred as a loan was not supported with any loan document and therefore without any proof. The Tribunal affirmed the finding of the Adjudicating Authority that if the Appellant was within his right to give the amount out of love and affection, the Appellant could have gifted the property instead of transferring the funds for the purchase of the property. The Tribunal also held that the sister and the brother-in-law of the Beneficial Owner did not have the means to purchase the properties in their names. With regard to the contention of the Appellant that the condition regarding the future benefit under section 2(9)(A) was not satisfied, and therefore the transaction was not a Benami Transaction, the Tribunal held that the term ‘future benefit’ under section 2(9)(A) of the Act is without earmarking to any particular period. The benefit can happen or arise any time in future without the limitation of period. The condition regarding future benefit need not necessarily be satisfied at the time of provisional attachment. Further, the records revealed that the Beneficial Owner had availability of unaccounted and undisclosed funds and therefore the same were utilised for his future benefits. Thus, the appeal filed by the Appellants was dismissed.

DCIT v. Bharathi & Anr.: Statement in cross-examination admitting ownership prevails over income tax statements in determining Benami property transactions.

10. 2026 (8) TMI 1327 – (SAFEMA – New Delhi)

DCIT (BPU), Chennai v. Bharathi & Anr

Date of Order: 18.08.2026

Where the Benamidar admits the knowledge of the transaction and the ownership of the property by way of a statement in cross-examination before the Adjudicating Authority under Prohibition of Benami Property Transaction Act, 1988 (PBPT Act), such a statement would prevail and the transaction cannot be said to be a Benami Transaction under PBPT Act merely on the basis of statement recorded by the Benamidar in the proceedings carried out under the provisions of the Income-tax Act, 1961.

FACTS

A search was conducted on M/s. Shobhikaa Impex Pvt. Ltd. (SIPL). Based on the evidence gathered during the course of search, it was found that there was a benami transaction in the name of Smt. R. Bharathi and others.

It was found in the course of search that SIPL had inflated its expenses to reduce the taxable income by claiming bogus expenses under the head Job Work / Contractors. This was without the actual receipt of goods or services and without the actual payment to the job workers. The expenses were shown to be payable and accounted as liability under Trade Payables. The corresponding entry on the asset side was shown by way of increase in the Investments / Fixed Deposits and Closing Stock. Subsequently, the Trade Payables were converted into Securities Premium. This modus operandi was admitted by the Directors of SIPL through a sworn statement during the course of search carried out under section 132 of the Income-tax Act, 1961 (IT Act).

During the Financial Year 2017-18, the Trade Payables in the form of Job Work Charges were converted into Securities Premium Reserve in the name of job workers by allotting them equity shares of ₹100 at premium of ₹750. For this purpose, separate bank accounts, email ids, etc. were created in the name of job workers which were actually operated by persons of SIPL for statutory obligations. The funds were routed through bank transfers / cheques so as to show it as a real business transaction, all with the intention of evading taxes.

In the course of investigation, it was found that M/s. Abhaa Knittings, was a proprietary concern of Smt. Bharathi who was one of the job workers and whose name appeared in the Trade Payables and also under the head Share Capital in the books of SIPL. However, no such corresponding asset in the form of shares was reflected in the books of account of the M/s. Abhaa Knittings, the proprietary concern owned by Smt. R. Bharathi. Further, various documents such as unsigned share certificates of SIPL in the name of Smt. R. Bharati, cheque book, letterheads and blank bills in the name of M/s. Abhaa Knittings were found from the premises of SIPL. Smt. R. Bharathi was neither aware of any such transaction carried out in her name nor was she aware of being a creditor of SIPL. Further, she was also not aware of allotment of shares in her name and the subsequent buy back or the receipt and transfer of funds for it. Accordingly, a case was made out under the provisions of the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act). It was held by the Initiating Officer that the definition of benami transaction under section 2(9)(C) of the said Act covers within its ambit a transaction where the owner of the property is not aware of or denies knowledge of the ownership. Since in this case the job workers were not aware of the allotment of the shares made to them, section 2(9)(C) was held to be applicable and an order for provisional attachment of the properties was made.

However, the order for provisional attachment was not confirmed by the Adjudicating Authority. The Adjudicating Authority noted that the statement recorded by the Respondent, Smt. R. Bharathi was different during the investigation carried out under the Income-tax Act from that stated by her in the cross-examination before the Adjudicating Authority.

The Appellant Department filed an appeal before the Appellate Tribunal contending that:

(i.) The liability created under Trade Payables was bogus and the job workers were not aware of the liability.

(ii.) The job workers were not aware of the shares allotted to them in their names.

(iii.) Subsequently, the shares were bought back by transferring the shares to the Managing Director.

(iv.) The consideration for buy back of shares from the job workers were carried out through Wire Transfer and the amount was ultimately received in cash through intermediate entities.

(v.) The documents such share certificates, bank pass books, cheques, etc. were found from the custody of SIPL and therefore a case of benami transaction under section 2(9)(C) of the PBPT Act was made out.

HELD

The Tribunal noted that the issue for consideration before it was where there was contradiction in the statements made under the Income-tax Act and the statement made in cross-examination in the proceedings under the PBPT Act, which one would prevail. The Tribunal held that the statement, though recorded in cross-examination before the Adjudicating Authority, under the proceedings carried out under the provisions of the PBPT Act would prevail over any other conflicting statement recorded under any other statute. The Tribunal observed that in the cross-examination before the Adjudicating Authority, the Respondent had admitted that she was aware of the allotment of shares and the other transactions related to it. Once it was admitted, there was no case against the Respondent under section 2(9)(C) of the PBPT Act. The Tribunal further held that while it may be a case of evading taxes by recording bogus liability in the name of job workers, however, in so far as the provisions of PBPT Act were concerned, the position was that the job worker admitted that they were aware of the transactions and remained to be the owner of the shares. Therefore, section 2(9)(C) of the PBPT Act was not applicable. Most importantly, the Tribunal held that the proceedings were initiated merely on the basis of borrowed satisfaction. Unless the ingredients of Benami Transaction defined under section 2(9)(C) of the PBPT Act were satisfied, the case would not be met under the provisions of section PBPT Act.

In addition to the above, the Tribunal remarked that the Initiating Officer had not considered the fact that an order in favour of the Respondent SIPL was passed by the Interim Board for Settlement under section 245-B(4) of the IT Act, where the Trade Payables were held to be genuine. However, the Tribunal clarified that section 245-B of the IT Act shall not override the provisions of the other statute. Further, an order passed by the Settlement Board would be final and conclusive on the proceedings of the nature undertaken by the Income-tax Department and not to the present proceedings which were under a different statute.

In view of the foregoing, the appeal was dismissed and the issue was decided in favour of the Respondent Benamidar.

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 not able to produce STC and the summons could not be served in the absence of existence of the entity, the IO tried to find out income-tax returns and found STC to be a non-filer of returns. Its GST registration was for trade in metals but the Appellant claimed to have purchased cloth and fabrics from STC. The appellant claimed to have made payment to STC through banking channels but did not provide the details of bank account of STC. On physical verification, STC was not found on location and also the summons sent were returned undelivered. The Appellant failed to provide a credible explanation for the cash deposits in the account of Asian Fabrics, which was around the same time when payments were made to STC. The IO held that the payments made to STC were nothing but rounding of money resulting in benami transactions. The IO made a provisional attachment to the extent of benami transaction.

The Adjudicating Authority (AA) confirmed the provisional attachment order.

Aggrieved, the Appellant filed an appeal before the Tribunal.

HELD

The Tribunal noted that the issue before it is, whether STC can be said to be a fictitious company or entity merely for the reason that it was a non-filer of income-tax returns. The Tribunal held that this cannot be the sole ground but this can be supported by other material to find out whether the entity is fictitious or not. It noted that the transaction by the Appellant with STC was for supply of clothes and fabrics. However, no relevant material could be placed on record by the appellant, despite the initial burden being discharged by the respondents to prove a case of benami transaction. The Tribunal noted that the respondents had referred to GST registration details of STC which were for metal trade and not cloth and fabrics. This was the second issue. Non-existence of the entity at the location, on physical verification, was the third issue. Summons were returned undelivered because neither the firm nor Ms. Reeta Devi were found available. Also, non-availability of details of bank account of STC was the fourth issue. Notice issued by the AA to STC remained undelivered. The Tribunal noted that the Appellant failed to defend its case by producing evidence that the allegations made are incorrect and false and that STC was, in fact, in active business and not a fictitious entity. The bills examined by AA of about Rs 3 lakh were found to be without proof and specific mention of account number of the entity and had no acknowledgement of supply of material and mode of delivery. The Tribunal held that the transaction was fictitious and, therefore a case u/s 2(9)(B) of the PBPT Act was made out.

As regards the argument that it is only the benami property which can be attached and not the amount lying with the appellant in its bank account and also that the attachment of the property can be in the hands of the benamidar and not the beneficial owner as has been done in the present case. The Tribunal held that generally if a case is made out u/s 2(9)(A) of the PBPT Act or any provision other than section 2(9)(B), the provisional attachment of the property may be caused in the hands of the benamidar. However, the aforesaid is not the universal legal proposition and in any case section 2(9)(B) is an exception to it. It held that it is for the reason that when the transaction is fictitious, the question would not arise. It would be in the hands of the beneficial owner who is involved in making fictitious transaction. The Tribunal held that the attachment of property of the appellant cannot be said to be illegal.

Compilers’ Note: The nexus, if any, between the Appellant and Asian Fabrics in whose account cash was found to be deposited is not coming out from the order.

M/s. R. R. Builders v. Nandkumar Mulani and Anr : Tribunals may impose a reasonable three-year completion timeline when allotment letters fail to specify the date of possession.

8. Second Appeal (Stamp) No. 19058 of 2026 with Interim Application No. 5313 of 2026

Bombay High Court

M/s. R. R. Builders v. Nandkumar Mulani and Anr

Date of Order: 22.07.2026

The Appellate Tribunal was justified in imposing a reasonable period of three years for completion of project in absence of date of possession specified in the allotment letter and on failure on the part of the builder / promoter to enter into an agreement for sale and complete the project and handover possession to the allottee.

Treating the date of completion at the time of registration (as against the contractual date or a reasonable period of 3 years) is contrary to the statutory scheme and susceptible to undermine the very object of the Act.

FACTS

The Respondent Allottee was allotted a 3BHK Residential Flat measuring approximately 2144 sq ft. in the project then named Godrej Sky by the Appellant vide allotment letter dated 31.01.2013 for a consideration of Rs. 4,03,07,200. An earnest amount of Rs. 1,00,00,000 was paid by the Respondent Allottee in the beginning. Subsequently, the Respondent Allottee made payments and an aggregate amount of Rs. 2,01,53,600, that is, almost 50% of the aggregate consideration was paid to the Appellant. The Appellant neither executed an Agreement for Sale nor was the project anywhere near completion till the year 2021. The Respondent Allottee, vide letter dated 01.07.2021 demanded the refund of amount paid alongwith interest.

Since the Appellant failed to refund the amount paid by the Allottees, a complaint was filed before the Maharashtra Real Estate Regulatory Authority (MahaRERA) which came to be rejected vide order dated 20.09.2023 holding that the complaint was premature as the project was registered with MahaRERA on 05.08.2017 with a declared completion date of 30.06.2025. Aggrieved by the said order, the Respondent Allottee preferred an appeal before the Appellate Tribunal.

The Tribunal held that in absence of specific date of delivery of possession, the Appellant was under an obligation to deliver the possession within a reasonable time, which, in the circumstances of the case was 3 years. Aggrieved by the said order of the Tribunal, the Appellant filed an appeal before the High Court.

HELD

The High Court held that the Appellate Tribunal acted within its powers in imposing the reasonable period of 3 years for completion of project, else it would amount to granting liberty to the promoter for breach of statutory and contractual obligation thereby allowing him to convert his own default into an advantage – a result wholly inconsistent with the regime of fairness and transparency which RERA sought to achieve. The contention of the Appellant that the date of completion at the time of registration must be treated as conclusive was held to be contrary to the statutory scheme and was susceptible to undermine the very object of the Act. No fault could be attributed to the Respondent, who was not responsible for the Appellant’s default. It was held that the liability of the Appellant was squarely governed by the decision of the Hon’ble Supreme Court in the case of Newtech Promoters and Developers Pvt. Ltd. v. State of UP (2022) 1 SCC 401. The High Court, thus, held that no substantial question of law arose and dismissed the appeal.

Raipur Development Authority v. Anup Kumar Sahu : Allottees have an unconditional right to refund for possession delays, even without formal contracts specifying the target completion date.

7. MANU/CG/0356/2024

Chhattisgarh High Court

Raipur Development Authority v. Anup Kumar Sahu

Date of Order: 17.01.2024

An allottee has an unconditional right to refund under section 18(1) of the Real Estate (Regulation and Development) Act, 2016 when there is delay of possession beyond the stipulated date notwithstanding the fact that delay was due to pending litigation and notwithstanding that there was no written agreement or formal contract expressly recording the date of possession.

FACTS

The Respondent filed an application before the Real Estate Regulatory Authority (RERA) under section 31 of the Real Estate (Regulation and Development) Act 2016, (“the Act”) on the ground that he had not received the possession of the house. It was stated that the Respondent was allotted a 2 BHK Duplex Row House on 10.06.2016 for an amount of Rs. 18,25,000. The Respondent had deposited an amount of Rs. 18,21,250 upto 31.10.2017. However, even after four years of filing the application before the RERA, the Respondent did not get the possession of the said house. Vide a letter dated 27.08.2020, the promoter RDA required the Respondent to deposit an amount of Rs. 23,33,963 wherein the GST amount was also shown.

At the time of purchase of the house, though it was stated that the price was tentative price and the actual price may increase by 2-3%. However, the amount claimed was higher to the extent of 35% instead of 1-2%. The Respondent requested for allotment of house with an increase of 2% and in the alternate requested for allotment of plot in another project known as Indraprastha -2 on the price which was prevailing in the year 2016. Further, the Respondent also submitted that if RDA was not willing to proceed as per the request, the entire deposit amount be refunded to the Respondent.

The Appellant RDA stated that the delay was attributable to the litigation pending before the Green Tribunal and the Supreme Court. Thereafter, there was assembly election and consequently, no development could be carried out. It was stated that the development was carried out upto June 2019 and thereafter application for extension was sought from the State Government. It was stated that the Appellant was ready to return the money and the application be dismissed.

The RERA, vide order dated 02.01.2021 dismissed the application and held that the increased price could not be accepted as there was no agreement executed. However, the application was dismissed, and it was held that since the Respondent failed to deposit the amount he was called upon to deposit by 11.09.2020, the increased amount was not paid, no relief could be granted. Further, it was also held that since the proceedings were pending before the National Green Tribunal and the Supreme Court from 2013 to 2019 and certain orders were passed, the delay caused was reasonable.

Against this order, an appeal was preferred by the Respondent before the Real Estate Appellate Tribunal which was decided in favour of the Respondent vide order dated 07.03.2023 and directions were issued to return the deposit amount of Rs. 18,25,000 paid by the Respondent along with interest at 10.5% from 08.06.2016 within a period of 45 days. Against the said order of the Appellate Tribunal, an appeal has been preferred by the RDA before the High Court.

HELD

The Hon’ble High Court remarked that on perusal of the records of RERA, judgements and stay orders of the Green Tribunal and the Supreme Court were not found on record and therefore, no inference could be drawn. The Hon’ble High Court relied upon the decision of the Hon’ble Supreme Court in the case of Newtech Promoters and Developers Pvt. Ltd. v. State of UP & Others etc (Civil Appeal No. 6745-6749 of 2021]and held that the right of an allotee to seek refund is not dependent upon contingencies and if the allotee has exercised the option to get back the deposit, the allottee cannot be directed to take delayed possession of the house. Further, the High Court observed that even though there was no agreement which fixed the time limit for possession, it could be inferred from the other factual aspects such as date of completion registered with RERA (being 31.03.2019), that the target date of completion was 31.03.2019. The additional amount was demanded in July 2020 which was beyond the target date of completion. The High Court held that when the terms were directed by an institution like RDA and general people at large, imposed faith and deposited the amount, then RDA would be bound by the promise and the promise would be enforceable at the instance of the promisee Respondent in the present case, notwithstanding the fact that there was no consideration for the promise and the promise was not recorded by way of a formal contract. Thus, the High Court held that RDA was not entitled to immunity and was under an obligation to refund the deposit.

Wadhwa Group Housing Private Ltd. v. Vijay Choksi and Ors.: Multiple promoters are jointly liable for refunds under section 18, regardless of direct privity of contract with the allottee.

6. MANU/MH/1177/2024

Bombay High Court

Wadhwa Group Housing Private Ltd. v. Vijay Choksi and Ors.

Date of Order: 26.2.2024

In a real estate project having more than one promoter, every promoter is liable to refund the amount u/s 18 along with interest. A promoter cannot escape the statutory liability on the ground that the consideration was received exclusively by the co-promoter or that there was no direct privity of contract with the allottee.

FACTS

Wadhwa Group Housing Pvt. Ltd. (“the Appellant”) preferred an appeal against the order dated 18th October, 2022 passed by Maharashtra Real Estate Appellate Tribunal, Mumbai (AT) directing both the Appellant herein and SSS Escatics Pvt. Ltd. (Respondent No. 2 herein) to refund of entire amount paid by Vijay Choksi (Respondent No. 1) with interest.

Briefly stated, in respect of a project known as The Nest at Mumbai, the Appellant and Respondent No. 2, entered into a Joint Development Agreement (JDA) agreeing to share the constructed areas between them for being sold to customers. Since the project was incomplete on the date of coming into force of Real Estate (Regulation and Development) Act, 2016 (“the Act”) it was registered as an ongoing project and the Appellant was declared as a Promoter (Investor).

The Respondent No. 1 booked a 3BHK flat, coming to the share of Respondent No. 2, and was issued an allotment letter dated 24.7.2013 by Respondent No. 2. The Respondent No. 1 paid several amounts to Respondent No. 2 from time to time. Since there was a delay in completion of the project, Respondent No. 1 filed a complaint to MahaRERA who held both Respondent No. 1 as well as promoters responsible for violation of provisions of section 4 of the MOFA and held that the Respondent No. 1 could not claim any equity under the provisions of RERA.

Aggrieved, Respondent No. 1 preferred an appeal against the order of the AT. The AT directed both Respondent No. 2 and the Appellant to refund the entire amount paid by Respondent No. 1 with interest to Respondent No. 1.

Aggrieved, by the order of the AT, the Appellant preferred the present appeal (second appeal) to the High Court on the ground that a promoter who has not received any consideration from an allottee cannot be made liable for giving refund with interest under section 18 of the Act. It also contended absence of direct privity of contract with Respondent No. 1.

HELD

The court held that the term `promoter’ has been so widely defined that it virtually includes every person associated with construction of the building. It held that even a person who is merely an investor in the project along with the Promoter and who is entitled to benefit in the real estate project is also covered by the definition of the term `Promoter’. Since it was an undisputed fact that the Appellant is entitled to a share in the constructed area which it is entitled to sell and accept consideration for such sale, the court held that there is no doubt to the position that both Appellant as well as the Respondent No. 2 are Promoters and are jointly liable in respect of the responsibilities under the RERA and Rules and Regulations made thereunder. Therefore, mere falling of flat in the share of Respondent No. 2 under the JDA would not excuse the Appellant from the responsibilities and liabilities under the RERA, Rules and regulations made thereunder qua that flat. RERA does not demarcate or restrict liabilities of different promoters in different areas. The liability is joint for all purposes under the Act, Rules and Regulations.

As regards the contention urged on behalf of the Appellant that this is not a fresh project after coming into force of RERA and that JDA was executed way back in the year 2012, the court held that mere registration of the project as an ongoing project would not make any difference so far as the joint liability of several promoters is concerned. It observed that the circular dated 4.12.2017 was issued particularly with reference to the ongoing project. By continuing the joint venture with Respondent No. 2 at the time of registration of the project, the Appellant has accepted all the liabilities of a Promoter under the Act and he cannot seek to escape the liability on a specious plea that the payments were made to Respondent No. 2 alone.

Section 18(1)(b) casts a liability on the Promoter to return the amount received from the flat purchaser. Since the Appellant is also a `Promoter’ it is jointly liable to refund the amount along with other promoter, Respondent No. 2. Section 18 cannot be narrowly interpreted to include only that promoter who actually received the amount.

When a claim is raised in respect of a real estate project by a flat purchaser, all promoters become jointly liable qua that flat purchaser irrespective of whether there is privity of contract with each of the promoter or not. This is the scheme of RERA and mere absence of privity of contract with a particular promoter does not relieve such promoter in respect of the liabilities under RERA.

The court held that the Appellant cannot escape the liability to refund the amount received towards sale of flat to Respondent No. 1.

Ruma Mehta & Ors v. Parorch Developers LLP : Allotment letters with clear property descriptions and payment schedules constitute valid contracts, enforceable retroactively under the RERA Act.

5. MANU/RT/0304/2026

Maharashtra Real Estate Appellate Tribunal

Ruma Mehta & Ors v. Parorch Developers LLP

Date of Order: 09.06.2026

An allotment letter that discloses the description of the property, flat, consideration amount, payment schedule, and terms and conditions, etc. fulfils all the ingredients of a valid and concluded contract for sale and purchase, which is enforceable under the provisions of the Act.

Since the Act is retroactive, an allotment letter issued prior to coming into force of the Act is enforceable under the Act.

FACTS

The Appellant booked a flat in the project of the Respondent for a consideration of Rs 3.75 crore by paying a sum of Rs 1.00 crore on 17.2.2014 by cheque. Upon receiving the said payment, the Respondent / Promoter confirmed that it will issue an allotment letter and called for further payments. The Appellant paid two more instalments. Thereafter, allotment letter dated 22.4.2014 was issued. The Promoter assured possession of the said flat by mid-2017. The Appellant thereafter paid further amounts to the Respondent making aggregate of payments to Rs 3.25 crore. Despite follow up when the Respondent failed to hand over possession, the Appellant filed a complaint on 19.4.2019 with the Authority seeking refund of amounts paid with interest under section 18 of the Act.

The Authority held that no directions are warranted under the Act since no agreement for sale was been executed and registered between the parties. Moreover, the cause of action for cancellation of booking has taken place prior to the RERA Act, 2016 coming into force.

Aggrieved, the Appellant preferred an appeal seeking to set aside the order of the Authority and a direction to the Promoter to refund the principal amount along with interest.

HELD

The Tribunal noted that despite having received 90% of the consideration amount, the Promoter failed to execute and register the agreement for sale. Since the Respondent failed to hand over the possession by due date, the Appellant was held to be entitled to a refund along with interest under section 18 of the Act.

The Tribunal observed that a closer examination of the allotment letter revealed that it disclosed the description of the property, flat, consideration amount, payment schedule, and terms and conditions, etc. Acceptance of payments in furtherance of the said allotment letter was held to reveal a clear picture of fulfilment of clauses (a) and (b) of section 2 of Contract Act, 1872. It held that the said letter of allotment constitutes a valid and concluded contract of sale purchase transaction, which is enforceable under the provisions of RERA Act, 2016.

Although the promised date of possession was mid2017, the allotment letter did not mention the same. The Tribunal noted that the Apex Court in Fortune Infrastructure (Now known as M/s. Hicon Infrastructure) & Anr. v. Trevor D’Lima & Ors. [MANU/SC/0253/2018 : (2018) 5 SCR 273] has held that if the date of possession is not mentioned in the agreement, the promoter is expected to hand over the possession of the unit within a reasonable time and the period of three years has been held to be reasonable. Therefore, the due date of possession of the said flat would be February 2017.

In the light of exposition of law contained in the decision of the Apex Court in the case of Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. & Others [Civil Appeal No(s). 6745-6749 of 2021 (arising out of SLP (Civil) No(s). 3711-3715 of 2021 decided on 21st November, 2021], the Tribunal held that the said allotment letter which was executed prior to coming into force the RERA Act, 2016 can be enforced under the provisions of RERA Act, 2016.

It held that the appellant is entitled to seek relief under the provisions of RERA Act, 2016 even though the said allotment letter was executed prior to RERA Act, 2016 coming into force.

Yoosaf NA. vs. The Initiating Officer (BPU), Kochi: Unaccounted cash with untraceable sources falls within benami property definitions, and filing returns doesn’t exonerate the possessor from the Act.

4. 2026(5) TMI 936 – Appellate Tribunal under SAFEMA

Yoosaf NA. v. The Initiating Officer (BPU), Kochi

Date of Order : 14.5.2026

Possession of unaccounted cash or cash without ownership cannot go scot-free from the purview of the PBPT Act – the same is covered under the Act.

Unaccounted cash, the source of which is unexplained, falls within the definition of `benami property’.

Only two parties, namely, the `benamidar’ and the `beneficial owner’ are sufficient to constitute a benami transaction – The contention that three parties are required for every benami transaction is devoid of merit.

Section 2(9)(D) of the PBPT Act is clearly attracted because the IO could not trace the source from which the appellant collected the cash.

Mere filing of, or an intention to file, an ITR does not exonerate a person from the application of the PBPT Act.

FACTS

On 27.3.2017, during a routine police vehicle check, cash of Rs 50,13,000 was found in possession of the appellant, Shri Yoosaf N.A. and one Shri Jamsheer P.K. The cash was seized since neither the appellant nor Jamsheer was able to explain its source. In a statement recorded under section 131 of the Income-tax Act, 1961, and in a subsequent affidavit, the Appellant claimed full personal ownership of the cash seized and submitted that the funds had been pooled from friends and relatives for investment in land at Koduvally. He stated that, since those persons were not willing to appear before the Department, he offered to declare the entire amount as his income in AY 2017-18. The Appellant did not furnish any documents identifying the contributors or substantiating his claim. Shri Jamsheer disowned ownership of any part of the cash.

The Initiating Officer (IO) held that, since the source of the cash was untraceable, the provisions of section 2(9)(D) of PBPTA applied. He passed a Provisional Attachment Order (PAO) dated 12.3.2018. The Adjudicating Authority, vide order dated 25.3.2019, confirmed the action of the IO.

Aggrieved, the Appellant (alleged benamidar) preferred an appeal to the Tribunal.

HELD

The Tribunal observed that the following issues emerged for its decision –

i) Whether cash is not property?

ii) Whether, for any benami transaction, three parties are required?

iii) Whether section 2(9)(D) can be invoked in the absence of any investigation regarding the ownership of the cash?

iv) Whether the provisions of the PBPT Act are not attracted, considering the fact that the Appellant is ready to file ITR qua the seized amount?

The Tribunal having considered the rival submissions held as follows –

As regards issue (i), the Tribunal held that cash is often considered tangible movable property due to its physical nature. Assets represent value of ownership that can be converted into cash (although cash itself is also considered as an asset). Considering the intent of the PBPT Act to curb black money, it held that unaccounted cash or cash without ownership cannot go scot-free from the purview of the PBPT Act and the same would be covered under the Act. Since the source of the cash was unexplained, it held that it falls within the definition of benami property.

As regards issue (ii), it held that the contention of the Appellant that, for any benami transaction, three parties are required, is devoid of any merit, as a benami transaction requires only the `benamidar’ and `beneficial owner’. Accordingly, only two parties are sufficient to constitute a benami transaction, as is apparent from the bare perusal of the definition contained in section 2(9)(D) of the PBPT Act, 1988.

As regards issue (iii) i.e. the contention of the Appellant that section 2(9)(D) cannot be invoked in the absence of any investigation regarding the ownership of the cash, the Tribunal held that the Appellant had not denied the fact that cash was seized from his possession without any valid document / evidence regarding its source. It also observed that it could not ignore the statement of the Appellant recorded under section 131 of the Income-tax Act, wherein he stated that he claimed full ownership of the seized cash of Rs.50,13,000, that Shri Jamsheer has no relationship with the cash, and that the total amount of Rs.50,13,000 seized from him had been received from his friends and relatives as contribution towards investment in an immovable property at Koduvally. However, he did not provide valid documents in support of his claim. Since the Appellant neither challenged the said statement nor disclosed the persons from whom he received such a huge amount, the IO could not trace the source from which the Appellant had collected the cash. Therefore, section 2(9)(D) was clearly attracted.

As regards issue (iv), the Tribunal held that the submission of the Appellant that the provisions of PBPT Act were not attracted because he was ready to file an ITR qua the seized amount was untenable. Firstly, the filing of an ITR after being caught and proceeded against was an afterthought strategy to claim back at least 50% of the seized amount. Secondly, the recovery of cash, in the absence of any explanation, is duly covered within the scope of PBPT Act. The right of action under PBPT Act cannot be restrained merely because the Appellant is ready to file ITR under the Income-tax Act. The principal object of the Income-tax Act is to collect income-tax, whereas the object of PBPT Act is to prohibit the practice of benami transactions, to check the accumulation of wealth in the name of benamidars for the use of the beneficial owner without detection, and to confiscate the property involved in a benami transaction. Both the Acts are enacted for different purposes. Mere filing of, or an intention to file, an ITR does not exonerate a person from the application of PBPT Act where the source of money is unknown and remains unexplained.

Kaluram Berva vs. Initiating Officer, Pune: Properties acquired for a company’s benefit in an individual’s name using company funds constitute benami transactions despite legal caste-related restrictions.

3. [2026] 183 taxmann.com 459 (SAFEMA – New Delhi)

Kaluram Berva v. Initiating Officer, Pune

Date of Order : 27.01.2026

Property acquired in the name of the Appellant with consideration provided by PMPL for the future benefit of PMPL constituted a benami transaction under section 2(9)(A) of the Act.

The plea that the Appellant held the property in a fiduciary capacity was untenable since title had been conclusively transferred through registered sale deeds, which was inconsistent with fiduciary holding.

Further also, the use of name of a scheduled caste individual owing to the Rajasthan Revenue Laws did not take the transaction outside the mischief of the Act.

Property held by a benamidar after the amendment w.e.f. 1.11.2016, though acquired prior to the amendment, continued to be covered by the provisions of the PBPTA in view of the decision in Prism Scan, Accordingly,- the provisional attachment was not invalid merely because the acquisition pre-dated the amendment.

FACTS

The present batch of appeals was preferred by the alleged Benamidar and the Beneficial Owner (PMPL), challenging the order dated 19.5.2022 passed by the Adjudicating Authority (AA) confirming the Provisional Attachment Order (PAO).

The properties had been purchased in the name of the Appellant, though the consideration had been provided by Padmavati Marbles Private Limited (PMPL). The transactions were taken as `benami transaction’, and accordingly the properties standing in the names of the alleged benamidars were attached.

The AA concluded that the alleged benamidar was not even an employee of the Beneficial Owner.

The Appellants contended that –

i) the Purchase of the property by PMPA formed part of its business;

ii) the land in question was agricultural land held by an individual of a Reserved Caste and under the Revenue Laws of State of Rajasthan unless the land was converted into a non-agricultural land it could not have been acquired by a person other than that of a Reserved Caste;

iii) the transaction had been entered into prior to the amendment of the PBPTA; and

iv) the Appellants had acted in a fiduciary capacity and thus matter will fall into the exceptions to section 2(9)(A)

On behalf of the Respondents it was contended that –

i)  the land had been purchased in the name of the appellant with consideration provided by PMPL for its future benefit, and therefore it was clearly a benami transaction. Upon conversion of land from agricultural to non-agricultural use, it was transferred to PMPL;

ii) the purchase of the land could not be regarded as being in a fiduciary capacity, because it is not that the property in the name of the company was given in a fiduciary capacity; and

iii) the transaction for land in question was completed with the registration of the Sale Deed in the name of benamidars and, once it was registered in their names, it cannot be claimed to be in a fiduciary capacity. It could have been in a fiduciary capacity if the land had not been registered in the names of the benamidars.

HELD

The land has been registered in the name of the benamidars, for which consideration was paid by the beneficial owner for its future benefit. It was for future benefit of beneficial owner because, after conversion of the land from agricultural to non-agricultural, it was taken by the appellant company (beneficial owner). Thus, the case in hand squarely falls within the definition of Section 2(9)(A) of the Act of 1988 defining “benami transaction”.

In the fiduciary capacity, title of the property cannot be passed on with concluded transaction. Accordingly, the Tribunal held that it did not agree that, even after conclusion of the transaction by registration of the Sale Deed in favour of the appellants, the holding of the land could be said to be in fiduciary capacity, because the beneficial owner does not hold title to the land so as to pass on to another in a fiduciary capacity.

If the Revenue Laws prohibit transfer of the land by Reserved Caste candidate to a person belonging to another caste, it does not mean that the appellant or, for that matter, anyone, could purchase the property by creating a benami transaction. The reason for purchasing the property in the name of the Reserved Caste candidate does not nullify the provisions of the Act of 1988; rather, in view of the statement of the appellant, no reason remained to interference with the impugned order because the transaction falls under Section 2(9)(A) of the Act of 1988 without any exception. That being the position, the Tribunal held that the Adjudicating Authority rightly confirmed the provisional attachment of the property.

As regards prospective application of the amended Act of 2016 the Tribunal held that no doubt the Apex Court, in the case of Ganpati Dealcom (P.) Ltd. (supra), applied the amending Act of 2016 prospectively, but that judgment has been recalled by the order dated 18.10.2024. Thus, the issue no longer remains open for debate. It is, however, necessary to refer the order of this Tribunal in the case of Prism Scan Express (P.) Ltd. (supra) wherein, while, referring to the judgment in Ganpati Dealcom (P.) Ltd. (supra), the definition of ‘benami transaction’ under Section 2(9)(A) of the Act of 1988 was interpreted with prospective application.

The word ‘ held’ used in Section 2(9)(A) of the Act of 1988 was interpreted and held to be applicable to this case. The land in dispute continued to be held in the names of benamidars on the date of the amendment and for some years thereafter.

If a property is transferred to a person whose consideration was paid or provided by another person prior to 01.11.2016, and such a property is not held by that person on or after the date of the amendment, then such a Benami transaction would not be affected by the Amending Act of 2016.

However, if transfer of property took place prior to 01.10.2016 and the property is “held” even after the aforesaid date by the person who has not paid the consideration, which was paid or provided by another person, then irrespective of the date of transfer of the property, its holding would constitute a “Benami Transaction”.

Compiler’s Note: The readers may also consider the ratio of the decision of the Apex Court in the case of Manjula vs. D.A. Srinivas [2026] 186 taxmann.com 357 (SC)[08-05-2026]

DCIT (BPU-1), Mumbai vs. Jiten Pujari: Cash held by employees in lockers for beneficial owners constitutes a fiduciary holding, exempting it from “benami transaction” definitions.

2. [2026] 166 taxmann.com 672 (SAFEMA – New Delhi)

DCIT (BPU-1), Mumbai v. Jiten Pujari

Date of Order: 09.09.2024

Where the beneficial owners did not disown the cash but claimed the cash to be theirs, it was held that where the cash was found in the lockers of the employees of the beneficial owners, which employees were alleged to be benamidars, the employees were holding the cash in fiduciary capacity and such holding would fall under the exception given under section 2(9)(A)(ii) of the PBPT Act

FACTS

A search was conducted on M/s. Trigon Hotels and Resource Private Limited (THRPL) under section 132 of the Income-tax Act, 1961. During the course of search, several bank lockers standing in the name of alleged benamidars were searched, and cash amounting to Rs.9.94 crores was found.

During the search, the statement of the Respondent Benamidar was recorded, wherein he stated that the cash found in the locker belonged to one RKS, the Beneficial Owner. The statement of one VS was also recorded, who stated that the keys to the lockers in which the cash was found were with the Respondent and that the cash belonged to RKS. The statement of one SRP was also recorded, wherein he stated that the cash did not belong to him but had been given to him by the Respondent, and the cash belonged to one SSS, the Beneficial Owner.

The Respondent that the cash was given to him and others for safe custody in their capacity of being the employees of SSS and brothers, the Beneficial Owners, who were holding M/s. Noble India Construction Company. In the affidavit given by the Beneficial Owners, it was stated that the cash found in the lockers were kept in the name of Respondent and others, but the same belonged to SSS, the Beneficial Owner.

The Appellant contended that:

i) there were material inconsistencies in the statements of the witnesses inasmuch as the Respondent and VS stated that the cash belonged to RKS whereas SRP stated that the cash belonged to SSS;

ii) the Respondent was not a long standing employee of M/s. Global India Construction Company belonging to SSS but was merely associated with the firm as a “piece rate worker” and therefore could not claim the benefit of being a long standing employee;

iii) the outcome of the assessment proceedings, wherein the cash had been treated as undisclosed income in the hands of the beneficial owners, had not been taken into consideration; and
iv) the Balance Sheet and books of account did not disclose the cash held by the Beneficial Owners.

On behalf of the Respondent, it was contended that –
i) this was a case where the cash had been entrusted to the Respondent for safe custody in a fiduciary capacity;

ii) the alleged Benamidars had not claimed the cash as their own but had consistently stated that it belonged to the Beneficial Owners;

iii) the Beneficial Owners had not disowned the cash found in the locker and rather, they had claimed it to be theirs and stated that it had been entrusted to the employees for safe custody; and

iv) the case fell within the exception contained in sub-clause (ii) of section 2(9)(A) of the definition of “benami transaction”, as amended by the Amending Act of 2016.

HELD

The Tribunal relied upon the decisions of the Hon’ble Supreme Court in the case of Marcel Martins v. M. Printer AIR 2012 Supreme Court 1987 and in the case of RBI v. Jayantilal N. Mistry (2015) 64 taxmann.com 264 (SC) while interpreting the expression “fiduciary capacity”. It held that although fiduciary capacity cannot constitute an exception in every case, it would apply where the money is entrusted to another person for safe custody. The Appellant’s contention regarding inconsistencies in the witness statements was rejected on the ground that the Adjudicating Authority had analysed those statements in detail and reproduced the relevant portions. The Tribunal further observed that the only addition made in the income tax assessment was in respect of the undisclosed cash in the hands of the Beneficial Owners, which, by its very nature, was not reflected in the books of account, thereby supporting the Respondent’s case. In view of the fact that the Respondent never claimed ownership of the property and, at the same time, the Beneficial Owners did not disown the cash found, and in fact claimed it to be theirs, the appeal was dismissed and the issue was decided in favour of the Respondent Benamidar.

Balkar Singh vs. Initiating Officer: Provisional attachments under section 24(4) must relate to the same property previously attached under section 24(3), not different assets.

Editor’s Note:

From this month, we start a new feature titled “BePR Digest”. This feature will digest cases under the Prohibition of Benami Property Transactions Act, 1988 (“Be”), the Prevention of Money Laundering Act, 2002 (“P”) and the Real Estate (Regulation and Development) Act, 2016 (“R”). We are confident that the readers will find reading this monthly digest of cases useful. We invite feedback from the readers on this new feature.

1. [2026] 182 taxmann.com 25 (SAFEMA – New Delhi)

Balkar Singh v. Initiating Officer

Date of Order : 17.12.2025

Provisional attachment under section 24(4)(a)(i) of PBPT Act provides only for the continuation of a provisional attachment made under section 24(3) till the passing of the order by the Adjudicating Authority – therefore the property attached under section 24(4)(a)(i) cannot be different from the property attached under section 24(3)

FACTS

A provisional attachment under section 24(3) of the PBPT Act was made by the Initiating Officer (IO) in respect of the bank account of the Appellant with Andhra Bank. Subsequently, while passing an order under section 24(4)(a)(i) of the Act for the continuation of provisional attachment till the passing of the order by the Adjudicating Authority (AA), the IO provisionally attached a bank account with Axis Bank in the name of Mala Petro Chemicals and Polymers. On a reference made to the AA, the Provisional Attachment Order was confirmed.

The Assessee filed appeal before the Appellate Tribunal and, for the first time, raised the contention that section 24(4)(a)(i) permits only the continuation of the provisional attachment made under section 24(3). Therefore, an order passed under section 24(4)(a)(i) must relate to the same property that had been attached under section 24(3), and not to a different property. The Appellant further submitted that this was a pure question of law and could therefore be raised for the first time before the Appellate Tribunal.

The Respondent contended that the substitution of the property under attachment was due to an oversight or a bona fide mistake and therefore prayed that the matter be remanded with liberty to revisit the issue or pass a fresh order.

HELD

The Tribunal permitted the Appeallant to raise the legal plea for the first time before it, holding that the issue went to the root of the matter and that, if decided in favour of the Appellant, there would be no necessity to examine the remaining issues.

The Appellate Tribunal noted that the property attached under section 24(3) and the property attached under section 24(4)(a)(i) were indeed different. It held that section 24(4)(a)(i) provides only for the continuation of the attachment order passed under section 24(3), and not for addition or substitution of property under attachment. Accordingly, the Tribunal set aside the provisional attachment orders, while grantingliberty to the Respondent to initiate fresh proceedings, as the legal defect pointed out by the Appellant was curable. The Respondent was therefore permitted to proceed afresh strictly in accordance with law.