Tribunal quashed attachment orders against 28 employees who returned salary advances within 10 days during demonetization, holding no benami property existed.
Impugned orders set aside, attached properties released forthwith, appeals and pending applications disposed of.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
APPELLATE TRIBUNAL FOR SAFEMA, FEMA, PMLA, NDPS, PBPT Act AT NEW DELHI
Date of decision : 17th October, 2018
| 1. | FPA/PBPT/16/CHN/2018 V Rajinikanth |
…. Appellant | |
|---|---|---|---|
| 2. | FPA/PBPT/17/CHN/2018 | ||
| G. Jothi Priya | …. Appellant | ||
| 3. | FPA/PBPT/18/CHN/2018 | ||
| K Jawahar Rani | …. Appellant | ||
| 4. | FPA/PBPT/19/CHN/2018 | ||
| P Deepa | …. Appellant | ||
| 5. | FPA/PBPT/20/CHN/2018 | ||
| S Aghalya | …. Appellant | ||
| 6. | FPA/PBPT/21/CHN/2018 | ||
| S Karthick | …. Appellant | ||
| 7. | FPA/PBPT/22/CHN/2018 | ||
| Jayasreekrishnan | …. Appellant | ||
| 8. | FPA/PBPT/23/CHN/2018 | ||
| G Lathaselvi | …. Appellant | ||
| 9. | FPA/PBPT/25/CHN/2018 | ||
| V Vijayan | …. Appellant | ||
| 10. | FPA/PBPT/27/CHN/2018 | ||
| T Prabhuram | …. Appellant | ||
| 11. | FPA/PBPT/29/CHN/2018 | ||
| S Sathish Kumar | …. Appellant | ||
| 12. | FPA/PBPT/33/CHN/2018 | ||
| D Arivukkodi | …. Appellant |
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 1 of 17
| 13. | FPA/PBPT/34/CHN/2018 C N Gnanaprakasam |
…. Appellant |
|---|---|---|
| 14. | FPA/PBPT/35/CHN/2018 | |
| G Jyosthana | …. Appellant | |
| 15. | FPA/PBPT/36/CHN/2018 | |
| J Sivapriya | …. Appellant | |
| 16. | FPA/PBPT/37/CHN/2018 | |
| S Manigandan | …. Appellant | |
| 17. | FPA/PBPT/38/CHN/2018 | |
| D Sankaran | …. Appellant | |
| 18. | FPA/PBPT/39/CHN/2018 | |
| I Cephas | …. Appellant | |
| 19. | FPA/PBPT/45/CHN/2018 | |
| M Methini | …. Appellant | |
| 20. | FPA/PBPT/46/CHN/2018 | |
| D Kousalya | …. Appellant | |
| 21. | FPA/PBPT/47/CHN/2018 | |
| P. Thilaga | …. Appellant | |
| 22. | FPA/PBPT/48/CHN/2018 | |
| G Dhivya | …. Appellant | |
| 23. | FPA/PBPT/49/CHN/2018 | |
| M Nivethitha Devi | …. Appellant | |
| 24. | FPA/PBPT/50/CHN/2018 | |
| M Ramesh Babu | …. Appellant | |
| 25. | FPA/PBPT/54/CHN/2018 | |
| C Bhaskaran | …. Appellant |
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 2 of 17
26. FPA/PBPT/57/CHN/2018
27. FPA/PBPT/61/CHN/2018 R Sivakumar …. Appellant
28. FPA/PBPT/64/CHN/2018
Vs.
Sh. K. Visakh --Respondent Dy Commissioner of Income Tax Chennai
Advocates/Authorized Representatives who appeared
For the Appellants : Sh. Anirudh Bakhru and Sh. Sudhir Chandra, Advocates For the Respondent : Sh. Anish Dhingra, SPP for Initiating Officer (Respondent )
CORAM
JUSTICE MANMOHAN SINGH : CHAIRMAN
JUDGEMENT
FPA/PBPT/16, 17, 18, 19, 20, 21, 22, 23, 25, 27, 29, 33, 34, 35,36, 37, 38, 39, 45, 46, 47, 48, 49, 50, 54, 57, 61 & 64/CHN/2018
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 3 of 17
chart of the same having full details of 28 appeals would be reproduced in the later part of my order. The relevant facts taken from appeal no. 16/2018, are given below:-
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 4 of 17
The show cause mentions as under:
“ The list ofpersons to whom the said cash of Rs.8.18 crores was distributed contains your name Shri/ Smt. Shri K Rajinikanth which shows that you have received the cash amount of Rs.50,000/-.
You also under sworn statement taken on 28/11/2016 has stated that you have received the cash amount of Rs50, 000/-. This clearly establishes the fact that you have held the cash amount and also lent your name.”
“I have received the cash amount of Rs.50, 000/-from the Head of the Department on 17/11/2016(Rs.500 notes). I have returned this amount to the H.O.D. Dr. R. Sivakumar on 23/11/2016.”
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 5 of 17
“The sum of Rs.50,000/- is due from the Benamidhar, Thiru.V. Rajinikanth on account of Benami transactions (Prohibitions) Amendment Act, 2016. The savings bank account held by the Benamidhar in your branch is SB A/c No. 707050607. You are hereby required u/s 24(3) of the Benami Transactions (Prohibitions) Amendment Act, 2016 to pay to provisionally attach any amount due from you to or held by you o r……….”
| S. N. |
Tribunal‟s Reference/ Appellant‟s Name |
Emp |
loyment |
details |
Salary Adva |
nce taken |
Salary returned b |
advance ack |
Property held Benami by the IO |
Bank Balance on 25.01.17 (Date of |
|---|---|---|---|---|---|---|---|---|---|---|
| Post | Since Year |
Salary PM(Rs.) |
Amount Rs. |
Date | Amount Rs. |
Date | attach- ment) comprising past salary savings |
|||
| 1. | PB 16/2018 V. Rajnikanth |
Prof. | 2006 | 1,19,592 | 50,000 | 17.11.06 | 50,000 | 23.11.06 | 50,000 | 28,820 |
| 2. | PB 17/2018 G Jothipriya |
Asstt. Prof. |
2015 | 50,760 | 1,00,000 | 15.11.06 | 1,00,000 | 25.11.16 | 1,00,000 | 192 |
| 3. | PB 18/2018 K. Jawahar Rani |
Prof. | 2001 | 1,25,467 | 75,000 | 17.11.16 | 75,000 | 24.11.16 | 75,000 | 1,807 |
| 4. | PB 19/2018 P Deepa |
Prof. | 1997 | 96,961 | 1,00,000 | 15.11.16 | 1,00,000 | 26.11.16 | 1,00,000 | 768 |
| 5. | PB 20/2018 S. Aghalya |
Asstt. Prof. |
1998 | 98,794 | 1,00,000` | 16.11.16 | 1,00,000 | 25.11.16 | 1,00,000 | 147,372 |
| 6. | PB 21/2018 S .Karthick |
Asstt. Prof. |
2015 | 50,760 | 1,00,000 | 14.11.16 | 1,00,000 | 23.11.15 | 1,00,000 | 953 |
| 7. | PB 22/2018 Jayasree- krishnan |
Prof. | 1996 | 1,31,718 | 75,000 | 17.11.16 | 75,000 | 19.11.06 | 75,000 | 2,976 |
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 6 of 17
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 7 of 17
| 28 | PB 64/2018 V Murali |
Acco- untsO ffi-cer |
2003 | 23,699 | 2,00,000 | 14.11.16 | 2,00,000 | 22.11.16 | 2,00,000 | 45,415 |
|---|---|---|---|---|---|---|---|---|---|---|
| Total | 31,00,000 | Total | 31,00,000 | Total | 31,00,000 |
final orders in remaining appeals would be passed in due course.
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 8 of 17
bank accounts of these employees up to the value of the alleged “ benami ” property.
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 9 of 17
employers. They have not kept any amount. They were not aware about the consequences. The advance salary was taken due to bonafide manner.
“2(u) „proceeds of crime‟ means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property [for where such property is taken or held outside the country, then the property equivalent in value held within the country]”
2(5) “attachment “ means the prohibition of transfer, conversion, disposition or movement of property, by an order issued under this Act;
2(9) “ benami transaction ” means, -
(A) a transaction or an arrangement—
(a) where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and
(b) the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration, except when the property is held by—
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 10 of 17
(i) a Karta, or a member of a Hindu undivided family, as the case may be, and the property is held for his benefit or benefit of other members in the family and the consideration for such property has been provided or paid out of the known sources of the Hindu undivided family;
(ii) a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 (22 of 1996) and any other person as may be notified by the Central Government for this purpose;
(iii) any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual;
(iv) any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendant and the individual appear as joint-owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual; or
(B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or
(C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership;
(D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious;
(i) consideration for such property has been provided by the person to whom possession of property has been allowed but the person who has granted possession thereof continues to hold ownership of such property;
(ii) stamp duty on such transaction or arrangement has been paid; and
(iii) the contract has been registered.
2(10) "benamidar" means a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name;
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 11 of 17
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 12 of 17
“I have received the cash amount of Rs. 50,000/- from the Head of the Department on 17/11/2016 (Rs. 500 notes). I have returned this amount to the H.O.D. Dr. R. Sivakumar on 23/11/2016.”
However, in Para 4 ofthe IO‟s order, he writes as under:
“In response to the notice, the Benamidar had filed a reply, stating that the sum received by cash from through Shri Babu Manoharan, (beneficial owner) are his salary advance. His reply is not acceptable, because in the sworn statement recorded before the Assistant/Deputy Director of Income tax (Inv), during the course of the search, it has been stated by him that he has received the said amount as loan”.
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 13 of 17
“This shows that ThiruBabu Manoharan has forced his employees to distribute, deposit and retain his own money in demonetized currency in the guise of loan received, which has to be repaid after some time in new currency as per his convenience.”
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 14 of 17
attached in value of such property unlike in Section 2(u) of PMLA, 2002, which is other Special Act. Any provision of PMLA, 2002 cannot be invoked in the Benami Act. The members of Adjudicating Authority have failed to appreciate the same law while passing the impugned order. In the present case, the amount was not held by the appellants, it was an advance salary received from the employer. It was an oral contract between the employee and employers. It is not the case of respondent, the appellants were involved in any link and nexus in the crime or they have hatched any conspiracy or arrangement between the employee and employers.
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 15 of 17
traceable or fictitious. The admitted position is that the management/employer was very much traceable, his statement was recorded, the money returned by the appellants was dealt by the department.
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 16 of 17
that cash is transferred from one person to another, with an object to defeat ,demonetization. This is insufficient to establish a “ benami ” transaction.
(Justice Manmohan Singh) Chairman
New Delhi, 17th Oct., 2018. „skb‟
FPA/PBPT/16 to 23,25, 27, 29, 33 to 39, 45 to 50,54,57,61 & 64/CHN/2018
Page 17 of 17
3 issues framed by the court
Whether attachment of bank accounts under Section 24 can be valid when the alleged benami property had already been returned to the employer.
Whether sworn statements showing receipt of salary advance as opposed to loan negate the formation of a 'benami' transaction.
Whether the Benami Act permits attachment of property in lieu of the value of that property unlike provisions in the PMLA.
Colour shows how this judgement treated each authority
ACIT v. Dhariya Construction Co.Referred¶130
ACIT v. Dhariya Construction Co. (2010) 328 ITR 515
CIT v. Kelvinator India Ltd.Referred¶130
CIT v. Kelvinator India Ltd. (2010) 320 ITR 561
Sitaram Agarwal v. Subrata ChandraApplied¶146
Sitaram Agarwal v. Subrata Chandra, (2008) 7 S.C.C. 716 · Who else cites this
6 provisions across 2 enactments
Rajinikanth and others
K. Visakh
MANMOHAN SINGH
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
