Dismissed

FPA-PBPT-2564/BPL/2023 of Mohd. Farooq v. The Initiating Officer, Bhopal

ATFP5 Nov 2024FPA-PBPT-2564/BPL/2023

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed the appeal against the confirmation of attachment of properties alleged to be benami. The bench held that the appellant failed to prove the source of income for the acquisition of the properties, and the Apex Court judgment relied upon was subsequently recalled, negating the plea for release based on non-retrospective application of the 2016 amendment.

What did the court decide?

N/A

FPA-PBPT-2564/BPL/2023 of Mohd. Farooq Vs. The Initiating… — Banking and Recovery | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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MP-PBPT-3122/BPL/2023 Stay FPA-PBPT-2564/BPL/2023

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Mohd. Farooq … Appellant Versus

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The Initiating Officer, Bhopal … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellant : Mr. Stuti Gujral, Adv. Ms. Trisha Mittal, Adv. Ms. Priti Verma, Adv. Ms. Bedotroyi Gupta, Adv. Mr. Vipin Kumar, Adv. Ms. Dhanya, Adv.

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For the Respondent : Mr. Kanhaiya Singhal, S.P.P.

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JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN SHRI BALESH KUMAR : MEMBER

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FINAL ORDER 05.11.2024

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FPA-PBPT-2564/BPL/2023

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By this appeal under Section 46 of Prohibition of Benami Property Transactions Act, 1988 (in short `the Act of 1988’), a challenge has been made to the order dated 24.06.2022 passed by the Adjudicating Authority confirming the attachment and the reference made by the Initiating Officer (IO). It is to be mentioned here that the IO filed an application under Section 47 of the Act of 1988 for rectification/modification of the order dated 24.06.2022

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FPA-PBPT-2564/BPL/2023

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but it was disallowed by the Adjudicating Authority vide its order dated 13.02.2023.

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The learned counsel for the appellant submitted that the impugned order had been passed by the Adjudicating Authority in ignorance of the facts available on record so as the provisions of law applicable to the case and accordingly the attachment order was erroneously confirmed by the impugned order.

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The appellant was held to be the benamidar of the properties given in three tables leaving one property at Item No.8 in Table `A’. While confirming attachment of all the other properties holding it to be a case of benami transactions, it was taken under different subsections of Section 2(9) of the Act of 1988 as amended by the Amending Act of 2016 by the Notification dated 25.10.2016.

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The appellant had disclosed sources for acquisition of the properties said to be benami with active support of his employer Piyush Gupta who was also served with the notice by the IO. The Adjudicating Authority ignored the fact that the appellant successfully demonstrated and proved sources to acquire all the properties. It was held to be benami after considering it to be under Section 2(9)(A) and 2(9)(B) of the Act of 1988, as amended by the Amending Act of 2016. This is by taking a contradictory view because the properties could not have been attached treating it to be benami transaction under two different and distinct provisions.

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The learned counsel for the appellant pressed the appeal more specifically for the property at Item Nos. 1 and 2 of Table `A’. All

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FPA-PBPT-2564/BPL/2023

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those properties were purchased prior to amendment under the Act of 1988 by the Notification dated 25.10.2016 which came into force with effect from 01.11.2016. It was submitted that the amended provisions were subject matter of challenge before the different High Courts and the Apex Court in the case of Union of India Vs. GanpatiDealcom reported in (202 3 ) 3 SCC 315. The judgment in the case of GanpatiDealcom (supra) squarely covers the properties at Item Nos. 1 and 2 of Table A’ and Property No. 1 of Table C’ because all those properties were purchased or acquired prior to 25.10.2016. The amended provisions could not have been applied retrospectively.

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It was submitted that one property at Item No.8 falling in Table A’ was also attached but attachment order was not confirmed by the Adjudicating Authority finding it to be out of purchase prior to 25.10.2016. However, the same principle was not applied for the properties at Item Nos. 1 and 2 of Table A’ and Property No.1 of Table C’ while passing the impugned order. The Tables A’ and `C’ are quoted hereunder to indicate different properties attached by the respondent:

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Table-A (Immovable Properties i.e. purchased in the name of Mohd Farooq)

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S.N	Khasra Area No./Plot No./ Flat No.	Area	Details/Location of Property	Purchaser	Seller	Mode of Payment
1.	225	0.260 Hec	Gram- Khamkheda,	Mohd Farooq (Benamidar), S/o	Shri Arvind Kumar Urf Arvind Kaushal S/o	Rs.25,00,000/- Mode-
2.	226	0.550 Hec.	VikasKhandFanda, Tehsil-Huzur, Bhopal Date of registry 04.12.2013	Late Shri Abdul Rakeeb R/o H. No. 19, Gali No. 01, ChowkiImambada, Huzur, Bhopal (M.P.)	Shri PoonamchandKaushal, R/o Lakherapura, Bhopal	1.Rs.5,00,000/- Cheque no.000035 dated 03.12.2013 Bank of Baroda, Airport Road Branch, Bhopal 2. 20,00,000 cash

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FPA-PBPT-2564/BPL/2023

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3.	Flat	600 Sq.ft.	Flat No. F-2, Ist Floor, Ali Tower, situated at Plot no.27 (Khasrano.62) Mugalpura, Barah Mahal, Shahjahanabad, Bhopal Date of registry 06.04.2017	Mohd. Farooq (Benamidar), S/o Late Shri Abdul RakeebR/o H.No. 19, Gali No.01, ChowkiImambada, Huzur, Bhopal (M.P.)	1. Shri Arif Khan S/o Late Shri Dilshad Khan House no. 27, Gali no.2, Mugalpura, Barahmahal, Shahjahanabad, Bhopal 2. Sabiya Khan W/o Late Shri Rasheed Khan House no.27, Gali no.2, Mugalpura, Barahmahal, Shahjahanabad, Bhopal 3. Smt. Haseeba Bee, W/o Late Shri Haroon Khan, House no.27, Gali no.2, Mugalpura, Barahmahal, Shahjahanabad, Bhopal 4. Shri Shaheen Khan W/o Late Shri Rafeeq Khan, House no.27, Gali no.2, Mugalpura, Barahmahal, Shahjahanabad, Bhopal	Rs.8,00,000/- Mode-Cash
4.	Flat	536 Sq.ft	Flat No.S-6, 2^nd Floor, Usmani Heights, situated at Plot no.78, Kumharpura, Near Rejiment Road, Ward no.11, Bhopal Date of registry 26.04.2017	Mohd Farooq (Benamidar), S/o Late Shri Abdul Rakeeb R/o H. No. 19, Gali No. 01, ChowkiImambada, Huzur, Bhopal (M.P.)	1. Shri JavedUrmani S/o Late Shri VaheedUrmani 78, Kumharpura, Near Rejiment Road, Ward no. 11, Bhopal 2. Mohd. ParvejUrmani S/o Late Shri VaheedUrmani 78, Kumharpura, Near Regiment Road, Ward no. 11, Bhopal	Rs.10,00,000/- Mode- Cash
5. 6. 7,	170 171 174	0.550 Hec. 0.700 H 0.080 Hec.	Gram- Kolukhedi, PHN 34, Tehsil- Huzur, Bhopal Date of registry 08.07.2020	Mohd Farooq (Benamidar), S/o Late Shri Abdul Rakeeb R/o H. No. 19, Gali No. 01, ChowkiImambada, Huzur, Bhopal (M.P.)	. 1. Smt. Rampyari 2. Shri Premnarayan 3. Smt. Seema 4. Smt. Pappi Bai All are R/o Village- Kolukhedi, Tehsil- Huzur, Bhopal All are giving POA Shri Vipin Jain S/o Shri Virendra Jain R/o LIG-130, Block- 6, Chetak Bridge, Near Gautam Nagar, Govindpura, Bhopal	Rs.44,30,000/- Mode- Cash
8.	188	Rakba 0.6519 Hectare* (A total area of	Village Arvalia, Tehsil-Huzur, Bhopal 15.03.2013	Mohd. Farooq (Benamidar), S/o Late Shri Abdul Rakeeb R/o H.No. 19, Gali No.01,	Sajiya Khan D/o Shri Siraj Mohammad Khan R/o 29, Ashiyana Complex,Koh-e-fiza,	Rs.54,07,500/- 50 lakh by chequethrough Kotak Mahindra

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FPA-PBPT-2564/BPL/2023

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1.030	ChowkiImambada,	Bank,
hectare was	Huzur, Bhopal (M.P.)	4,07,500 cash
purchased
out of which
0.3781
hectare
was sold
through plotting so remaining
area is
0.6519
hectare

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Note: Five registries in respect of these Eight properties were executed in the name of Mohd. Farooq for Rs.1,41,37,500/-.

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*The portion of property mentioned at serial no.8 i.e. 0.6519 hectare is held in the name of Mohd. Farooq and 0.3781 hectare out of total area of 1.030 hectare was already sold out through plotting.

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Table-C

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Movable properties i.e. Shares in the name of Mohd. Farooq

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Sr. No.	Share number	Share allotment date	Total share application money	Com (unlis	pany ted)	detail
1.	351126 to 369875 Total shares (18750)	29.03.2014	15,00,000	M/s Limit Add: Jaha Bhop	Extol ed Extol ngiraba al	Wind Tower, d,
		Total amount	Rs.15,00,000

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The challenge to the order has been made mainly on the aforesaid grounds though the appellant tried to reiterate that he was having means and disclosed the sources for acquisition of all the properties but at the threshold, counsel for the appellant failed to refer to any material which may be sufficient to prove the sources to acquire the property. The documents produced were not tenable to prove the sources to acquire the properties though it was submitted that the acquisition of properties was out of sale of the earlier properties and, therefore, the Adjudicating Authority should not have confirmed the attachment of the property by accepting the representation.

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FPA-PBPT-2564/BPL/2023

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The appellant Mohd. Farooq was as an office boy for Piyush Gupta’s Golden Group Real Estate India Pvt. Ltd. He wasearning Rs. 15,000 per month. He never filed income tax return for his salary and was the only source of the livelihood. Form 26AS show no TDS deductions or other substantial income including interest, rent or commission . The counsel for the appellant, however, submitted that the appellant was a BPL card holder indicating low income and limited financial resources. Thus a lenient view should have been taken by the Adjudicating Authority but it erroneously confirmed the order accepting the reference.

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The appellant submitted documents along with the rejoinder without an application for taking the additional documents on record and otherwise the documents enclosed along with the rejoinder were not part of the proceedings before the authority below. Thus, a serious objection for consideration of those documents was raised by the counsel for the respondent and accepted by the Tribunal. Accordingly, counsel for the appellant did not refer those documents which were basically to prove the income by showing payment of income-tax though even if those documents are looked into, they are not sufficient to prove the sources for acquisition of the property and otherwise assessment order is for the block period starting from 2011-12 onwardsi.e much subsequent to the order impugned herein and it was to fill the gap. It was, therefore, only that the document was not placed before the Adjudicating Authority and additional document can be taken into consideration at the appellate stage only when an application is

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FPA-PBPT-2564/BPL/2023

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filed to consider the documents at the appellate stage and are accepted. Counsel for the appellant was fair enough to press the appeal only in reference to the documents which were part of the record before the Adjudicating Authority.

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Reference of Paras 67,68,124 and 125 of the judgment in the case of GanpatiDealcom (supra) was given to support the argument and prayer was made to release the Properties at Item Nos. 1 and 2 of Table A’ and Property at Item No.1 of Table C’ by causing interference in the impugned order.

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The counsel for the appellant did not raise any other arguments though he was given an opportunity for it.

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The appeal was contested by the counsel for the respondent. It was submitted that the appellant was an employee of Piyush Gupta and was getting meagre salary of Rs. 15,000/- thus having no means to acquire the property worth of Rs.1,41,37,500/-. The documents submitted by the appellant before the Adjudicating Authority were considered and finding that appellant has failed to prove the sources to acquire the property.Five properties worth Rs 1.41 crore and agreements worth Rs . 1.52 crore(total Rs 2.93 crores) were registered in his name between FY 2012-2013 and FY 2020-2021. In the statement, appellant Mohd. Farooq denied ownership and knowledge of these properties, stating that he signed documents under the directions of Piyush Gupta, who sold part of one of property (khasra No. 188) through plotting.

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FPA-PBPT-2564/BPL/2023

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The counsel for the respondent further submitted that the properties at Item Nos. 1 and 2 of Table A’ were purchased by the appellant on 04.12.2016 and not on 04.12.2013 wrongly mentioned in the Table A’. In the light of the aforesaid, the amended provisions by the Amending Act of 2016 became applicable to the case. Thus, the argument of the appellant that applying the judgment of the Apex Court in the case of GanpatiDealcom (supra), the attachment of property at Item Nos. 1 and 2 of Table A’ and Property at Item No.1 of Table C’ should not have been confirmed by the Adjudicating Authority under erroneous assumption of the date of purchase and otherwise the appeal was pressed only for the property at Item Nos. 1 and 2 of Table `A’ on the strength of the judgment of the Apex Court without realizing that the judgment does not provide assistance to the appellant. If at all the date of purchase is taken to be 4.12.2013, property was held by the appellant even after the amendment w.e.f. 01.11.2016 thus case for those properties would fall under Section 2(9)(A) of the Amending Act of 2016.

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The detailed arguments were made by the counsel for the respondent which would be referred while recording our finding to the arguments raised by the counsel for the appellant. It is to avoid repetition of the one and same facts.

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We have considered the rival submissions of the parties and perused the record carefully.

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It is a case where the allegation against the appellant was for acquisition of benami properties while he was employee of Piyush FPA-PBPT-2564/BPL/2023 Page 8 of 14

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Gupta, the defendant No.2 before the Adjudicating Authority. The appellant was getting meagre salary of Rs. 15,000/- per month. However, during the course of search and seizure, it was found that the appellant Mohd. Farooq made investment of Rs.1,41,37,500/during the Financial Years 2012-13, 2013-14, 2017-18 & 2020-21. The respondent found different properties and divided into three parts which are movable and immovable.

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The two tables quoted in Para 6 above revealthe movable and immovable benamiproperties attached by the respondent. Table B’ is not quoted because no argument in reference to it was made. The properties mentioned at Item Nos. 1 and 2 of Table A’ said to have purchased on 04.12.2016 for consideration of Rs. 25,00,000/though the date of purchase given by the appellant is of 04.12.2013. The property mentioned at Item No. 3 of Table A’ was purchased on 06.04.2017 for consideration of Rs.8,00,000/- while property mentioned at Item No. 4 was purchased on 26.04.2017 for a sum of Rs.10,00,000/-. The properties mentioned at Item Nos. 5 to 7 of Table A’ were purchased on 08.07.2020 for consideration of Rs.44,30,000/-. The property at Item No. 8 is not subject matter of this appeal. It is revealed from Item No. 1 of Table `C’ that shares were purchased by the appellant on 29.03.2014 for consideration of Rs.15,00,000/-. The total investment of the appellant during the period given above was of Rs.1,56,37,500/-.

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It was found that the appellant was not income-tax payer or filed any income-tax return. It is also a fact that in the statement made by the appellant, he admitted that he was an employee of M/s Golden

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FPA-PBPT-2564/BPL/2023

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Group Real Estate India Pvt. Ltd. and receiving Rs. 15,000/- per month from Piyush Gupta. It was his only earning for the family thus considering that the appellant was not a tax payer and otherwise was receiving meagre income of Rs.15,000/- per month, he could not show the source for acquisition of property worth of Rs.1,56,37,500/. It was also found that Piyush Gupta acted as a middleman for acquisition of properties. The business activities or income-tax return of Piyush Gupta were also analyzed apart from the statements of appellant Mohd. Farooq and Piyush Gupta recorded under Section 19(1) of the Act of 1988. From the inquiries, income-tax return and statement of Piyush Gupta and others, it was revealed that even he was not having enough source of income to invest in the immovable properties in his name and in the name of his family members and associates. We are not dealing with the case of Piyush Gupta in absence of an appeal but reference of it has been given to show that even he was not having sources to acquire the properties rather acted as a middleman.

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The counsel for the appellant pressed the appeal mainly for release of properties at Item Nos. 1 and 2 of Table A’ and Property at Item No. 1 of Table C’ though later on he pressed the appeal mainly for release of properties at Item Nos. 1 and 2 of Table `A’ though failed to place the documents to indicate the source for acquisition of all the properties.

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So far as the properties at Item Nos. 1 and 2 of Table `A’ are concerned, the argument has been raised to cause interference in the impugned order on the strength of the judgment of the Apex Court in

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FPA-PBPT-2564/BPL/2023

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the case of GanpatiDealcom as the property said to have been purchased prior to 25.10.2016. The amending Act of 2016 has no retrospective effect in the light of the judgment (supra).

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We have considered the main submission of the appellant but finding that the Properties at Item Nos. 1 and 2 were purchased subsequent to the amendment i.e. on 04.12.2016 and not prior to the amendment, however, a confusion remains because 04.12.2013 has been shown to be the date of purchase in Table `A’ of the impugned judgment though throughout discussion, the Adjudicating Authority has taken date of purchase of the properties at Item Nos. 1 and 2 on 04.12.2016 and that too in reference to the specific argument for purchase of those properties prior to the amendment.

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The position of fact is now that the Apex Court by its order dated 18.10.2024 has recalled the judgment dated 22.08.2022 in the case of GanpatiDealcom (supra). In the light of the aforesaid, the plea raised by the appellant in reference to the judgment of Apex Court in the case supra for release of Property Nos. 1 and 2 of Table A’ and even Property No. 1 of Table C’ cannot be accepted.

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We find that the appellant could not produce any document worth acceptance to prove the source of income for purchase of properties for the total value of Rs.1,41,37,500/- which includes the property at Item No.8 of Table `A’ but even for the properties mentioned at Item Nos. 1 to 7, the appellant failed to prove the source for its acquisition.

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FPA-PBPT-2564/BPL/2023

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The appellant has tried to make out a case for disclosure of source of income by submitting the documents along with the rejoinder but they have not been accepted in absence of application for taking additional documents on record at the appellate stage and otherwise it was not pressed by the appellant. We otherwise find that the assessment order for the block period 2011-12 to 2021-22 is subsequent to the impugned order and cannot support the appellant. The perusal of the assessment order otherwise shows the conduct of the appellant as he could not show source to acquire the properties while his statements were recorded under Section 19 of the Act but submitted I.T. return subsequent to it. The addition of income can be acceptable under the Income-Tax Act but it cannot be used for adjudication under the Act of 1988 and otherwise if the practice adopted by the appellant is accepted, every benamidaror beneficial owner get the assessment of block years by one order after paying the income tax and penalty without submission of proof of income before the IO or the Adjudicating Authority. We have made comment in reference to the assessment order though a serious objection of the document has been taken and as such we have not recorded our finding going deep in the assessment order but touching the legal background under which assessment of income by the Income-tax authority has been made vis-à-vis the adjudication under the Act of 1988.

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It is further necessary to add that if the appellant was having source of income to acquire the property for which he got assessment of income, no one prevented him to show the source for acquisition of

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FPA-PBPT-2564/BPL/2023

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property before the IO and the Adjudicating Authority. The detailed finding recorded by the Adjudicating Authority rather disclosed as to how the benami properties came in the name of the appellant benamidar. The finding in regard to each benami property has been recorded. The payment to acquire the property said to have been made largely in cash without disclosing the source for acquiring the cash. The Adjudicating Authority has made detailed discussion for purchase of each property vis-à-vis the source of income.

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In the light of the discussion made above and finding that the appellant failed to submit the material to prove the source of income before the Adjudicating Authority and even while filing the appeal, no document was submitted to prove the source for acquisition of property. The documents submitted along with rejoinder were without permission of the appellate court and were not relied later on by the counsel. The learned counsel for the appellant referred to the judgment of the Apex Court in the case of GanpatiDealcom (supra) and more specifically reference of Paras 67,68,124 and 125 has been given.

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The fact, however, remains that the Apex Court has recalled its judgment in the case of GanpatiDealcom (supra) by the order dated 18.10.2024. Thus, argument raised by the appellant in reference to the aforesaid judgment no more holds field. We have otherwise analyzed the case to find out the source to acquire the property by the appellant and finding no material favourable to the appellant, the appeal would fail and is dismissed.

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FPA-PBPT-2564/BPL/2023

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(Justice MunishwarNath Bhandari) Chairman

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(Balesh Kumar) Member

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New Delhi, 5^th November, 2024

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‘srd’