The benami attachment rests on a retracted statement and they refused cross-examination. Is that evidence?
No. An untested and retracted statement, standing alone, is no evidence at all on which a benami finding can rest. Where such a statement is the only material against a party, the power in s.19(1)(b) of the Prohibition of Benami Property Transactions Act to summon and examine the witness stops being discretionary and becomes a duty, and income-tax assessment findings on the source and genuineness of the funds are relevant material the Initiating Officer is bound to consider.
Decided by the High Court (Rajasthan High Court, Jaipur Bench, Division Bench — Arun Monga and Sandeep Shah JJ; D.B. Civil Miscellaneous Appeal No. 1595 of 2026) on 2026-08-03, reported as 2026:RJ-JP:35541-DB; 2026 LLBiz HC(RAJ) 33. It bears on section Benami s.2(9), section Benami s.19(1)(b), section Benami s.24, section Benami s.26, section 69, section 132(4) of the Income Tax Act 1961, in Evidence & Burden of Proof matters.
This meets the common pattern where a Benami Prohibition Unit attaches properties on the strength of a search statement that was retracted within days and the deponent is never produced. It also gives the interplay point in usable form: benami proceedings and income-tax assessments run on separate tracks, but an assessment that accepted the source of funds cannot simply be ignored. The outcome was a remand for a fresh inquiry rather than a finding that the properties were not benami, so it buys process, not a clean exit.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The income-tax department searched the Maharani Group in June 2022. A chartered accountant associated with the group gave a statement under s.132(4) of the Income-tax Act describing cash being routed through hawala channels; he retracted it by affidavit within nine days, alleging it had been extracted after some 65 hours of continuous questioning. On the strength of that statement the Benami Prohibition Unit initiated proceedings and attached 79 properties, worth about Rs 11.16 crore, purchased by Alishan Complex Private Limited, alleging the company was a benamidar for the group promoter Mahaveer Lunia. The company said the properties had been bought through banking channels out of corporate funds, and asked for the chartered accountant to be summoned for cross-examination; the Initiating Officer never summoned him. Income-tax assessment orders had accepted the company's explanation of the source of funds.
The Division Bench set aside the attachment and the orders below and remanded the matter for a fresh inquiry. It held that a retracted statement which has not been tested by cross-examination is, standing alone, no evidence at all on which a benami finding can rest, and that although benami proceedings are independent of income-tax assessment, findings returned under s.69 of the Income-tax Act carry evidentiary value which the Initiating Officer cannot simply disregard.
The Court held that an untested statement is weak evidence and a retracted one weaker still, so that without independent corroboration or the opportunity of cross-examination it cannot sustain a finding as grave as benami. Where a witness's statement is the sole material against a party, the power under s.19(1)(b) to summon and examine that witness ceases to be a matter of discretion and becomes a duty; refusing to exercise it breached natural justice. Given the confiscatory consequences of the Prohibition of Benami Property Transactions Act, the Court held that the quality of evidence must be subjected to rigorous scrutiny rather than accepted at face value. On the interplay of statutes, the Court accepted that benami proceedings and income-tax assessments run on separate tracks, but held that assessment findings on the genuineness of the source and acquisition of the funds are relevant material which the Initiating Officer is bound to consider, even though they are not conclusive. All prior orders were set aside and the matter remitted for a fresh inquiry taking that material into account.
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Handle my notice → Ask a CA on WhatsAppNo. An untested and retracted statement, standing alone, is no evidence at all on which a benami finding can rest. Where such a statement is the only material against a party, the power in s.19(1)(b) of the Prohibition of Benami Property Transactions Act to summon and examine the witness stops being discretionary and becomes a duty, and income-tax assessment findings on the source and genuineness of the funds are relevant material the Initiating Officer is bound to consider. This was decided by the High Court (Rajasthan High Court, Jaipur Bench, Division Bench — Arun Monga and Sandeep Shah JJ; D.B. Civil Miscellaneous Appeal No. 1595 of 2026) and bears on section Benami s.2(9), section Benami s.19(1)(b), section Benami s.24, section Benami s.26, section 69, section 132(4) of the Income Tax Act 1961. It is reported as 2026:RJ-JP:35541-DB; 2026 LLBiz HC(RAJ) 33. This meets the common pattern where a Benami Prohibition Unit attaches properties on the strength of a search statement that was retracted within days and the deponent is never produced. It also gives the interplay point in usable form: benami proceedings and income-tax assessments run on separate tracks, but an assessment that accepted the source of funds cannot simply be ignored. The outcome was a remand for a fresh inquiry rather than a finding that the properties were not benami, so it buys process, not a clean exit. If it applies to you, the first step is this: Ask in writing for the deponent to be summoned and examined under s.19(1)(b) and get the refusal recorded, since the failure to summon was the breach of natural justice here.
The income-tax department searched the Maharani Group in June 2022. A chartered accountant associated with the group gave a statement under s.132(4) of the Income-tax Act describing cash being routed through hawala channels; he retracted it by affidavit within nine days, alleging it had been extracted after some 65 hours of continuous questioning. On the strength of that statement the Benami Prohibition Unit initiated proceedings and attached 79 properties, worth about Rs 11.16 crore, purchased by Alishan Complex Private Limited, alleging the company was a benamidar for the group promoter Mahaveer Lunia. The company said the properties had been bought through banking channels out of corporate funds, and asked for the chartered accountant to be summoned for cross-examination; the Initiating Officer never summoned him. Income-tax assessment orders had accepted the company's explanation of the source of funds. The matter was decided on 2026-08-03 by the High Court (Rajasthan High Court, Jaipur Bench, Division Bench — Arun Monga and Sandeep Shah JJ; D.B. Civil Miscellaneous Appeal No. 1595 of 2026). On those facts the High Court held as follows. The Division Bench set aside the attachment and the orders below and remanded the matter for a fresh inquiry. It held that a retracted statement which has not been tested by cross-examination is, standing alone, no evidence at all on which a benami finding can rest, and that although benami proceedings are independent of income-tax assessment, findings returned under s.69 of the Income-tax Act carry evidentiary value which the Initiating Officer cannot simply disregard.
The Court held that an untested statement is weak evidence and a retracted one weaker still, so that without independent corroboration or the opportunity of cross-examination it cannot sustain a finding as grave as benami. Where a witness's statement is the sole material against a party, the power under s.19(1)(b) to summon and examine that witness ceases to be a matter of discretion and becomes a duty; refusing to exercise it breached natural justice. Given the confiscatory consequences of the Prohibition of Benami Property Transactions Act, the Court held that the quality of evidence must be subjected to rigorous scrutiny rather than accepted at face value. On the interplay of statutes, the Court accepted that benami proceedings and income-tax assessments run on separate tracks, but held that assessment findings on the genuineness of the source and acquisition of the funds are relevant material which the Initiating Officer is bound to consider, even though they are not conclusive. All prior orders were set aside and the matter remitted for a fresh inquiry taking that material into account.
It was decided by the High Court on 2026-08-03 and is reported as 2026:RJ-JP:35541-DB; 2026 LLBiz HC(RAJ) 33. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section Benami s.2(9), section Benami s.19(1)(b), section Benami s.24, section Benami s.26, section 69, section 132(4), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Division Bench set aside the attachment and the orders below and remanded the matter for a fresh inquiry. It held that a retracted statement which has not been tested by cross-examination is, standing alone, no evidence at all on which a benami finding can rest, and that although benami proceedings are independent of income-tax assessment, findings returned under s.69 of the Income-tax Act carry evidentiary value which the Initiating Officer cannot simply disregard. It arises in Evidence & Burden of Proof matters, on section Benami s.2(9), section Benami s.19(1)(b), section Benami s.24, section Benami s.26, section 69, section 132(4) of the Income Tax Act 1961, and was decided by Rajasthan High Court, Jaipur Bench, Division Bench — Arun Monga and Sandeep Shah JJ; D.B. Civil Miscellaneous Appeal No. 1595 of 2026. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put the retraction affidavit, its date and the circumstances alleged on record at the earliest stage rather than saving them for appeal. File the income-tax assessment orders that accepted the source of the funds together with the banking trail, and require the Initiating Officer to deal with them in the order. Do not argue that a favourable assessment concludes the benami question, because the Court held such findings are relevant material but not conclusive.
The judgment itself could not be reached, so no check was possible. The judgment itself has not been located in a reported source, so no later treatment of it can be checked and its text has not been read. What can be said is this. The order it is said to have set aside — Swagatma Enclave (P.) Ltd. v. Initiating Officer, Jaipur [2026] 185 taxmann.com 441 (SAFEMA - New Delhi), 1 April 2026, decided by Justice Munishwar Nath Bhandari, Chairman, and G.C. Mishra, Member, in the companion appeals of the three companies — carries no record of having been set aside or reversed. That order therefore still stands unreversed, and it went in favour of the revenue on the admissibility of the s.132(4) statements, on the effect of the retraction and on the absence of cross-examination. Whether the Union has taken the High Court decision further is not known. Two consequences follow for anyone relying on this page. The propositions set out above — that a retracted statement untested by cross-examination is, standing alone, no evidence at all; that the power in s.19(1)(b) of the Prohibition of Benami Property Transactions Act to summon and examine a witness becomes a duty where such a statement is the only material against a party; and that findings returned under s.69 of the Income-tax Act carry evidentiary value which the Initiating Officer cannot disregard — should be checked against a certified copy before they go into a pleading, and the case should not be cited on the strength of this entry alone. And because the outcome was a remand for a fresh inquiry rather than a finding that the properties were not benami within s.2(9) of that Act, the decision goes to the quality of the material before the Initiating Officer under s.24 and not to the character of the transaction. An attachment confirmed under s.26 on evidence that has been properly tested is untouched by it, and a party whose matter is remanded should expect the inquiry to be done over again rather than to end. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This judgment could not be found in a subscription case-law database. Three searches were run - on the company name, on the promoter's name and on the single distinctive word in the company name - returning eight, four and twenty-six documents respectively, none of them this decision; because those searches match words anywhere in a document a judgment naming the company would have been returned. The decision is very recent, so it may simply not be carried yet. The entry therefore still rests on press reporting, and the sentence previously quoted as the Court's words was a newspaper headline and has been removed; there is no verified quotation from this judgment. What the searches did establish is the decision appealed from, and it matters. The companion appeals of the three companies - Alishan Complex Private Limited, Principal Dealers Private Limited and Swagatma Enclave Private Limited - were dismissed by the Appellate Tribunal under the Safema, New Delhi, on 1 April 2026, reported as Swagatma Enclave (P.) Ltd. v. Initiating Officer, Jaipur [2026] 185 taxmann.com 441 (SAFEMA - New Delhi), Justice Munishwar Nath Bhandari, Chairman, and G.C. Mishra, Member, in FPA-PBPT Nos. 332 to 335 (JP) of 2024. That Tribunal held against these companies on the very points this entry reports the High Court deciding for them: that a statement recorded under s.132(4) of the Income-tax Act may be used in proceedings under the Prohibition of Benami Property Transactions Act because s.60 of that Act preserves the application of other laws; that the retraction here, made by affidavit after a considerable period and not shown to follow duress, came too late to be accepted; and that the absence of cross-examination did not destroy the evidentiary value of statements which it found corroborated by other material, cross-examination not being an integral part of natural justice in these proceedings. It also held, at its para 40, the opposite of what this entry attributes to the High Court on the interplay of statutes: that assessment or acceptance of income by the income-tax authorities, including the taxation of undisclosed income, does not preclude or neutralise proceedings under the benami statute where a benami transaction is made out, and that an element of benami transaction may exist even where disclosed income was used. The same order records that this is not the first time the Rajasthan High Court has been asked about this attachment: the companies' writ petitions challenging the initiation of the benami proceedings, Civil Writ Petitions Nos. 16732 of 2023, 14527 of 2023 and 15074 of 2023 at the Jodhpur seat, were dismissed, the Court holding that the Initiating Officer need not await a reply to a notice under s.24(1) and (2) before making a provisional attachment under s.24(3) provided the approving authority's prior approval is obtained, and a review petition, D.B. Review in Petition (Writ) No. 20 of 2024, was dismissed on 9 April 2024. Anyone relying on this entry should read the High Court judgment itself before citing it, and should know that it is reversing a reasoned appellate order that went the other way. Two details in the entry also conflict with the record below: the Tribunal's order puts the money involved in the 79 properties standing in this company's name at about Rs. 40 crores, not the Rs. 11.16 crore the press report gave, and it treats the chartered accountant's retraction as delayed, where the press report describes it as made by affidavit within nine days. Neither conflict can be resolved without the judgment. This is in any event a decision under the Prohibition of Benami Property Transactions Act, 1988 and not under the Income-tax Act, 1961: the s.132(4) statement and the s.69 findings come from the income-tax side, but s.2(9), s.19(1)(b), s.24 and s.26 are provisions of the benami statute and are described as such. There is no verified quotation from this judgment and its reasoning is known only from press reporting, so it should not be cited at length without reading it. Four searches in a subscription case-law database have not produced it, and the appellate order it is said to have set aside carries no citator banner recording a reversal, so no later treatment or confirmation of the outcome could be obtained from that source either. Whether the Union has appealed is not known. Two figures cannot be reconciled from the sources available: the money attributed to the 79 properties in this company's name is given as about Rs. 11.16 crore in the press report and as about Rs. 40 crores in the appellate order below, and the retraction is described as made within nine days in the press report and as delayed in that order. The entry also cannot tell you what the Adjudicating Authority actually found, or how the High Court dealt with the appellate Tribunal's holding that assessment of income by the income-tax authorities does not neutralise a benami finding. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Division Bench set aside the attachment and the orders below and remanded the matter for a fresh inquiry. It held that a retracted statement which has not been tested by cross-examination is, standing alone, no evidence at all on which a benami finding can rest, and that although benami proceedings are independent of income-tax assessment, findings returned under s.69 of the Income-tax Act carry evidentiary value which the Initiating Officer cannot simply disregard.
TaxSphere, “Alishan Complex P Ltd v Initiating Officer”, https://taxnotice.vittsphere.com/caselaw/case/alishan-complex-v-initiating-officer-benami/ (validity last checked 2026-08-19)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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