The department says shares allotted in my name were benami. I knew about the allotment and the money came into my account. Does s.2(9)(C) still catch me?
No. Section 2(9)(C) of the Prohibition of Benami Property Transactions Act is engaged only where the owner of the property is not aware of, or denies knowledge of, that ownership. Where the named holder admits in cross-examination that he knew of the allotment and received the consideration in his own bank account, the knowledge ingredient is absent and the transaction falls outside s.2(9)(C) whatever the tax character of the underlying entries.
Decided by the ITAT (Justice Munishwar Nath Bhandari, Chairman, and Shri V. Anandarajan, Member) on 2026-08-18, reported as FPA-PBPT-691, 722, 690, 692, 665, 673, 688, 727, 717, 728, 666, 689, 667, 720, 672, 721, 729 and 674/CHN/2025 (Appellate Tribunal under SAFEMA, New Delhi). It bears on section Benami s.2(9)(C), section Benami s.24, section Benami s.26, section 131, section 132(4) of the Income Tax Act 1961, in Evidence & Burden of Proof, How Tax Law Is Read and Appeals matters.
Benami charges built out of a share-premium or bogus-creditor investigation routinely proceed on the assumption that anyone used as a name-lender is a benamidar. This order holds the department to the actual wording of the limb it invokes, and it does so at the level of the Appellate Tribunal, where the attachment is confirmed or falls.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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M/s Shobikaa Impex Pvt. Ltd. carried outstanding 'trade payables' of about Rs 117.65 crore as at 31 March 2017 in the names of job workers, which the Income-tax authorities treated as fictitious because no goods or services had been supplied and no payments made. In FY 2017-18 the company converted those liabilities into securities premium, allotting equity shares of Rs 100 face value at a premium of Rs 750 to twenty-two job workers, and later bought the shares back. The Initiating Officer, BPU, Chennai treated the job workers as benamidars under s.2(9)(C) and provisionally attached their properties. The Adjudicating Authority, by order dated 27 June 2025, refused to confirm the provisional attachment. The DCIT appealed in eighteen connected appeals.
The appeals were dismissed. The Tribunal found no error in the Adjudicating Authority's refusal to confirm the attachment, holding that s.2(9)(C) requires that the owner of the property be not aware of, or deny knowledge of, such ownership (para 14), and that any transaction in the knowledge of the benamidar would not be construed to fall under that limb (para 21). The operative paragraph reads: "In view of the above, the appeals fail and are dismissed." (para 23).
The Tribunal set out the statutory ingredient at para 14 - the provision refers to the transaction being benami where the owner of the property is not aware of, or denies knowledge of, the ownership - and recorded at para 15 that where there is a contradiction between a statement made under the Income-tax Act, 1961 and a statement made in cross-examination in proceedings under the Act of 1988, the statement recorded under the Act of 1988 prevails and not the conflicting statement recorded under any other statute. At para 16 it recorded that, the benamidar having made the disclosure, counsel for the appellants could not clarify how a case of benami transaction under s.2(9)(C) was made out. At para 17 it declined to carry across a finding in an Interim Board settlement order, that being a related but separate proceeding under a separate statute. Para 18 records that the NCLT, Chennai had by order dated 26 April 2024 cancelled the allotment of the equity shares, so that the property said to be benami was not even in existence. Para 19 records that all eighteen job workers admitted in cross-examination that they knew of the allotment and had received the buy-back money in their accounts. At para 20 the Tribunal noted that the statements relied on by the department were recorded under s.131 of the Income-tax Act and concerned evasion of income-tax rather than a benami transaction, and at para 21 it concluded that any transaction in the knowledge of the benamidar would not be construed to fall under s.2(9)(C).
any transaction in the knowledge of benamidar would not be construed to fall under Section 2(9)(C) of the Act of 1988.
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Handle my notice → Ask a CA on WhatsAppNo. Section 2(9)(C) of the Prohibition of Benami Property Transactions Act is engaged only where the owner of the property is not aware of, or denies knowledge of, that ownership. Where the named holder admits in cross-examination that he knew of the allotment and received the consideration in his own bank account, the knowledge ingredient is absent and the transaction falls outside s.2(9)(C) whatever the tax character of the underlying entries. This was decided by the ITAT (Justice Munishwar Nath Bhandari, Chairman, and Shri V. Anandarajan, Member) and bears on section Benami s.2(9)(C), section Benami s.24, section Benami s.26, section 131, section 132(4) of the Income Tax Act 1961. It is reported as FPA-PBPT-691, 722, 690, 692, 665, 673, 688, 727, 717, 728, 666, 689, 667, 720, 672, 721, 729 and 674/CHN/2025 (Appellate Tribunal under SAFEMA, New Delhi). Benami charges built out of a share-premium or bogus-creditor investigation routinely proceed on the assumption that anyone used as a name-lender is a benamidar. This order holds the department to the actual wording of the limb it invokes, and it does so at the level of the Appellate Tribunal, where the attachment is confirmed or falls. If it applies to you, the first step is this: Identify which limb of s.2(9) the Initiating Officer has invoked; if it is (C), the whole case turns on the named owner's knowledge.
M/s Shobikaa Impex Pvt. Ltd. carried outstanding 'trade payables' of about Rs 117.65 crore as at 31 March 2017 in the names of job workers, which the Income-tax authorities treated as fictitious because no goods or services had been supplied and no payments made. In FY 2017-18 the company converted those liabilities into securities premium, allotting equity shares of Rs 100 face value at a premium of Rs 750 to twenty-two job workers, and later bought the shares back. The Initiating Officer, BPU, Chennai treated the job workers as benamidars under s.2(9)(C) and provisionally attached their properties. The Adjudicating Authority, by order dated 27 June 2025, refused to confirm the provisional attachment. The DCIT appealed in eighteen connected appeals. The matter was decided on 2026-08-18 by the ITAT (Justice Munishwar Nath Bhandari, Chairman, and Shri V. Anandarajan, Member). On those facts the ITAT held as follows. The appeals were dismissed. The Tribunal found no error in the Adjudicating Authority's refusal to confirm the attachment, holding that s.2(9)(C) requires that the owner of the property be not aware of, or deny knowledge of, such ownership (para 14), and that any transaction in the knowledge of the benamidar would not be construed to fall under that limb (para 21). The operative paragraph reads: "In view of the above, the appeals fail and are dismissed." (para 23).
The Tribunal set out the statutory ingredient at para 14 - the provision refers to the transaction being benami where the owner of the property is not aware of, or denies knowledge of, the ownership - and recorded at para 15 that where there is a contradiction between a statement made under the Income-tax Act, 1961 and a statement made in cross-examination in proceedings under the Act of 1988, the statement recorded under the Act of 1988 prevails and not the conflicting statement recorded under any other statute. At para 16 it recorded that, the benamidar having made the disclosure, counsel for the appellants could not clarify how a case of benami transaction under s.2(9)(C) was made out. At para 17 it declined to carry across a finding in an Interim Board settlement order, that being a related but separate proceeding under a separate statute. Para 18 records that the NCLT, Chennai had by order dated 26 April 2024 cancelled the allotment of the equity shares, so that the property said to be benami was not even in existence. Para 19 records that all eighteen job workers admitted in cross-examination that they knew of the allotment and had received the buy-back money in their accounts. At para 20 the Tribunal noted that the statements relied on by the department were recorded under s.131 of the Income-tax Act and concerned evasion of income-tax rather than a benami transaction, and at para 21 it concluded that any transaction in the knowledge of the benamidar would not be construed to fall under s.2(9)(C). In the words reproduced by the source cited on this page: "any transaction in the knowledge of benamidar would not be construed to fall under Section 2(9)(C) of the Act of 1988."
It was decided by the ITAT on 2026-08-18 and is reported as FPA-PBPT-691, 722, 690, 692, 665, 673, 688, 727, 717, 728, 666, 689, 667, 720, 672, 721, 729 and 674/CHN/2025 (Appellate Tribunal under SAFEMA, New Delhi). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section Benami s.2(9)(C), section Benami s.24, section Benami s.26, section 131, 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 appeals were dismissed. The Tribunal found no error in the Adjudicating Authority's refusal to confirm the attachment, holding that s.2(9)(C) requires that the owner of the property be not aware of, or deny knowledge of, such ownership (para 14), and that any transaction in the knowledge of the benamidar would not be construed to fall under that limb (para 21). The operative paragraph reads: "In view of the above, the appeals fail and are dismissed." (para 23). It arises in Evidence & Burden of Proof, How Tax Law Is Read and Appeals matters, on section Benami s.2(9)(C), section Benami s.24, section Benami s.26, section 131, section 132(4) of the Income Tax Act 1961, and was decided by Justice Munishwar Nath Bhandari, Chairman, and Shri V. Anandarajan, Member. 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. Get the named owner into cross-examination before the Adjudicating Authority and put the allotment, the bank credit and the buy-back to him on record. Where a statement under s.131 or s.132(4) of the Income-tax Act is relied on, point out that it was recorded for a tax-evasion enquiry and that a statement recorded under the 1988 Act prevails over a conflicting one recorded under another statute. Check whether the property alleged to be benami still exists - a share allotment cancelled by the NCLT leaves nothing to attach. Do not let an Interim Board or Settlement order under the Income-tax Act be carried across as a finding in the benami proceeding.
Searched for later treatment; none was found. That is not the same as a source affirming it. Decided 18 August 2026. Nothing applying, affirming, doubting or reversing it was located, which is the expected position for an order this recent. The Appellate Tribunal's own site at atfp.gov.in publishes orders only through a search form that could not be submitted from here, and indiankanoon carries no doctype for this Tribunal, so later treatment of its orders is hard to track. Whether the department has taken the matter to the High Court under s.49 is not known. 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 is an order of the Appellate Tribunal under SAFEMA at New Delhi, which hears appeals under the Prohibition of Benami Property Transactions Act. The library's tier vocabulary has no separate value for it, so it is recorded at the tribunal tier alongside the Income Tax Appellate Tribunal; it is not an ITAT order and should not be cited as one. The copy read is the PDF of the Tribunal's own order hosted by taxguru; the Tribunal's site does not expose a direct link to it and indiankanoon does not index this Tribunal at all. The order disposes of eighteen appeals together and the cause title given here is that of the lead appeal. Paragraph numbers for the reasoning are taken from the order as read; the discussion before para 14 sets out the rival contentions and was not relied on for anything stated above. No neutral or reporter citation is printed on the copy read. A later reading of the same PDF corrected two paragraph pins: the sentence used as the key quote is at para 21 and not para 20, para 20 being the separate point about the statements having been recorded under s.131 of the Income-tax Act; and the holding that a statement recorded under the Act of 1988 prevails over a conflicting statement recorded under another statute is at para 15 and not para 16, para 16 being the different point that counsel for the appellants could not explain how a case under s.2(9)(C) survived the benamidar's disclosure. The date of the NCLT, Chennai order cancelling the allotment, 26 April 2024, has been added from para 18. 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 appeals were dismissed. The Tribunal found no error in the Adjudicating Authority's refusal to confirm the attachment, holding that s.2(9)(C) requires that the owner of the property be not aware of, or deny knowledge of, such ownership (para 14), and that any transaction in the knowledge of the benamidar would not be construed to fall under that limb (para 21). The operative paragraph reads: "In view of the above, the appeals fail and are dismissed." (para 23).
TaxSphere, “DCIT, BPU, Chennai v R. Bharathi”, https://taxnotice.vittsphere.com/caselaw/case/dcit-bpu-chennai-v-r-bharathi-benami-2-9c-knowledge/ (validity last checked 2026-09-16)
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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The transaction the Department calls benami was done in 2011. Can it use the 2016 definitions against me?
The benami attachment rests on a retracted statement and they refused cross-examination. Is that evidence?
I went to the High Court instead of the Tribunal and the adjudication order is now months old. Is my s.46 appeal dead?
The benami attachment on my client's bank accounts rests on an investigation that never traced the people it names. Will the Tribunal simply release it?
