The officer says my wife's property is mine because the money came from my account. Is that enough to make it benami?
No, not by itself. The burden of proving that a purchase is benami rests throughout on the person asserting it, and the source of the purchase money has never been the sole consideration. What decides the question is the intention of the person who put up the money, drawn from the relationship of the parties, the motive for the arrangement and their conduct afterwards.
Decided by the Supreme Court (L. Nageswara Rao J and M.R. Shah J (judgment delivered by M.R. Shah J)) on 2019-05-09, reported as Civil Appeal No. 4805 of 2019 (arising out of SLP (C) No. 29642 of 2016); AIR 2019 SC 2918; AIR 2019 SC (CIV) 2163; (2019) 7 SCALE 811. It bears on section Benami s.2(9), section Benami Amendment Act 2016 of the Income Tax Act 1961, in Evidence & Burden of Proof and How Tax Law Is Read matters.
Almost every benami adjudication opens with a money trail and stops there. This is the Supreme Court's modern restatement that a money trail is one circumstance among several, that the onus never shifts to the apparent owner to prove a negative, and that part payment of consideration cannot by itself carry the finding.
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The original plaintiffs sued for partition (O.S. No. 124 of 1990), claiming a three-fourths share in properties standing in the name of defendant no. 1, Mangathai Ammal, wife of Narayanasamy Mudaliar. Their case was that the properties were ancestral, bought out of funds raised by selling other ancestral property. Defendant no. 1 said the properties were her self-acquired property, bought from her stridhana and the proceeds of jewellery she had sold. The trial court decreed the partition suit and the High Court affirmed the decree by judgment dated 5 January 2016. The defendants appealed.
The appeal was partly allowed. The judgments of the High Court and the trial court holding that the plaintiffs had a three-fourths share were quashed and set aside except as to item nos. 1 and 3 of the suit properties, and it was held that the plaintiffs have no share in the other suit properties; the preliminary decree was modified accordingly, with no order as to costs (para 13). On the law, the Court held that the burden of proving a sale to be benami always rests on the person asserting it (para 8.1), that part payment of the sale consideration cannot be the sole criterion for holding a transaction benami (para 9.1), and that the Benami Transaction (Prohibition) Act does not apply retrospectively (para 12).
The Court set out the settled principles from Jaydayal Poddar v. Bibi Hazra and Thakur Bhim Singh v. Thakur Kan Singh: the burden of showing that a particular sale is benami and that the apparent purchaser is not the real owner always rests on the person asserting it; where the purchase money is proved to have come from someone other than the transferee the purchase is prima facie assumed to be for the benefit of the person who supplied it, unless there is evidence to the contrary; and the true character of the transaction is governed by the intention of the person who contributed the purchase money (para 8.1). The essence of a benami is the intention of the parties, which is rarely on the surface (para 8.1). At paras 8.2 and 8.3 the Bench adopted the six guiding circumstances it had stated a month earlier in P. Leelavathi v. V. Shankarnarayana Rao. Applying that framework, payment of part of the sale consideration could not by itself make the transaction benami, and intention had to be gathered from the surrounding circumstances (para 9.1). Decisively on the facts, the properties standing in defendant no. 1's name had been purchased well before Narayanasamy Mudaliar sold the ancestral properties said to have funded them (para 10), so the alleged source of funds could not have existed at the relevant time. The properties other than item nos. 1 and 3 were therefore her self-acquired properties and not joint family properties (para 12.1). At para 12 the Court recorded, on the authority of Binapani Paul, that the Benami Transaction (Prohibition) Act would not apply retrospectively.
the Benami Transaction (Prohibition) Act would not be applicable retrospectively.
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Handle my notice → Ask a CA on WhatsAppNo, not by itself. The burden of proving that a purchase is benami rests throughout on the person asserting it, and the source of the purchase money has never been the sole consideration. What decides the question is the intention of the person who put up the money, drawn from the relationship of the parties, the motive for the arrangement and their conduct afterwards. This was decided by the Supreme Court (L. Nageswara Rao J and M.R. Shah J (judgment delivered by M.R. Shah J)) and bears on section Benami s.2(9), section Benami Amendment Act 2016 of the Income Tax Act 1961. It is reported as Civil Appeal No. 4805 of 2019 (arising out of SLP (C) No. 29642 of 2016); AIR 2019 SC 2918; AIR 2019 SC (CIV) 2163; (2019) 7 SCALE 811. Almost every benami adjudication opens with a money trail and stops there. This is the Supreme Court's modern restatement that a money trail is one circumstance among several, that the onus never shifts to the apparent owner to prove a negative, and that part payment of consideration cannot by itself carry the finding. If it applies to you, the first step is this: Put the Initiating Officer to proof on intention, not only on the flow of funds; the burden is his throughout and does not shift because the money is traced.
The original plaintiffs sued for partition (O.S. No. 124 of 1990), claiming a three-fourths share in properties standing in the name of defendant no. 1, Mangathai Ammal, wife of Narayanasamy Mudaliar. Their case was that the properties were ancestral, bought out of funds raised by selling other ancestral property. Defendant no. 1 said the properties were her self-acquired property, bought from her stridhana and the proceeds of jewellery she had sold. The trial court decreed the partition suit and the High Court affirmed the decree by judgment dated 5 January 2016. The defendants appealed. The matter was decided on 2019-05-09 by the Supreme Court (L. Nageswara Rao J and M.R. Shah J (judgment delivered by M.R. Shah J)). On those facts the Supreme Court held as follows. The appeal was partly allowed. The judgments of the High Court and the trial court holding that the plaintiffs had a three-fourths share were quashed and set aside except as to item nos. 1 and 3 of the suit properties, and it was held that the plaintiffs have no share in the other suit properties; the preliminary decree was modified accordingly, with no order as to costs (para 13). On the law, the Court held that the burden of proving a sale to be benami always rests on the person asserting it (para 8.1), that part payment of the sale consideration cannot be the sole criterion for holding a transaction benami (para 9.1), and that the Benami Transaction (Prohibition) Act does not apply retrospectively (para 12).
The Court set out the settled principles from Jaydayal Poddar v. Bibi Hazra and Thakur Bhim Singh v. Thakur Kan Singh: the burden of showing that a particular sale is benami and that the apparent purchaser is not the real owner always rests on the person asserting it; where the purchase money is proved to have come from someone other than the transferee the purchase is prima facie assumed to be for the benefit of the person who supplied it, unless there is evidence to the contrary; and the true character of the transaction is governed by the intention of the person who contributed the purchase money (para 8.1). The essence of a benami is the intention of the parties, which is rarely on the surface (para 8.1). At paras 8.2 and 8.3 the Bench adopted the six guiding circumstances it had stated a month earlier in P. Leelavathi v. V. Shankarnarayana Rao. Applying that framework, payment of part of the sale consideration could not by itself make the transaction benami, and intention had to be gathered from the surrounding circumstances (para 9.1). Decisively on the facts, the properties standing in defendant no. 1's name had been purchased well before Narayanasamy Mudaliar sold the ancestral properties said to have funded them (para 10), so the alleged source of funds could not have existed at the relevant time. The properties other than item nos. 1 and 3 were therefore her self-acquired properties and not joint family properties (para 12.1). At para 12 the Court recorded, on the authority of Binapani Paul, that the Benami Transaction (Prohibition) Act would not apply retrospectively. In the words reproduced by the source cited on this page: "the Benami Transaction (Prohibition) Act would not be applicable retrospectively." The decision followed or applied Jaydayal Poddar v. Bibi Hazra (1974) 1 SCC 3 - principles on burden of proof and intention set out and applied; Thakur Bhim Singh v. Thakur Kan Singh (1980) 3 SCC 72 - applied; Binapani Paul v. Pratima Ghosh (2007) 6 SCC 100 - applied, including on non-retrospectivity; P. Leelavathi v. V. Shankarnarayana Rao (2019) 6 SCALE 112 - six guiding circumstances adopted at paras 8.2 and 8.3; Valliammal v. Subramaniam (2004) 7 SCC 233 - referred to; Om Prakash Sharma v. Rajendra Prasad Shewda (2015) 15 SCC 556 - referred to.
It was decided by the Supreme Court on 2019-05-09 and is reported as Civil Appeal No. 4805 of 2019 (arising out of SLP (C) No. 29642 of 2016); AIR 2019 SC 2918; AIR 2019 SC (CIV) 2163; (2019) 7 SCALE 811. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section Benami s.2(9), section Benami Amendment Act 2016, 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 appeal was partly allowed. The judgments of the High Court and the trial court holding that the plaintiffs had a three-fourths share were quashed and set aside except as to item nos. 1 and 3 of the suit properties, and it was held that the plaintiffs have no share in the other suit properties; the preliminary decree was modified accordingly, with no order as to costs (para 13). On the law, the Court held that the burden of proving a sale to be benami always rests on the person asserting it (para 8.1), that part payment of the sale consideration cannot be the sole criterion for holding a transaction benami (para 9.1), and that the Benami Transaction (Prohibition) Act does not apply retrospectively (para 12). It arises in Evidence & Burden of Proof and How Tax Law Is Read matters, on section Benami s.2(9), section Benami Amendment Act 2016 of the Income Tax Act 1961, and was decided by L. Nageswara Rao J and M.R. Shah J (judgment delivered by M.R. Shah J). 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. Build the record on the other circumstances - possession after purchase, custody of title deeds, motive, and how the parties have dealt with the property since. Where only part of the consideration is traced to your client, say so expressly; part payment is not the sole criterion. Check the chronology. Here the Court found the purchases pre-dated the sale of the ancestral property said to have funded them, which destroyed the case on its own. If the transaction pre-dates 1 November 2016, take the timing point separately, but see the note on validity below before leaning on it.
Searched for later treatment; none was found. That is not the same as a source affirming it. No decision applying, affirming, doubting or overruling this judgment was located from the documents opened. The burden-of-proof and intention holding is a restatement of Jaydayal Poddar and Binapani Paul and is not in doubt. The retrospectivity observation at para 12 needs care: the Supreme Court's judgment of 23 August 2022 in Union of India v. Ganpati Dealcom, which dealt at length with the prospective operation of the 2016 amendment, was recalled in its entirety on 18 October 2024 in Review Petition (Civil) No. 359 of 2023, 2024 INSC 799, and Civil Appeal No. 5783 of 2022 stands restored and undecided. The Supreme Court's position on the reach of the 2016 amendment is therefore open. 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.
The date of pronouncement on the document is 9 May 2019, as the discovery note recorded. The judgment was delivered by M.R. Shah J; the Bench line on the document names M.R. Shah J first. On the retrospectivity point the sentence at para 12 as printed reads that the Benami Transaction (Prohibition) Act would not apply retrospectively, resting on Binapani Paul, which concerned the 1988 Act. The judgment does not contain an extended analysis of the 2016 Amendment Act, and it should not be cited as if it decided the reach of the 2016 amendment. The part of the decree relating to item nos. 1 and 3 was left undisturbed. 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 appeal was partly allowed. The judgments of the High Court and the trial court holding that the plaintiffs had a three-fourths share were quashed and set aside except as to item nos. 1 and 3 of the suit properties, and it was held that the plaintiffs have no share in the other suit properties; the preliminary decree was modified accordingly, with no order as to costs (para 13). On the law, the Court held that the burden of proving a sale to be benami always rests on the person asserting it (para 8.1), that part payment of the sale consideration cannot be the sole criterion for holding a transaction benami (para 9.1), and that the Benami Transaction (Prohibition) Act does not apply retrospectively (para 12).
TaxSphere, “Mangathai Ammal v Rajeswari”, https://taxnotice.vittsphere.com/caselaw/case/mangathai-ammal-v-rajeswari-benami-burden-of-proof/ (validity last checked 2026-09-16)
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