Benami s.2(9)(C) — the law in short
What the courts have decided on section Benami s.2(9)(C), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Nexus Feeds Ltd v ACIT
High CourtHelps taxpayerNo later treatment found
The transaction the Department calls benami was done in 2011. Can it use the 2016 definitions against me?
No, on this judgment. The Telangana High Court held that ss.2(9)(A) and 2(9)(C) are substantive, offence-creating provisions and not machinery provisions, that the 2016 Amendment Act was brought into force on 1 November 2016 by the notification of 25 October 2016 with nothing to give it effect from an earlier date, and that applying those definitions to a transaction of December 2011 would offend Article 20(1). All the writ petitions were allowed.
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DCIT, BPU, Chennai v R. Bharathi
ITATHelps taxpayerNo later treatment found
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.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
