Benami s.24

Benami s.24 — the law in short

What the courts have decided on section Benami s.24, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Alishan Complex P Ltd v Initiating Officer High CourtHelps taxpayerJudgment not reachable
  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.
• Porter Buildcon Pvt Ltd v Union of India High CourtHelps taxpayerNo later treatment found
  I went to the High Court instead of the Tribunal and the adjudication order is now months old. Is my s.46 appeal dead?
  Not necessarily. The Delhi High Court relegated the petitioners to the appeal under s.46 after they gave up a challenge to the validity of the Act, held that the time the writ petition was pending is liable to be excluded under s.14 of the Limitation Act, fixed 28 February 2025 as the date by which the appeals were to be filed, and directed that appeals filed by then not be dismissed as barred by limitation or delay.
• 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.
• Niharika Jain v Union of India High CourtCuts both waysUnder appeal
  The property was bought years before November 2016 and the benami notice came after. Can the amended Act reach back?
  This is the writ batch in which the Rajasthan High Court framed that question directly - whether the Benami Amendment Act 2016 applies retrospectively - after a search under s.132 threw up show-cause notices under s.24(1) and provisional attachments under s.24(3) for pre-amendment land purchases. The judgment runs to 160 pages and the concluding part could not be reached in the copy available; what can be established from the document is the framing of the issue at para 19 and the rival cases on either side.
• 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.
• Harvinder Pal Miglani v Initiating Officer, ACIT (BPU) ITATCuts both waysNo later treatment found
  My client handed demonetised notes to a trader who banked them and sent the money back the same day. Is that a benami transaction, and does the PMGKY declaration help?
  On this order it is a benami transaction, and the declaration helps only on quantum. The Appellate Tribunal held that cash is property under s.2(26), that handing it over to the trader and its deposit in his account was a transfer and holding of property making him a benamidar under s.2(10), and that all the ingredients of s.2(9)(A) were made out. But because the declarant had already paid tax under the Pradhan Mantri Garib Kalyan Yojana and locked part of the sum in the interest-free bond, attachment could extend only to what was left.
• Ranjana Roy v Initiating Officer, Kolkata ITATHelps taxpayerNo later treatment found
  Jewellery found in my client's house during a search has been attached as benami. The alleged owner declared it under PMGKY. Does the attachment survive?
  It did not. The Appellate Tribunal had the jewellery verified against the jeweller's own hallmarking and sales records, and only four of sixty-six packets could be traced to the showroom the Department relied on. The person said to be the beneficial owner had already declared the jewellery bought from that showroom under the Pradhan Mantri Garib Kalyan Yojana 2016 and the Department had accepted the declaration. On that material the Tribunal held the jewellery was not held as benami, set aside the adjudication order and allowed the appeal.
• Ambica Bullion v DCIT (BPU-1), Mumbai ITATCuts both waysNo later treatment found
  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?
  Not necessarily. Where both sides have left holes — the Initiating Officer having failed to trace the person said to control the benamidar companies or to establish how they were incorporated and operated, and the appellant having failed to produce a stock register or the underlying sale invoices — the Appellate Tribunal remanded the matter for re-investigation instead of deciding it, directed that it be completed preferably within six months, ordered status quo and directed the banks to convert the attached balances into fixed deposits in the meantime.
• Union of India v Ganpati Dealcom P Ltd Supreme CourtCuts both waysOverruled
  Can benami proceedings be taken against me for a property bought before October 2016?
  On the current position, yes, because the judgment that said otherwise has gone. In 2022 the Supreme Court held that the 2016 amendment to the Prohibition of Benami Property Transactions Act created new substantive offences and could not operate on transactions before 25 October 2016, struck down s.3(2) and s.5 of the un-amended 1988 Act, and directed pre-amendment prosecutions and confiscations to be quashed. On 18 October 2024 it recalled that judgment in its entirety, holding that constitutional validity had been decided with no lis and no contest between the parties, and restored the appeal for fresh hearing.

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.