Benami s.26

Benami s.26 — the law in short

What the courts have decided on section Benami s.26, 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.
• Shyamsundar Sharma v ACIT High CourtHelps departmentNo later treatment found
  The Initiating Officer has issued a s.24 notice and attached my accounts on the strength of a spreadsheet found in someone else's search. Will the High Court interfere now?
  Not where the officer has set out his material. The Delhi High Court dismissed the writ petition, holding that the Initiating Officer had written in detail the reasons for believing the petitioner to be a benamidar — spreadsheets of bogus expenses recovered in a search, corroborated by statements of the beneficial owners — and that the Court would not interfere with that opinion when an efficacious remedy lay before the Adjudicating Authority under s.26, which can also revoke the attachment.
• 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.
• 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.
• 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.

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.