Case Compilation Of Tribunal Rulings: Benami vs Income Tax

Here is the case compilation of tribunal rulings in respect of Benami versus Income Tax:

1. M/s Om Samriddhi Banquet & Hospitality LLP v. Initiating Officer, ACIT (BPU), Mumbai

Citation: FPA-PBPT-84/MUM/2018, Order dated 12.08.2025

• Facts:
  • During demonetisation (2016), ₹85.18 lakh cash was routed through third-party accounts before reaching LLP.
  • LLP disclosed the money as business income, paid advance tax, and claimed compliance under Income-tax Act.
• Ruling:
  • Cash is “property” under PBPT Act.
  • Routing money through third parties amounted to benami transaction, regardless of I-T disclosure.
  • Payment of tax does not grant immunity from Benami proceedings.
  • PBPT Act & Income-tax Act operate independently.
• Key Takeaway: Declaring income under Income-tax Act does not protect if true ownership is hidden.

2. Hussain P. v. Initiating Officer, ACIT (BPU), Kochi

Citation: FPA-PBPT-1201/KOCHI/2020, Order dated 31.07.2025

• Facts:
  • Police seized ₹1.84 crore cash from appellant at a toll gate.
  • Initially admitted carrying cash for someone abroad, later claimed it was from real estate dealings and offered to declare in ITR.
• Ruling:
  • Cash = “property” under PBPT Act.
  • Only two parties (benamidar & beneficial owner) needed for benami.
  • Paying tax or filing ITR cannot override PBPT confiscation.
  • Changing statements showed concealment of real ownership.
• Key Takeaway: Declaring cash in I-T returns cannot save property if it’s truly someone else’s money.

3. Kapil Dineshbhai Patel & Others v. Initiating Officer, ACIT (BPU), Ahmedabad

Citation: FPA-PBPT-230/AHD/2019, Order dated 10.07.2025

• Facts:
  • Huge demonetisation cash deposits were shown as bullion “sales.”
  • Thousands of alleged one-day sales, but no customer details or confirmations.
  • Data showed fake bills and round-tripping of cash to bullion firm.
• Ruling:
  • Sales invoices were bogus, impossible to execute in reality.
  • Beneficial owner = bullion firm, not name-lenders.
  • Tax disclosure of bogus sales does not prevent PBPT action.
  • Benami Act targets ownership, not mere taxability.
• Key Takeaway: Bogus sales disclosures in I-T returns cannot shield benami cash routed through layering and false billing.

Overall Principles Emerging:

1. Benami Act & Income-tax Act are independent – tax compliance does not negate benami implications.
2. Cash is property under PBPT Act – even if declared in ITR.
3. True ownership test prevails – not mere disclosure in books.
4. Camouflaged ownership (layering, false billing, proxies) triggers PBPT even if income tax is paid.

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