The Appellate Tribunal under SAFEMA at New Delhi has upheld the attachment of ₹5.30 crore deposited under the Income Declaration Scheme, 2016 (IDS), holding that the money could be treated as benami property after the declarations under which it was paid were declared illegal and void.

The bench of Balesh Kumar and Rajesh Malhotra (Members) dismissed appeals filed by Satyendra Kumar Jain, Vaibhav Jain and Ankush Jain. It concluded that Vaibhav Jain and Ankush Jain were the benamidars and Satyendra Kumar Jain was the beneficial owner of the attached amount.

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The appeals challenged an adjudication order dated February 25, 2020, passed under Section 26(3) of the Prohibition of Benami Property Transactions Act, 1988. That order had confirmed a provisional attachment dated January 27, 2019, covering ₹5,30,10,000.

The dispute arose against the background of income-tax demands of ₹6,92,45,248 for assessment year 2011-12 and ₹3,88,54,355 for assessment year 2012-13 raised against Satyendra Kumar Jain.

Vaibhav Jain and Ankush Jain had made declarations under IDS 2016 concerning undisclosed income connected with investments in share capital and share premium. The proceedings referred to investments involving Akinchan Developers Pvt. Ltd., Indo Metal Impex Pvt. Ltd. and Prayas Infosolution Pvt. Ltd.

The deposits relevant to the two assessment years were ₹3,71,25,000 and ₹1,58,85,000, together amounting to ₹5,30,10,000.

Through two letters dated June 27, 2018, Satyendra Kumar Jain sought adjustment of these deposits against the outstanding income-tax demands raised against him. Those letters became central to the benami proceedings.

Satyendra Kumar Jain contended that the authorities had misinterpreted his correspondence. According to his counsel, the letters sought to prevent the same income from being taxed again when Vaibhav Jain and Ankush Jain had already made payments under IDS.

He maintained that the letters denied his beneficial ownership and identified the other two appellants as the owners of the income declared. A request for adjustment, he argued, did not establish that he had supplied the funds used to make the deposits.

Vaibhav Jain and Ankush Jain similarly denied that the payments were made for his benefit. They also stated that they had never authorised him to seek adjustment of their deposits against his tax liability.

The appellants questioned whether money paid to the government as tax, surcharge and penalty could remain property capable of attachment. They relied on Section 191 of the Finance Act, 2016, concerning the non-refundable nature of IDS payments, and challenged the adequacy of the inquiry supporting the attachment.

The department argued that the declarations had been made on behalf of Satyendra Kumar Jain and that his subsequent requests for adjustment demonstrated the benefit intended for him.

It maintained that the money retained its character as benami property because the IDS declarations had been invalidated. The department also relied on findings in related proceedings concerning investments in the companies and asserted that the prescribed approvals and procedures had been followed.

The tribunal identified the principal question as whether the amount deposited under IDS 2016 could be held to be benami property.

It noted that the Principal Commissioner of Income Tax had declared the declarations illegal and void on June 9, 2017. The Delhi High Court, through its judgment dated August 21, 2019, upheld that decision on the ground that the declarations involved suppression and misrepresentation of facts.

The tribunal discussed Section 193 of the Finance Act, 2016, under which a declaration made through misrepresentation or suppression of facts is void and deemed never to have been made under the scheme.

Consequently, it held that the deposits, although still lying with the Income Tax Department, could not be regarded as tax. This finding was central to rejecting the contention that payment to the government prevented the money from being treated as benami property.

Examining the June 27, 2018 correspondence, the tribunal found that Satyendra Kumar Jain had expressly sought adjustment of the deposits against his own income-tax liability.

For assessment year 2012-13, it noted that he sought credit for the IDS deposit to meet more than 40% of the demand, together with a stay of the remaining demand pending appeal. It found that the other letter supported the same inference.

The tribunal treated these requests as central evidence of the benefit contemplated by the arrangement. In its final analysis, it also inferred that the consideration had been provided by Satyendra Kumar Jain.

It held that the ingredients of Section 2(9)(A) were satisfied even on consideration of the letters. That provision concerns arrangements in which property is held by one person, consideration is provided by another, and the property is held for the immediate or future benefit of the person providing the consideration.

The tribunal also considered the procedural history of related company proceedings.

It recorded that the Delhi High Court had quashed an earlier attachment order on October 10, 2022, relying on the Supreme Court’s 2022 judgment in Union of India v. Ganpati Dealcom Pvt. Ltd.

The tribunal noted that the Supreme Court recalled that judgment on October 18, 2024. It further recorded that departmental review applications in the related company appeals were allowed on August 18, 2025, restoring those appeals.

However, it acknowledged that the department had not informed it of further proceedings concerning the High Court’s October 10, 2022 order.

On retrospectivity, the tribunal relied on the Supreme Court’s decision in Manjula & Ors. v. D. A. Srinivas, as discussed in its order.

It applied the distinction between procedural, curative and machinery provisions and provisions creating offences or enhancing punishment.

Rejecting the appellants’ objection, the tribunal held that confiscation proceedings under Sections 27 to 29 would be applicable. It nevertheless expressly clarified that penal provisions under Chapter VII could not operate retrospectively.

The tribunal concluded that the ₹5,30,10,000 remained available as benami property because the void IDS declarations had failed to discharge the tax liability.

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Read More: JURISHOUR | TAX LAW DAILY BULLETIN : 03 November, 2026