Backdated Bullion Sales with OHD Notes Deemed Benami | Tribunal Confirms Attachment

Case Details: Kapil Dineshbhai Patel vs. Initiating Officer, BPU, Ahmedabad - [2025] 176 taxmann.com 775 (SAFEMA - New Delhi) 

Judiciary and Counsel Details

• G.C. Mishra and BALESH KUMAR, Member
• Sunil Kumar for the Appellant.
• Kanhaiya Singhal, SPP for the Respondent.

In the instant case, a survey operation was carried out based on data regarding huge cash deposits during the post-demonetization period in the bank account of the proprietary concern, namely, Tirupati Jewellers. Upon analysing the bank statements and conducting inquiries, the findings from the post-survey action on Tirupati Jewellers revealed that the cash memos/sales invoices supporting the deposit of old high-denomination (OHD) notes totalled less than Rs. 1,00,000. Also, these cash memos neither contained the names/addresses of buyers, nor were they countersigned by the alleged customers/purchasers. It was also observed that the majority of such cash memos pertain to specific dates.

During the investigation, it was revealed that there were discrepancies in the account books of the assessee. However, the assessee argued that the alleged transactions made in these references against the assessee were not within the definition under the Benami Property Act. The Income Tax Department conducted all investigations under the Income Tax Act, rather than under the Benami Property Act. Also, there was no evidence that consideration money was transferred from the beneficial owner to the benamidar, which was a sine qua non as per the definition of Benami transactions as provided under the Benami Property Act.

The matter reached the Tribunal.

Tribunal Held

The Tribunal held that it was an admitted fact that most of the retail sales of bullion were made below Rs. 1,00,000, wherein the names of the purchasers, their addresses, and their PAN Card numbers were not mentioned. In the absence of these pieces of information, the authorities could not verify the names of purchasers. Thus, the contention of the assessee that the order was bad in law as no money was found during the search was liable to be rejected.

It was also held that the benamidar had filed no appeal. The contention of the assessee that the assessment of the Income Tax Authority had not been considered was also not acceptable. The assessment of income was only for the purpose of ascertaining the tax to be paid by the assessee. This had nothing to do with the proceedings under the Benami Property Act.

Further, the argument that the assessee had made arrangements of accommodation entries to route the OHD currencies during the demonetization period with back-dated bills/kachha slips, so it falls within the second limb of the definition of Benami transaction, i.e. ‘arrangement’, was not accepted. The facts of the present case were different from the facts of the judgments relied on by the assessee. Therefore, it was held that the assessee had failed to substantiate their case. The appeals were devoid of merit and hence liable to be dismissed.

List of Cases Referred

• Narayan Bhagwantrao Gosavi Balajiwale v. Gopal Vinayak Gosavi AIR 1960 SC 100 (para 19),
• Avadh Kishore Das v. Ram Gopal AIR 1979 SC 861 (para 19),
• Sree Meenakshi Mills Ltd. v. CIT AIR 1957 SC 49 (para 40),
• V N Nandhini Devi v. K. Visakh Dy. CIT [FPA/ PBPT/57/CHN/2018] (para 40) and
• Narayan Bhagwantrao Gosavi Balajiwale v. Gopal Vinayak Gosavi AIR 1960 SC 100 (para 51).