Cash Deposit in Another’s Account Held Benami | ITAT

Case Details: Om Samriddhi Banquet & Hospitality LLP vs. Initiating Officer, ACIT Benami Prohibition Unit, Mumbai - [2025] 177 taxmann.com 435 (SAFEMA - New Delhi) 

Judiciary and Counsel Details

• G.C. Mishra & Rajesh Malhotra, Member
• Misha Rohatgi Mohta, Bharat Monga & Dhananjay S. , Advs. for the Appellant
• Manmeet Singh Arora, SPP for the Respondent

Facts of the Case

The assessee, Limited Liability Partnership (LLP), discovered that it held currency notes of particular value during the demonetization period. To avoid the hassle of long queues and the risk of being identified by criminal elements, the LLP provided a person with currency notes to deposit into the LLP’s bank account, accompanied by an authority letter, in exchange for a 2% commission.

However, the said amount was erroneously deposited in the account of a proprietorship concern, whose proprietor was that person. The amount was received back from the account of the proprietorship concern on different dates and was credited to the LLP’s bank account. After demonetization, the Income Tax Department (I.T. Department) received information that the person used his bank accounts to deposit the demonetized currency notes belonging to the LLP. Accordingly, he passed a provisional attachment order (PAO) in respect of said amount received by the LLP. The matter reached the Tribunal.

Tribunal Held

The Tribunal held that the person deposited the currency notes in his bank account, and thereafter, transferred back the same through RTGS into the LLP’s bank account. It was noted that the accounts of the proprietorship concern were opened in various banks during the demonetization period, without any intention of doing real business.

Furthermore, despite having no prior dealings with the LLP, the person received a substantial amount of cash, rather than depositing it through an employee, accountant, or manager of the LLP.

Thus, the act of the person was a benami transaction. Therefore, the Tribunal held that there was ample material with the I.O. to proceed against the person.

List of Cases Referred to

• C.B. Gautam v. Union of India [1992] 65 Taxman 440/[1993] 199 ITR 530 (SC) (para 3)
•  Mohd. Zafar v. Union of India (1994) Suppl (2) SCC 1 (para 3)