I-T dept can attach assets under benami law even if actual owner not traced: Authority

New Delhi: The Income Tax department can attach an asset under the anti-benami law even if the actual owner of such a property has not been identified as the Act has a specific provision to deal with untraceable or fictitious entities, a quasi-judicial body has said.

In its ruling dated November 26, 2024, the Adjudicating Authority set up under the Prohibition of Benami Property Transactions (PBPT) Act, 1988, has thus upheld a 2023 land assets attachment order issued by the Lucknow unit of the Income Tax department.

The alleged benami assets case came to the fore after the department raided three Lucknow-based realty groups that had "purchased big land parcels in the Kakori (Lucknow district) area by paying huge amounts of unaccounted cash".

The Lucknow-based Benami Prohibition Unit (BPU) of the department issued a provisional order in October 2023, attaching five land parcels in Kakori valued at over Rs 3.47 crore and categorising them as "benami assets".

This order was sent to the Authority for confirmation with the name of a 'benamidar' (in whose name a benami property is standing) apart from two companies and two individuals who were named as "interested parties" in the case.

The provisional order did not mention the name of any beneficial owner.

Usually, when an attachment of assets order is issued by the I-T department under the PBPT Act, it bears the name of the 'benamidar' and the 'beneficial owner'.

'Benami' means 'no name' or 'without name'. The real beneficiary of such a property is not the one in whose name it has been purchased.

The Authority said it was partially confirming the I-T attachment order (properties worth Rs 3.10 crore of the total Rs 3.47 crore) as there was "no clear evidence related to payment of balance consideration (funds)" and upheld that Ravi Kumar, an office boy in a real estate company named Excella, was the 'benamidar' in this case.

It ordered deletion of the names of two companies -- Pintail Real Estate LLP and Excella Premioinfra LLP -- apart from an individual, Shiv Kumar, from the I-T attachment order, saying there was "no clear evidence" against them.

The Authority order also named Haresh Kumar Mishra as an "abettor" in this case and directed the taxman to "conduct an investigation" against some more assets that were reported to have been purchased in the name of Ravi Kumar.

The Lucknow BPU of the tax department recently attached five land parcels, located in the Mohanlalganj area of the city, worth more than Rs 5.68 crore on the direction of the Authority.

The defendants in the case argued that the attachment order should be quashed as it did not identify any "beneficial owner" as required under the said law.

"The ambiguity could not have arisen if the provisions of Section 2(9)(D) of the PBPT Act were invoked by the Initiating Officer as there is specific provision for the transaction or an arrangement in respect of a property where the person providing the consideration (money) is untraceable," the Authority said.

It explained that this section identifies a benami transaction as one in which the person providing the consideration for the purchase of a property is "not traceable or is fictitious".

The said attachment order, it said, cannot be declared "invalid" only on the ground that Section 2(9)(A) of the PBPT Act was invoked by the IO instead of Section 2(9)(D).

The Authority quoted a 2009 order of the Supreme Court which held that "it is a well-settled principle of law that mentioning of a wrong provision or non-mentioning of a provision does not invalidate an order if the court and/or statutory authority had the requisite jurisdiction therefore".