Case Law Details
Smt. Maya Verma Vs DCIT (Allahabad High Court)
The Allahabad High Court heard appeals filed under Section 49 of the Prohibition of Benami Property Transactions Act, 1988, challenging orders passed by the Appellate Tribunal under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act and the Adjudicating Officer under Section 26(3) of the Benami Act. The case arose from a search and seizure operation in which a total sum of Rs. 1,23,63,000/- was recovered from the appellants’ residence in April and June 2017. The appellants explained that the cash originated from the sale of jewellery and silver coins obtained through a family settlement in 2008, and that these amounts were disclosed in their Income Tax Returns for Assessment Year 2017-18. The appellants also referenced prior disclosure in the 2009-10 ITR, noting the possession of gold and silver items under the settlement.
The Adjudicating Authority and the Appellate Tribunal rejected the appellants’ explanation, citing a “kachcha paper” recovered from Sunita Verma’s almirah, which detailed sums received from transporters. The authorities concluded that the transactions were benami and suspected that the appellants’ family members, holding official positions in the transport and commercial tax departments, had received illegal gratification. The non-filing of Wealth Tax Returns and non-disclosure of buyers of jewellery were also highlighted as raising suspicion.
The appellants argued that the proceedings were outside the scope of the Benami Act, noting that definitions of “benamidar” and “beneficial owner” were not applicable, and that all amounts were disclosed in their Income Tax Returns. They contended that findings of illegal gratification were based on conjecture and that the “kachcha paper” lacked legal validity, relying on the Supreme Court judgment in Binapani Paul v. Pratima Ghosh regarding burden of proof.
The Department opposed these arguments, highlighting that the cash recovered post-demonetization was in high-denomination notes and that the appellants did not disclose buyer details of the jewellery. The Department maintained that the presence of unexplained cash, combined with the official positions of family members, suggested income derived from illegal and benami sources. Additionally, the retention of jewellery despite claims of prior sale undermined the appellants’ defense.
The Court noted that the ITRs reflect partial disclosure and that the family settlement claim appears prima facie supported by the 2009-10 ITR. The validity of the “kachcha paper” as evidence and the correct application of the Benami Act remain to be examined during final hearing. The appeals were admitted on key questions of law regarding whether the authorities proved the cash formed part of a benami transaction, whether findings were based on conjecture, and whether the link between the appellants and the cash was sufficiently established. Interim protection against coercive action was granted, and the matter was listed for final hearing in February 2026.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Shri Devansh Misra along with Shri Shiv Shanker Pandey, learned counsel for the appellants in all the three cases, Shri Amit Mahajan, learned counsel for the respondent-Department and perused the material available on record.
2. These three appeals have been filed under Section 49 of the Prohibition of Benami Property Transactions Act, 1988 (‘the Act, 1988’) challenging the order dated 23.04.2025 passed by the Appellate Tribunal, Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act in Appeal Nos. FPA-PBPT-1942/KNP of 2022, FPA-PBPT-3167/KNP of 2023 and FPA-PBPT-3168/KNP of 2023 as well as order dated 14.02.2022 passed by the Adjudicating Officer under Section 26(3) of the Act, 1988 arising out of Reference No. 1320 of 2019.
3. Brief facts of the case are that during search and seizure operation conducted by way of a raid by the Department, a sum of Rs. 83,00,000/-and odd was recovered from the house of the appellant on 18.04.2017 and further sum of Rs. 40,00,000/- and odd was recovered on 14.06.2017. The total amount recovered and seized by the Department is Rs. 1,23,63,000/-.
4. The appellants were issued notice calling upon explanation qua the said amount. The explanation was offered that Maya Verma (appellant in Appeal No. 2625 of 2025), who happens to be the mother of Dinesh Kumar Verma (appellant in Appeal No. 2624 of 2025) and mother-in-law of Sunita Verma (appellant in Appeal No. 2632 of 205), possessed with jewellery articles pursuant to a family settlement done in 2008, the said jewellery items including gold etc were sold and the amount received out of the said sale was clearly disclosed in the Income Tax Return for the Assessment Year 2017-18. Reference to document attached at page no. 282-I in Appeal No. 2625 of 2025 has been made, wherein full value of consideration from sale has been shown as 1,25,00,000/- (rupees one crore twenty five lacs only). Further explanation is that the settlement had taken place in the year 2008 and in the ITR for the period 2009-10, a disclosure was made regarding gold jewellery weighing 2 Kg 560 Grams and silver coins of British period amounting to Rs. 10,000/- (vide page-221 of Appeal No. 2625 of 2025).
5. The Adjudicating Authority as well as Appellate Tribunal have discarded the explanation offered by the appellant (Maya Verma) by invoking the provisions of the Act, 1988 and finding recorded against the appellant is that the transaction being benami and a “kachcha paper” having been recovered from the hand bag of Sunita Verma from her almirah during raid contained description of various sums received from transporters over a period of time. Further finding is that when the family settlement had taken place in the year 2008, provisions of Wealth Tax Act were existent and non-filing of any Wealth Tax Return and also nondisclosure of the names and particulars of those who had purchased gold from the appellants, raises a suspicion and, therefore, there was a strong possibility that the appellants, during the course of discharging their official duties, had received illegal gratification.
6. Learned counsel for the appellants has raised submissions that the entire proceedings are dehors the provisions of the Act, 1988 and are not covered by “benami transactions” as defined in Section 2(9) of the Act, wherein provision of consideration by another person is pre-requisite and even definitions of “benamidar” and “beneficial owner”, as provided under Sections 2(10) and 2(12) of the Act are not applicable. Further submission is that once the Income Tax Return produced by all the appellants were not disputed by the respondents and the same contain disclosure of amount received during the relevant period, going back to the year 2009-10 when the family settlement had taken place, would not be a proper course for initiating proceedings against the appellants.
7. It is further submitted that no clear finding has been recorded, either by the Adjudicating Authority or by the Appellate Tribunal, rather the entire finding is based upon conjectures and surmises, wherein words ‘strong possibility that they have received illegal gratification while discharging their official duties’ have been used. It is further submitted that “kachcha paper” forming part of the proceedings was planted by the Department itself and the said document had no legal sanctity. Placing reliance on the judgment of Hon’ble Supreme Court in Binapani Paul Vs. Pratima Ghosh and others: (2007) 6 SCC 100, submission has been made that the authorities have failed to correctly apply principles of burden of proof.
8. Per contra, Shri Amit Mahajan, learned counsel for the respondents has vehemently opposed the submissions and a contention has been raised that after demonetization which was done on 08.11.2016, there was a ban on keeping currency in the denomination of 2000 and 500 currency notes and amount recovered from the appellant was in the said denomination itself in the year 2017 and there is no explanation in this regard. It is further contended that once the very plea raised by the appellants to the effect that the cash amount was received out of sale of gold jewellery, silver coins and utensils etc, non-disclosure of details by the appellants about those who had purchased the said items from the appellants, was, in itself, sufficient to draw adverse inference against the appellants and, therefore, the conclusion drawn by the authorities cannot be said to be perverse.
9. It is further contended by Shri Mahajan that during the period when the raid was conducted, Sangita Verma was working as Regional Transport Officer, her husband Dinesh Kumar Verma was working as Assistant Commissioner, Commercial Tax Department and these two officers committed abuse of their position by receiving illegal gratification from transporters and the amount received as such was shown to be income of Maya Verma, respectively mother-in-law and mother of Sunita Verma and Dinesh Kumar Verma and, therefore, the material on record clearly indicates income earned by illegal and benami means.
10. It is further submitted that the entire defence set up qua sale of jewellery and silver coins stands belied from the fact that even jewellery was received during the raid proceedings and, therefore, had it been sold by the appellants, the same could not have been found in the residential premises of the appellants.
11. Prima facie, this Court is of the view that it is not a case of complete non-disclosure of cash amount which fact stands reflected from Income Tax Return produced for the Assessment Year 2017-18. The defence offered by the appellants co-relating the family settlement document of 2008 also stands prima facie established from the ITR of 2009-10, as noted above. As to whether the “kachcha paper” containing details of certain transporters could form the basis for saddling the appellants with impugned action, is a matter to be considered in the totality of the facts and circumstances and relevant law operating in the field. Further, whether the provisions of the Act, 1988 have been applied in correct perspective is also a matter to be examined at the time of final hearing.
12. Matter requires consideration.
13. All the appeals are admitted on the following questions of law:-
“(a) Whether the Adjudicating Authority and the Appellate Authority while declaring the cash recorded as benami property failed to prove that it formed part of a benami transaction as defined under Section 2(9)(A) of the Prohibition of Benami Property Act, 1988 ?
(b) Whether the findings returned by the Adjudicating Authority as well as the Appellate Tribunal are perverse inasmuch as merely on the basis of loose papers the cash recovered from the premises rented by the appellant has been alleged to be received on account of illegal gratification constituting benami property ?
(c) Whether in absence of any evidence on record, the Adjudicating Authority as well as the Appellate Authority could on the basis of an adverse inference draw a link between the appellant as benamidar and her son and daughter-in-law to be beneficial owners of the cash recovered ?”
14. As the respondent is duly represented by Shri Amit Mahajan, there is no need to issue notice.
15. Summon the record of proceedings from the Appellate Tribunal within two months from today.
16. Requirement of filing formal paper book stands dispensed with.
17. List for final hearing in second week of February, 2026.
18. As an interim measure, it is provided that until further orders of this Court, no coercive action shall be taken against the appellants pursuant to order dated 23.04.2025 passed by the Appellate Tribunal, Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act in Appeal Nos. FPA-PBPT-1942/KNP of 2022, FPA-PBPT-3167/KNP of 2023 and FPA-PBPT-3168/KNP of 2023 as well as order dated 14.02.2022 passed by the Adjudicating Officer under Section 26(3) of the Act, 1988 arising out of Reference No. 1320 of 2019.
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