Arpit Katyal Vs Initiating Officer (Appellate Tribunal Under SAFEMA Delhi)
SAFEMA Tribunal Upholds Benami Attachment in Keyal Group Case; Holds Transactions with Fictitious Entity Justify Attachment of Beneficial Owner’s Bank Funds
The Appellate Tribunal under SAFEMA dismissed a batch of appeals filed by members of the Katyal family and Nirmal Katyal HUF, upholding the provisional attachment under the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act). The proceedings arose from an Income-tax search on the Keyal Group, which revealed alleged fictitious purchases from M/s Sanmati Trading Co. The Investigation found that the supplier was non-existent, could not be traced at its registered address, was not an income-tax filer, and its GST registration pertained to metal and scrap, whereas the appellant claimed to have purchased clothes and fabrics from it.
The Tribunal held that the material collected by the Initiating Officer established a prima facie case of a fictitious transaction under Section 2(9)(B) of the PBPT Act. It observed that the appellants failed to produce credible evidence of actual supply of goods, acknowledgements of delivery, transport records or even the supplier’s bank account details, despite claiming that payments had been made through banking channels. The invoices relied upon were also found to be deficient, lacking proof of delivery and other essential particulars. Once the authorities discharged the initial burden by placing these circumstances on record, the burden shifted to the appellants to establish the genuineness of the transactions, which they failed to do.
Rejecting the contention that only the alleged benamidar’s property could be attached, the Tribunal held that Section 2(9)(B) stands on a different footing from other categories of benami transactions. Where the transaction itself is found to be fictitious, attachment of the beneficial owner’s property, including funds lying in its bank account representing the value of the benami transaction, is legally permissible. Finding no infirmity in the Adjudicating Authority’s order confirming the provisional attachment, the Tribunal dismissed all the appeals.
FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
This batch of appeals has been filed under Section 46(1) of the Prohibition of Benami Property Transactions Act, 1988 (in short “the Act of 1988”) to challenge the impugned order dated 25.02.2025 passed by the Adjudicating Authority confirming the Provisional Attachment Order while answering the reference.
