Smt. Bandana Pattanayak Vs Initiating Officer (Appellate Tribunal under SAFEMA, New Delhi)
Undocumented “Family Loan” Plea Fails to Defeat Benami Attachment of Properties Purchased in Sister’s and Brother-in-Law’s Names
Issue Before the Tribunal
Whether properties purchased in the names of a person’s sister and brother-in-law, using funds provided by him, could escape attachment under the Prohibition of Benami Property Transactions Act, 1988, merely on the assertion that the funds represented a family loan extended out of love and affection.
The Tribunal also considered the contention that the authorities had failed to establish that the properties were held for the future benefit of the person providing the consideration.
Facts of the Case
The proceedings concerned three properties purchased for an aggregate consideration exceeding ₹2.65 crore.
The authorities treated Anup Majee as the beneficial owner and the other appellants as benamidars. According to their findings, he provided the purchase funds, while the properties were registered in the names of his sister and brother-in-law.
The registered owners had not contributed the consideration and could not establish independent financial means sufficient to explain the purchases.
The Adjudicating Authority confirmed the provisional attachment under Section 26(3). The appellants challenged that confirmation before the Tribunal.
Appellants’ Defence: Funds Were Advanced as a Loan
The appellants submitted that Anup Majee had transferred money to his sister and brother-in-law as a loan, which they used to purchase the properties.
They argued that a brother could financially assist his sister and her husband out of love and affection, and that such assistance did not make the resulting purchases benami.
Their further contention was that payment of consideration by another person was insufficient by itself. The statutory requirement that the property be held for that person’s benefit also had to be established.
Loan Plea Rejected for Want of Supporting Evidence
The Tribunal found that the appellants could not produce any loan document supporting the alleged arrangement.
It therefore regarded the explanation as an unsupported assertion rather than an established financial transaction. The admitted flow of funds, the registration of properties in other persons’ names and their inability to demonstrate the necessary financial means remained unexplained by credible loan evidence.
Accordingly, merely describing the funding as a loan did not displace the authorities’ findings.
The Tribunal also referred to the Adjudicating Authority’s reasoning concerning the plea of love and affection. Ultimately, however, its rejection of the loan explanation rested on the absence of documentary support in the circumstances before it.
Relationship Did Not Bring the Transactions Within a Statutory Exception
The Tribunal expressly held that the transactions did not fall within any of the exceptions under Section 2(9)(A).
Thus, the fact that the persons involved were a brother, sister and brother-in-law did not, on the facts presented, provide protection from the benami provisions.
The decision proceeded on the particular funding and ownership arrangement established in the record, rather than accepting family relationship as a sufficient answer to the attachment.
Future Benefit Need Not Materialise Before Attachment
The appellants argued that no future benefit to Anup Majee had been proved.
The Tribunal rejected the suggestion that the benefit must arise within a specified period or must already have materialised when attachment takes place. It reasoned that “future benefit” is not confined to a defined time frame.
It also relied on its finding that undisclosed and unaccounted funds available with the beneficial owner had been deployed in the purchases for his future benefit.
The Tribunal explained that provisional attachment under Section 24 operates at an early stage to prevent alienation or transfer. Consequently, attachment need not await the subsequent enjoyment of the anticipated benefit.
Belated Retraction Did Not Assist the Appellants
The order also referred to statements recorded under Section 19 of the Benami Act and Section 131 of the Income-tax Act.
A statement recorded in February 2021 was retracted in 2022 on an allegation of coercion. The Tribunal noted the unexplained intervening delay and absence of cogent support for that allegation.
The appellants’ counsel did not pursue the point further, and the arguments were confined to the alleged loan and the statutory ingredients of a benami transaction.
Decision
The Tribunal upheld the Adjudicating Authority’s findings and dismissed all nine appeals, leaving the confirmation of provisional attachment undisturbed.
The order concerned attachment proceedings; it should not be described as a final confiscation order or a criminal conviction.
Author’s Comments
The practical lesson is that a family loan explanation requires credible evidence of an actual debtor-creditor relationship. A label advanced during litigation cannot, by itself, explain substantial funding of properties registered in another person’s name.
At the same time, the order should not be read as declaring every family-funded purchase benami. Third-party funding and holding property for the funder’s benefit remain distinct aspects of the statutory inquiry. The observation that future benefit need not already have materialised should not be confused with dispensing altogether with the requirement to establish the beneficial holding arrangement.
The Tribunal’s conclusion must therefore be understood alongside its factual findings, the unsupported loan plea and its express rejection of the claimed statutory protection.
FULL TEXT OF THE ORDER OF THE APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
By batch of these appeals, a challenge has been made to the order dated 31.05.2025 passed by the Adjudicating Authority under Section 26(3) of the Prohibition of Benami Property Transactions Act, 1988 ( in short “the Act of 1988”) confirming the provisional attachment of the properties.
Brief facts of the case:
2. The case involves transactions relating to three properties in which the appellant, Mr. Anup Majee has been treated as the beneficial owner while the other appellants have been treated as benamidars. For purchase of the properties involved under provisional attachment, the consideration was transmitted by the beneficial owner. The property was purchased in the name of the benamidar who did not contribute the consideration and otherwise could not show the means to purchase the three properties in a row for worth of Rs. 2,65,00,000/-.
3. The respondent initiated the proceedings under the Act of
1988. The statements of the witnesses were recorded under Section 19 of the Act of 1988. Prior to the aforesaid, the Income Tax authorities also recorded the statement under Section 131 of the Income-tax Act, 1961. The statement was recorded on 17.02.2021 and was subsequently retracted in the year 2022 alleging that it was recorded under coercion. The position of fact in regard to the statement recorded under Section 131 of the Income Tax Act, 1961 remains the same. The retraction of the statement could not have been accepted due to the unexplained long intervening period and in the absence of any cogent reason to allege that it was recorded under coercion by the authority under the Act of 1988 so as the Income Tax Authorities and accordingly the Ld. Counsel for the appellants did not raise further argument in that regard. The only argument raised was in regard to non-satisfaction of the condition to make the transaction to be benami in nature.
Arguments of the Ld. Counsel for the appellants:
4. The Ld. Counsel for the appellants submitted that the amount of consideration was transferred by the alleged beneficial owner, Mr. Anup Majee to his sister and brother-inlaw to purchase the properties and accordingly the properties were registered in the name of his sister and brother-in-law. The amount was transferred as a loan and utilized for purchase of the properties and thus could not have been considered to be a case of “benami transaction”.
5. The appellant, Mr. Anup Majee being the brother was within his right to transfer the amount to his sister and brotherin-law out of love and affection. It could have been even as a loan, therefore, the Adjudicating Authority erred in confirming the provisional attachment of the property.
6. Ld. Counsel for the appellants further submitted that the Adjudicating Authority even failed to consider the third limb of the definition of “benami transaction” given under Section 2(9)(A) of the Act of 1988. The respondent has failed to prove the benami transaction in question for the future benefit of the beneficial owner. In absence of the same, the basic ingredients of the definition are not satisfied. Therefore, the impugned order deserves to be set-aside as the aforesaid issue has not been considered by the Adjudicating Authority.
7. Ld. Counsel for the appellants did not raise any other argument than referred to above, despite an opportunity to raise any other legal or factual issues. The Ld. Counsel for the appellants restricted his argument to what has been mentioned in the preceding paras and accordingly, the respondent was called upon to address the arguments.
Arguments of the Ld. Counsel for the respondent:
8. Ld. Counsel for the respondent raised elaborate arguments and contested the appeals. It was on all the issues raised by the Ld. Counsel for the appellants. It would be referred while dealing with the issues raised by the Ld. Counsel for the appellant to avoid repetition of one and the same fact and for sake of brevity.
Findings of the Tribunal:
9. The facts on record show transactions in regard to three properties registered in the name of the benamidars. The consideration of which was paid by the beneficial owner, Mr. Anup Majee. Since the properties were registered in the name of sister and brother-in-law for which consideration was paid by the beneficial owner, Mr. Anup Majee, thus taken to be a case of “benami transaction” and thereby all the three appellants have questioned the impugned order on common ground.
10. It was submitted by the Ld. Counsel for the appellants that for the purchase of properties by the benamidars i.e. sister and brother-in-law, the beneficial owner, Mr. Anup Majee extended the loan and therefore it could not have been considered to be a case of benami transaction. Ld. Counsel for the appellant raised the argument aforesaid but could not show a loan document between the beneficial owner and the benamidars. The plea of loan was, thus, taken for the sake of it and without any proof.
11. The loan said to have been extended by the beneficial owner to his sister and brother-in-law out of love and affection. The Adjudicating Authority has dealt with the issue by holding that if an element of love and affection was existing, the beneficial owner could have gifted the property instead of transferring the funds to facilitate the benamidars to purchase the property in their names making a case of benami transaction. In absence of any documentary evidence, it could not have been accepted to be a case of extending loan to benamidars for purchase of property. Thus, the theory of loan propounded by Ld. Counsel for the appellants cannot be accepted.
12. In fact, the funds for purchase of properties were transferred by the beneficial owner. The benamidars purchased the properties from the said funds and were otherwise unable to establish their source of income to justify purchase of the property at the value of Rs.2,47,00,000/- in regard to first property, Rs. 17,04,000/- for second property and Rs.1,21,500/- for third property. The total amount comes to more than Rs.2,65,00,000/- of which no means could be shown by the benamidars. It is, otherwise, a fact that consideration for transfer of property was paid by the beneficial owner making out a case of benami transaction under Section 2(9)(A) of the Act of 1988 and accordingly the Adjudicating Authority confirmed the provisional attachment order.
13. It is submitted that the third limb of definition of “benami transaction” under section 2(9)(A) of the Act of 1988 is not satisfied. For the said provision to apply, the transfer of consideration must be paid for the future benefit of the beneficial owner, which is absent in the present case.
14. We have considered the said aspect also and find no merit in it because the expression “future benefit” under section 2(9)(A) of the Act of 1988 is defined without earmarking to any period. It can happen any time in future without the limitation of period and otherwise the fact on record shows availability of undisclosed and unaccounted funds with the beneficial owner and therefore utilized for the benami transaction for his future benefits. The third limb of the definition of “benami transaction” need not be satisfied any time in future and not at the time when the property was provisionally attached. In fact, the provisional attachment, under section 24 of the Act of 1988, of the property is caused immediately to avoid alienation or transfer of the property, thus, it is caused at the first instance. Hence, we do not find any substance in the argument in regard to non-satisfaction of third limb of the definition.
15. We find substance in the finding of the Adjudicating Authority and therefore no reason to cause interference in the order. The case, otherwise, does not fall within any of the exceptions provided under Section 2(9)(A) of the Act of 1988, accordingly, the appeals fail and are dismissed.
