Properties Acquired in Name of Wife & Sons Using Unaccounted Amount to Be Treated as Benami

Case Details: Deputy Commissioner of Income-tax (BP) vs. Domendra Dhariwal - [2024] 167 taxmann.com 291 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• Justice Munishwar Nath Bhandari, Chairman & Balesh Kumar, Member
• Kanhaiya Singhal, S.P.P & Ms Trisha Mittal, Adv. for the Appellant.
• Ashwani Taneja, Ashish Tandon, Ayush Saini & Harnoor Virdi, Advs. for the Respondent.

Facts of the Case

The assessee was found to have acquired various immovable properties illegally in the name of his two sons and his wife while working in the agriculture department office. Many immovable properties were purchased at the time when both the sons of the assessee were minors, and they had no source of income. Apart from that, bank deposits and residential plots or agricultural land in the assessee’s name were far higher than income from his known sources, and he was the only earning member of this family.

After inquiry and investigation, the Initiating Officer concluded that the assessee did not have sufficient income to make such an investment. Accordingly, a notice was issued to the benamidaar and beneficial owner regarding the acquisition of property to disclose the sources.

The immovable and movable properties acquired in the names of two sons and the assessee’s wife were attached. The matter was reached before the Appellate Tribunal Safema.

ITAT Held

The Tribunal held that the finding had been recorded even going against the definition of ‘benami transaction’ given under section 2(9)(A) despite the satisfaction of both the limbs of the definition. It was a case where the property was transferred or held by a person for which consideration was provided or paid by another person. It was the case where the wife and sons did not have sufficient means to acquire properties of the value given by the appellant and also that the acquisition of property was for the immediate or future benefit of the persons who provided consideration, i.e., the father.

It was found that the assessee could earn a salary while in service, and if no part of it was spent on his livelihood, he could not have acquired the property in the name of his wife and son.

If the total income of all the appellants was also considered, it did not come to the amount of property purchased. After deducting 30 percent of the income, the net earnings were not sufficient to acquire the property. The property was acquired for a value more than the earnings.

It was out of the assessee’s illicit income while in service of the agriculture department. The unaccounted amount was used to acquire the property in the name of his wife and sons for his own benefit, and therefore, it becomes a case of ‘Benami transaction’.