₹50.13 Lakh Cash Seizure Treated as Benami: Tribunal Confirms Attachment Despite Later ITR Offer

The Appellate Tribunal under the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act) at New Delhi, in the matter of Yoosaf N A. S/o Sh. Aboobacker Kutty Vs Initiating Officer (Appellate Tribunal Under SAFEMA Delhi), has upheld the attachment and confiscation of cash amounting to ₹50,13,000/-. The cash was originally intercepted and seized by the local police during a vehicle check and subsequently taken over by the Income Tax Department.

The Tribunal held that where the person in possession of cash cannot substantiate the source and the alleged contributors are untraceable, such unexplained cash can be brought within the ambit of “benami property” under the PBPT Act. Further, the Tribunal categorically ruled that a subsequent offer to treat the money as income in an Income Tax Return (ITR) does not shield the assessee from benami proceedings.

Factual Background

Seizure by Police and Handover to Income Tax Department

  • On 27.03.2017, the Sub Inspector of Police, Kunnamangalam Police Station, intercepted a vehicle and found two individuals, Shri Yoosaf N. A and Shri Jamsheer P. K (both from Kozhikode), carrying cash of ₹50,13,000.
  • Neither individual could produce any evidence or explanation for the source of the money.
  • The cash was seized by the police and produced before the Judicial First-Class Magistrate Court, Kunnamangalam (JFCM).
  • The Income Tax Department filed a claim petition before the said Court.
  • Both persons failed to substantiate any lawful ownership, produce supporting records, or even show that they were regular filers of income tax returns.
  • The Ld. Judicial Magistrate, after hearing all parties, allowed the claim of the Income Tax Department, and the amount was handed over to the Department on 04.12.2017.

Statement of the Appellant and Affidavits

Subsequently, the matter was taken up by the Investigation Wing of the Income Tax Department at Kozhikode.

  1. Sworn statement of Shri Yoosaf N A (24.04.2017)

    • He asserted that the entire sum of ₹50,13,000 belonged to him.
    • He stated that Shri Jamsheer P K had no connection with the cash.
    • He claimed that he had collected the amount from various friends and relatives to invest in an immovable property at Koduvally.
    • Despite this claim, he failed to produce any documentary evidence, confirmations, or identities of such alleged contributors.

  2. Affidavit dated 12.04.2017 by Shri Yoosaf N A

    • He reiterated that the seized cash was collected from friends and relatives for investment in land.
    • He stated that those persons were unwilling to appear before the Income Tax Department.
    • He therefore declared the entire sum of ₹50,13,000 as his income for Assessment Year 2017-18.
    • He expressed no objection to the tax being adjusted from this amount and requested refund of the balance.

  3. Affidavit dated 12.04.2017 by Shri Jamsheer P K

    • He confirmed that he had no claim over the cash.
    • He accepted that the entire cash belonged to Shri Yoosaf N A and that he would not assert any claim in future.

In the absence of verifiable explanation or proof as to the real source of funds, the DDIT (Investigation), Kozhikode considered the money as received from dubious sources and liable to be treated as undisclosed income under Section 69A of the Income Tax Act 1961.

Initiation of Benami Proceedings and Provisional Attachment

Invocation of PBPT Act and Provisional Attachment

Based on the above investigation:

  • The Initiating Officer (IO) concluded that the seized cash represented benami property within the meaning of Section 2(9)(D) of the PBPT Act, as the persons allegedly providing the consideration were untraceable.
  • A Provisional Attachment Order (PAO) dated 12.03.2018 was passed under Section 24(4)(b)(i) of the PBPT Act, attaching the cash as benami property.
  • The IO then made a reference for confirmation of this provisional attachment under Section 24(5) to the Adjudicating Authority.

Proceedings Before Adjudicating Authority

  • A show-cause notice under Section 24(1) was issued to the appellant on 13.04.2018 by ACIT, Benami Prohibition Unit (BPU), Kochi.
  • The appellant challenged the provisional attachment order dated 12.03.2018 before the Hon’ble High Court of Kerala, but the writ petition was dismissed.
  • After dismissal, another notice dated 27.06.2018 was issued, and the appellant filed his objections on 30.07.2018.
  • The Adjudicating Authority, after considering the objections and submissions, confirmed the provisional attachment by order dated 25.03.2019 in Reference No. 599/2018.

Aggrieved by this confirmation order, the appellant filed an appeal before the Appellate Tribunal under Section 46(1) of the PBPT Act.