Payment of advance salary to defeat purpose of demonetisation won’t come under purview of benami transaction

The appellant was employed in a College run by a Trust. He received Rs. 50 thousand as advance salary from the said trust. The appellant deposited entire amount in his bank account, which was subsequently withdrawn by him and used for own purposes.

The Initiating Officer (IO) assumed that Chairman of trust had forced employees to distribute, deposit and retain their own money in demonetized currency in guise of loan received, which had to be repaid after some time in new currency. Thus, IO held chairman of college as beneficial owner and appellant as benamidar and passed order provisionally attaching bank account of appellant.

The Appellate Tribunal held in favour of appellant as under:

Every cash transaction couldn't be termed as a 'benami' transaction. As per section 2(9) of Benami Act the following twin conditions are needed to be satisfied to construe any transaction as benami: (1) the property being held by a person who has not provided the consideration, (2) the property is held by that person for the immediate or future benefit, direct or indirect of the person who has provided the said consideration.

The characteristic of a 'benami' transaction is that there must be a mere lending of name without any intention to benefit the person in whose name it is made, i.e., a mere name lender. The mischiefs sought to be punished by the Act are only such transactions which have a name lending element without deriving any benefit therein, i.e., 'benami' transactions.

The transaction where cash was paid to person in lieu of a future promise couldn't be a 'benami' transaction, as there was no lending of name. There could be no 'benami' transaction if the future benefit was due from the person who was also the holder of property.

The impugned order was not sustainable as it intended to punish the appellants for wanting to defeat the purpose of demonetization and was beyond the purview of the Act.