Gopal Nathani – [2026] 186 taxmann.com 1081 (Article)
A person was intercepted by the police while carrying cash amounting to Rs. 50.13 lakh. He was produced before the Magistrate, but failed to disclose the identity of the persons from whom he had allegedly received such a huge amount, nor could he explain any legitimate source of the cash with supporting evidence. Consequently, the seized cash was handed over to the Income-tax Department.
Thereafter, proceedings were initiated against him under the Prohibition of Benami Property Transactions Act, 1988 (“PBPT Act”), alleging that the seized amount represented proceeds of a benami transaction. Reference in this regard was made to section 2(8) and section 2(9)(D) of the PBPT Act, which provides:
2. In this Act, unless the context otherwise requires,—
(8) “benami property” means any property which is the subject matter of a benami transaction and also includes the proceeds from such proceeds from such property;
(9) “Benami transaction” means—
(D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious.
During the proceedings, the person offered, by way of an affidavit, to declare the entire amount as his income for the relevant assessment year, sought adjustment of the applicable tax liability, and requested refund of the remaining balance amount.
These facts arise from the decision in Yoosaf N. A. v. Initiating Officer (BPU) [2026] 186 taxmann.com 645 (SAFEMA – New Delhi) [14-05-2026]. The Appellate Tribunal held that mere filing of, or even an intention to file, an Income-tax Return does not exonerate a person from the applicability of the PBPT Act where the source of the asset or money remains unexplained.
In the reported case, the individual was found in possession of cash amounting to approximately Rs. 50 lakh during a vehicle check conducted by the police authorities. Since he failed to explain the source and ownership of the cash before the Magistrate, the amount was transferred to the Income-tax Department, which subsequently initiated attachment and confiscation proceedings under the PBPT Act.
The Tribunal categorically observed that merely filing, or proposing to file, an ITR cannot shield a person from proceedings under the PBPT Act if the source of the money or asset remains unknown or unexplained. In this regard, reliance was placed upon section 60 of the PBPT Act, which reads as under:
Application of Other Laws Not Barred
“60. The provisions of this Act shall be in addition to, and not, save as hereinafter expressly provided, in derogation of any other law for the time being in force.”
While dealing with the appellant’s contention that the PBPT Act would not apply because he was willing to disclose the seized amount in his ITR, the Tribunal observed as under (paragraph 9):
“However, we are of the view that firstly, the submission of Income Tax Return after being caught and proceeded against is an after thought strategy to claim back at least 50% out of the seized amount. Secondly, the recovery of cash in absence of any explanation is duly covered under the scope of PBPT Act. The contention of the respondent that Section 60 of the PBPT Act prescribes that the provisions of this Act shall be in addition to any other laws in force and the right of action under the PBPT Act cannot be restrained just because appellant is ready to file ITR under the Income Tax Act. Moreover, the principal object of the Income Tax Act is to collect Income Tax, but the object of the PBPT Act is to prohibit the practice of benami purchases to check the accumulation of wealth in the name of benamidars for the use of beneficial owner without detection and to confiscate the property involved in a benami transaction. The Income Tax is being collected in respect of the “unexplained money” at the rate of 60% of the same along with 25% of the Surcharge on the Income Tax. But the PBPT Act provides for the confiscation of the benami property in 100% and the fine of 25% of the value of the benami property. Hence, both the acts are being enacted for different purposes. We agree with the contention of Ld. counsel for the respondent that ITRs is a self-declaration of the ACC and the Income Tax Authority have no business to check the source of the money and only the Authority under PBPT Act, 1988 can initiate the proceedings for Benami Property. In the ITR the appellant has not explained the source of accumulating of the huge amount. The appellant wants to declare the sum of Rs. 50,13,000/- as miscellaneous income in the ITR. Thus, merely filing or intent to file ITR, does not exonerate the person from the application of the PBPT Act, in case the source of that money is not known and unanswered for.”
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