The Benami Transactions (Prohibition) Act, 1988 has been in force for more than a decade. In a landmark judgment of the Calcutta High Court in the case of Smt. Usha Bhar v Sanat Kumar Bhar ( 135 Taxman 526), several guidelines have been laid down.
The High Court held that in a suit claiming a property as benami, there should be cogent and sufficient evidence to conclude that the apparent is not the real. In order to ascertain whether a particular sale is benami and the apparent purchaser is not the real owner, the burden lies on the person asserting to prove so. Such burden has to be strictly discharged based on legal evidence of a definite nature. Such evidence directly proves the fact of benami or establishes circumstances unerringly and reasonably.
It is the intention of the parties which is to be ascertained. Very often such intention is shrouded in a thick veil. It is not possible to pierce the veil easily. However, such difficulties would not relieve the person who asserts that the transaction is benami, of any part of the onus that rests on him. The difficulty would not justify the acceptance of a mere conjecture or surmise as a substitute for proof. The proof has to be weighed against a document prepared and executed showing the person expressly as purchaser or transferee. That follows the initial presumption of the apparent state of affairs being the real state of affairs.
However, the question is largely one of fact. For determining that question, no formula can be evolved nor can a formula so evolved be uniformly applied in all situations. However, in such circumstances, it is the probabilities and inferences which are to be gathered in order to discover the relevant indicia. It is not sufficient to show circumstances which may create suspicion. In order to determine whether a transaction was or is a benami one, the following guidelines should be followed : (1) the source from which the purchase money came; (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; (5) the custody of the title deeds after the sale, and (6) the conduct of the parties concerned