Relevance Of Intention In Benami Transaction

By
Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High Court
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The Hon'ble High Court of Madras in the case of First ITO vs. MR Dhanalakshmi Ammal 1978 ITR 413 held that the true test to determine whether the transaction is benami or not is to look into the intention of the parties viz whether it has been intended to operate as such or it was meant to be colourable. If colourable, the transaction is benami; otherwise the transaction is not benami. It is for the Initiating Officer to establish that there was a motive to undertake a benami transaction. A mere allegation of Benami will not be sufficient. The Initiating Officer has to establish the benefit that a person sought by way of a Benami transaction and whether that motive has been achieved and also whether in order to fulfill that