Benami case: Relief for Maharashtra RERA chief Ajoy Mehta

The south Mumbai flat bought by Ajoy Mehta, the chairman of the Maharashtra Real Estate Regulatory Authority and former advisor to chief minister Uddhav Thackeray, is “a bona fide purchase”, the adjudicating authority (AA) under the Prohibition of Benami Property Transactions Act, 1988, (PBPTA) has found, sources told ET.
The AA has said that the flat was “bought for adequate consideration before the show-cause notice was issued against him (Mehta) by the Income Tax department.”

The AA has also held that the alleged beneficial owner, Pune-based builder Avinash Bhosale, the promoter of ABIL group, “...has not provided any consideration to the company from whom Mehta purchased the flat and nor has he derived any benefit out of the said transaction”, a source familiar with the AA’s order said.

In November last year, the benami unit of the I-T department had provisionally attached the flat, purchased in 2020 by Mehta, under the PBPTA. The department had in its probe concluded that Bhosale was the ‘beneficial owner’ of the property.

Bhosale is currently being probed by multiple agencies, including the Central Bureau of Investigation, in connection with the Yes Bank fraud case and by the Income Tax Department for alleged tax evasion. He was earlier arrested by the CBI.

Sources in the I-T department told ET that it would file an appeal before the appellate tribunal in Delhi against the order.

“There is a 45-day window to file against the AA's order before the appellate tribunal. An appeal will be filed after taking a legal opinion in the case,” according to an official.

“The AA hasn't found merit in the department's contention that Mehta’s purchase wasn't bona fide in nature. Mehta was able to present before the AA that the flat was purchased through his savings,” the official added.

In its investigation, the I-T department had found that the seller, Anamitra Properties Pvt Ltd, was a shell company floated by Bhosale to ‘hold’ the ‘benami asset’ (the flat), which he subsequently sold to ‘old acquaintance’ Mehta, another source familiar with the findings told ET.

According to a valuation report, while the fair market value of the property was pegged at Rs 10.62 crore as of October 2020 when the sale took place, Mehta had bought the flat for Rs 5.33 crore.

Bhosale and Mehta were issued a show cause notice under Section 54 A of the benami properties Act and asked to give evidence and appear in person. They did not, however, present themselves before the probe officer (initiating officer, in this case), but only provided submissions in the case.

Mehta had previously told ET that it was a genuine transaction.

“I have purchased it with my life savings of 35 years. As far as the market rate is concerned, it was bought at a price higher than the legally government determined market rate,” he had said.

IT PROBE

According to documents with the Registrar of Companies (RoC) that ET has accessed, Anamitra Properties was incorporated in 2008 by Nikhil Gokhale and Vivek Nagarkar as directors and 50% shareholders. In May 2009, Anamitra Properties bought the flat in Samata CHS in Nariman Point for Rs 4 crore. The financing was through a loan of Rs 4.35 crore availed from Indiabulls Financial Services (IBFSL).

“The loan was taken from IBFSL under the instruction of Bhosale”, the probe revealed.

In 2009, the property was given on lease to Indiabulls Real Estate Ltd for a monthly rent of Rs 2.01 lakh and nil security deposit. In 2010, the flat was rented out to Lucina Land Development Ltd (a subsidiary of Indiabulls Real Estate) for a monthly rent of Rs 5,000 and security deposit of Rs 6 crore. In the same year, the loan of Rs 5.82 crore was paid through the security deposit. In October 2020, when the property was sold to Mehta, the security deposit of Rs 5.30 crore was paid back to Lucina Land Development Ltd (LLDL). The interest-free deposit continued as interest-free advance till financial year 2019-20.

This, despite an agreement between LLDL and Anamitra Properties stating that in the event Anamitra Properties failed to refund the interest-free security deposit, the latter was liable to pay an interest of 18% on the amount of unpaid security deposit.

However, the security deposits were paid in two installments after the termination of the order in 2018, and LLDL never tried to get the security deposit back immediately after the termination of the agreement. No interest was sought despite the same running into crores, the probe found.

During the financial year 2009-10, Bhosale paid unaccounted cash to the tune of Rs 15.20 crore to Indiabulls group and received unaccounted cash to the tune of Rs 1.7 crore from the group. This cash was ‘disguised as loan’ given by Anamitra Properties, the probe had found.

Moreover, the rent received - of Rs 21,70,800 in December 2009 - was given back to another Indiabulls group company, Indiabulls Properties, in the same month.

Nikhil Gokhale, who is a nephew of Bhosale’s and director in over 35 companies of the ABIL group, was neither a director or shareholder of Anamitra Properties between March 2018 and October 2020, but still held shares in the company.

On October 8, 2020, when the sale deed was executed between Mehta and Anamitra Properties, Gokhale was again made the director, days before the sale and he represented the company.

The probe identified him as the ‘benamidar’ holding the share certificate of the flat for the benefit of the beneficial owner, Avinash Bhosale.

In its reply to the I-T department’s show cause notice, Anamitra Properties said that the law had been applied retrospectively. It also argued that the initiating officer has not been able to establish either of the two limbs of the benami transaction -- consideration having been provided from an alleged beneficial owner or the subject matter property being held for the immediate or future benefit of the alleged beneficial owner.

A spokesperson for Indiabulls had previously told ET that the “hypothesis mentioned around the purchase of property and cash etc is completely erroneous and baseless.”