The government strategy now seems clear; it aims at taking strong action against benami property as soon as the demonetisation drive gets over.
The Benami Transactions (Prohibition) Amendment Act, 2016, designed to curb black money and passed by parliament in August 2016 & came into effect form 1st Nov. 2016. The new law amended the Benami Transactions Act, 1988 and renamed as the Prohibition of Benami Property Transactions (PBPT) Act, 1988. The amendment act also to strengthen the parent Act in terms of legal and administrative procedure.
What is Benami?
The benami transaction is any transaction in which property is transferred to one person for a consideration paid by another person in other words Benami essentially means property without a name. In this kind of transaction the person who pays for the property does not buys it under his/her own name. The person on whose name the property has been purchased is called the benamdar and the property so purchased is called the benami property. The person who finances the deal is the real owner. The property is held for the benefit - direct or indirect - of the person paying the amount.
What will not be considered as Benami Transactions?
Following transactions are not considered as Benami Transactions:
a) Property held in the name of the children or spouse through know income sources;
b) Property jointly held with brother, sister or lineal ascendant or descendant for which the amount is paid out of known sources of income;
c) HUF buying property in the name of the Karta;
d) Property held by someone in fiduciary capacity such as a trustee, executor, partner or director of a company.
Highlights of Key Provisions of Benami Transactions (Prohibition) Amendment Act, 2016
• The person found guilty may have to face rigorous imprisonment for a period not less than 1 year & which may be extended to maximum of 7 years. In addition to imprisonment, there would be a penalty of 25 percent which will be calculated on the fair market value of the property.
• Any person who is asked to furnish any information under this act, if intentionally provides false information shall face rigorous imprisonment of not less than 6 months which may extend up to 5 years along with the fine of 10 percent of the fair market value of the property.
• Properties held benami are liable for confiscation by government without compensation.
• Initiating Officer may pass an order to continue holding property and may then refer case to Adjudicating Authority which will then examine evidence and pass an order.
• Appellate Tribunal will hear appeals against orders of Adjudicating Authority.
• High Court can hear appeals against orders of Appellate Tribunal.