Highlights of the Act
1. Benami Transaction (Prohibition) Act 1988 was enacted in the May 1988, but no rules had been notified till 1 Nov 2016. Amendment to the Act was made and rules were also notified from 1/Nov/2016. Act was renamed as Prohibition of Benami Property Transactions Act 2016.
2. It is applicable to whole of India except Jammu & Kashmir.
3. Some important definitions are defined in Sec 2 which are of huge relevance.
Benami Property: Any Property subject matter of Benami transaction & includes proceeds thereof.
Property: Any asset MOVABLE / IMMOVABLE / TANGIBLE / INTANGIBLE / CORPOREAL / NON-CORPOREAL / any interest, right, document evidencing the right/ converted form of property & its proceeds also.
Benami Transaction: A) Any transaction or arrangement where property is transferred to some person or is held by some person and its consideration is paid by some other person and it is for the immediate or deferred benefit for the person who pays for the consideration. Some exceptions are
1. Property held in the name of karta/ member of HUF & consideration is made by HUF for benefit of the members from only known sources.
2. Property in fiduciary capacity
3. Property held in the name of spouse/any child provided it is from known sources.
4. Property in the name of brother, sister, mother, father provided you are the joint owner and it is from known sources.
B) Property held in the name of fictitious person
C) Property held in the name of person but not aware/denies of the reansaction
D) Property held in the name of person but consideration is provided by non traceable person.
4. Authority under the Act:
- Initiating Officer: Assistant Comm. of Income Tax/ Deputy Comm. of Income tax
- Approving Authority: Add. Comm. of IT/ Joint Comm. of IT
- Adjudicating Authority: Bench of 3 members comprising one member of IRS
5. If Initiating Officer has any material in possession and reasons to believe and issue SCN why it should not be considered as Benami Property. If he has reasons to believe that assessee is going to alienate the property, he may provisionally attach for max 0 days. He has to handover the report to adjudicating authority within 15 days.
6. Adjudicating Authority will hear the parties involved and pass the order within 1 year from end of the month when Initiating officer made reference to it. It will pass order whether the transaction is benami or not.
i. Property vest with the Govt and CG confiscate the property.
ii. Minimum rigorous Imprisonment of 1 year and max of 7 years.
iii,. Penalty of 25% of Fair Market Value of Property to the Benamidaar, beneficiary and the professionals who indulged in these practises.
Tags Income Tax