Benami Transactions (Prohibition) Amendment Act, 2016 – A right step towards curbing the rising benami property menace By Harshvardhan Korada from Amity University, Delhi
The Parliament enforced the Benami Transactions (Prohibition) Amendment Act, 2016 on November 1, 2016. The amendment bill was passed in August 2016. The new legislation has replaced the previous enactment namely, Benami Transactions (Prohibition) Act, 1988.
Prime Minister Narendra Modi had said that the government’s aim is to help the poor masses of the country and after the demonetization, he promised to take appropriate action against the benami properties in the country. The government deems the enactment of the new legislation as a vital step for the elimination of corruption and black money in India. However, the Finance Minister Mr. Arun Jaitley has assured that genuine religious trusts would be exempted from the purview of this legislation. The object of this new legislation is to prohibit the illegal benami transactions and prosecute those involved in such transactions.
The legislation defines who is a benamidar, what all constitutes a benami property and a benami transaction. The amendments have extended the powers of concerned authorities, giving them a better hold onto the offenders to check the menace of benami transactions. Also, the new legislation has a provision for a term of seven-year imprisonment and a fine replacing the less stringent three-year term or a fine or both being imposed in selective cases. According to the legislation, a benami property is any property which is the subject-matter of a benami transaction and also includes the proceeds from such property and a benamidar is a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name. The Bill also mentions cases which will be excluded from the definition of a benami transaction. These include when a property is held by (i) a member of a Hindu undivided family, and is being held for his or another family member’s benefit, and has been provided for or paid off from sources of income of that family; (ii) a person in a fiduciary capacity; (iii) a person in the name of his spouse or child, and the property has been paid for from the person’s income.
According to the Act, an Authority to acquire benami properties shall be instituted by rules. The Bill seeks to establish four authorities to conduct inquiries or investigations regarding benami transactions: (i) Initiating Officer, (ii) Approving Authority, (iii) Administrator and (iv) Adjudicating Authority. If an Initiating Officer believes that a person is a benamidar, he may issue a notice to that person. Further, the Initiating Officer can provisionally hold the property for 90 days from the date of issue of the notice, subject to permission from the Approving Authority. The property may be held even after the 90 day period by an order passed to continue holding the property, in such case, the Initiating Officer will refer the case to the Adjudicating Authority. The Adjudicating Authority will examine all documents and evidence relating to the matter and then pass an order on whether or not to hold the property as benami. Based on an order to confiscate the benami property, the Administrator will receive and manage the property in a manner and subject to conditions as prescribed. The Bill also seeks to establish an Appellate Tribunal to hear appeals against any orders passed by the Adjudicating Authority. Appeals against orders of the Appellate Tribunal will lie to the high court. Certain sessions courts would be designated as Special Courts for trying any offences which are punishable under the Bill.
In the author’s opinion, the amendment of the previous legislation was much needed for checking the issue of black money and corruption, the Parliament enforced the legislation at the right moment for there have been numerous reports of benami deposits being made in the banks during demonetization. One such instance would be the Delhi Transport Corporation depositing a whopping sum of Rs. 8.15 crores in old notes, with alleged attempts of senior officials trying to exchange their bribe money. Income Tax Department has released a statement warning the citizens from committing such offences. The department since the enactment of the law last year, has sent notices to and attached properties worth crores in their drive to curb benami transactions. As many as 235 cases were filed until February 2017 wherein properties worth more than Rs. 55 crores have been attached as a provisional measure. Surely, the enactment will bring in long term benefits and help the economy prosper further.
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Desk, I. (2016, July 21). All you need to know about benami transactions Bill. Retrieved from http://www.thehindu.com/news/national/All-you-need-to-know-about-benami-transactions-Bill/article14500932.ece
Pti (2017, March 3). Benami Act violators to face double whammy of legal action. Retrievedfrom http://economictimes.indiatimes.com/news/economy/policy/benami-act-violators-to-face-double-whammy-of-legal-action/articleshow/57444898.cms
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