New Delhi, Nov 1:
The Benami Transactions (Prohibition) Amendment Act, 2016, designed to curb black money and passed by parliament in August, came into effect on Tuesday.
An amendment of the 1988 Benami Transactions Act, the new law provides for up to seven years’ imprisonment and fine for those indulging in such transactions, whereas the earlier law provided for up to three years of imprisonment or fine or both.
“The rules and all the provisions of the Benami Transactions (Prohibition) Act, shall come into force on November 1, 2016. After coming into effect, the existing Benami Transactions (Prohibition) Act, 1988, shall be renamed as the Prohibition of Benami Property Transactions (PBPT) Act, 1988,” a Central Board Of Direct Taxes statement here said last week.
The amendments aim to strengthen the Act in terms of legal and administrative procedure.
The benami (without a name) property refers to property purchased by a person in the name of some other person.
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 PBPT Act prohibits recovery of the property held benami from benamdar by the real owner.
As per the Act, properties held benami are liable for confiscation by the government, without payment of compensation.
An appellate mechanism has been provided under the act, in the form of an adjudicating authority and appellate tribunal.
According to the government, the four authorities who will conduct inquiries or investigations are the Initiating Officer, Approving Authority, Administrator and Adjudicating Authority.
“Section 58 under the law clearly states that in case of charitable or religious organisation properties, the government has the power to grant exemption,” Finance Minister Arun Jaitley said, while reassuring parliament that properties in the name of genuine religious trusts will be kept out of the purview of the legislation.
Highlights of the Act:
* Up to seven years’ imprisonment and fine for indulging in benami transactions
* Furnishing false information is punishable by imprisonment up to five years and fine
* Properties held benami are liable for confiscation by government without compensation
* Initiating Officer may pass an order to continue holding the property and may then refer case to Adjudicating Authority
* Adjudicating Authority will then examine evidence and pass an order
* Appellate Tribunal will hear appeals against orders of Adjudicating Authority
* High Court to hear appeals against orders of Appellate Tribunal