The Parliament had enacted the Benami Transactions (Prohibition) Act, 1988 (Original Act) to prohibit benami transactions and to recover property held benami. However, in the absence of detailed provisions in the Original Act and rules for its implementation, the Original Act could not be enforced in letter and spirit. The Parliament made amendments in the year 2016 to bring substantial changes in the Original Act. The Amended Act is equipped to curb benami transactions and reprimand the persons involved in such transactions.
The Amended Act
The Original Act had only nine sections and there were no comprehensive provisions for dealing with cases of benami transactions.
In recent years, the Central Government has taken several initiatives against black money to bring transparency in the economy. In furtherance of this objective, the Parliament passed the Benami Transactions (Prohibition) Amendment Act, 2016, which brought substantial changes in the Original Act. The Amended Act has a total 72 sections and it has been renamed as the Prohibition of Benami Property Transactions Act, 1988. The Central Government has notified rules vide notification no. G.S.R. 1004 (E) dated 25 October 2016 for effective implementation of the Amended Act.
Important definitions under the the Amended Act
The Amended Act defines the term “benami transaction” very elaborately. The following types of transactions or arrangements will be considered as benami transactions:
Benami property means any property that is the subject matter of a benami transaction and also includes the proceeds from such property.
Benamidar is the person or a fictitious person in whose name the benami property is transferred or held and includes a person who lends his or her name.
Beneficial owner is a person for whose benefit the benami property is held by a benamidar.
The Amended Act defines the term “property” as assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal, and includes any right or interest or legal document or instruments evidencing title to or interests in the property.
Authorities under the Amended Act
Powers of the Authorities
1. Callall ing ing for information
The Initiating Officer or the Approving Authority or the Adjudicating Authority has the power to require any officer of the Central Government or State Government or a local body or any other person or officer (responsible for registering and maintaining books of account or other documents) to furnish any information in relation to any person, point or matter that his or her opinion will be useful or relevant for the purposes of the Amended Act.
2. Impounding and retainand documents
Any books of account or other documents produced before the Authorities in any proceedings under the Amended Act may be impounded and retained by the Authorities for any inquiry under the Amended Act if they have reason to believe that such impounding and retaining is required.
3. Attachment of benami property
4. Adjudication of benami property
5. Confiscation and vesting of benami property
Where the Adjudicating Authority holds a property to have been held as a benami property, the Adjudicating Authority, after giving an opportunity of hearing to the concerned person, pass an order for confiscation of such property. On passing of an order of confiscation of a property, all rights and title in such property will vest absolutely with the Central Government and no compensation will be payable in respect of such confiscation. Creation of any third-party interest in respect of such property to defeat the purposes of the Amended Act will be null and void.
6. Management and possession of confiscated property
The Administrator will receive, manage and take measures for disposal of the confiscated property in accordance with the rules framed under the Amended Act. On passing of order of confiscation of a property, the Administrator has the power to take possession of the property in accordance with the provisions contained in section 29 of the Act.
Bar of jurisdiction of civil courts
The Amended Act provides that the jurisdiction of civil courts will be barred to entertain any suit or proceeding in matters wherein the Authorities, the Adjudicating Authority or the Appellate Tribunal is empowered to determine under the Amended Act. The courts and other forums cannot grant injunction in respect of any action taken in pursuance of any powers conferred under the Amended Act.
The Amended Act makes provision for special courts for trial of offences involving benami transactions. The special courts will try to complete trials within 6 months from the date of filing of the complaint.
Offences and prosecution for benami transaction
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