An amendment to amend Benami Transaction Prohibition Act is in offing, which will have large impact on the Benami law
The Benami Transaction (Prohibition) Amendment Bill, 2015 was introduced in the Lok Sabha on 13th May 2015 to amend the Benami Transactions(Prohibition) Act, 1988.
The Bill proposes to bring in following three amendments to the Act:
1. The definition of Benami Transactions
2. Setting up of an Adjudicating authority and Appellate jurisdiction.
Benami transactions to be made subject to Penalty
Act defines the Benami Transaction as“A transaction where property is held by or transferred to a person, but has been provided for or paid by another person.”
The proposed amendment if gets notified will enhance the scope of above kind of transaction. The Benami transaction has been proposed to bring within its ambit also the:
(i) The transaction is made in a fictitious name.
(ii) The person providing the consideration of property is not traceable.
(iii) Where the owner is not aware of the transaction or denies knowledge of the same.
The Bill further intends to clearly exempt certain transactions not to be considered as Benami transactions:
1. Property held in the name of the children or spouse through known income sources.
2. Property jointly held with brother, sister or lineal ascendant or descendant for which the amount is paid out of known sources of income.
3. HUF buying property in the name of the Karta
4. Property held by someone in fiduciary capacity such as a trustee, executor, partner etc.
The Bill further proposes to create new authorities
to achieve the desired objectives of the legislation. Accordingly, four new authorities have been proposed to conduct inquiries or investigations.
1. Initiating Officer
2. Approving Authority
4. Adjudicating Authority
If an initiating officer believes that a person is a benamidar; he may issue a notice to that person. The initiating officer may hold the property for 90 days from the date of issue of notice subject to permission from approving authority. At the end of the notice period, the initiating officer may pass an order to continue the holding of the property.
Where an order is passed to continue holding the property the initiating officer will refer the matter 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 property, the administrator will receive and manage the property in manner and subject to conditions as prescribed.
The Bill further also seeks to establish an Appellate Tribunal to hear appeals against any orders passed by the adjudicating authority.
The Act as of today imposes a penalty for entering into Benami transactions by way of imprisonment upto 3 years or fine or both. The Bill seeks to change this penalty to rigorous imprisonment from one to seven years and a fine which may extend to 25% of the fair market value of Benami property. The Bill further proposes to impose
penalty for providing false information by way of rigorous imprisonment of six months which may be extended upto five years and a fine which may extend to 10% of the fair market value of Benami property.
The Bill by way of above proposed amendments thus is an attempt to cover the loopholes of the existing Act and once passed it can certainly be expected to curb the prevailing practice of entering into property transactions through unknown means.