BENAMI TRANSACTION PROHIBITION BILL 2011 PDF

June 17, 2020 0 Comments

Benami Transactions (Prohibition) Bill, Purpose: To prohibit holding property Benami and restrict the right to recover or transfer such property. THE BENAMI TRANSACTIONS (PROHIBITION) ACT, An Act to prohibit benami transactions and the right to recover properly held benami and for. Subsequently, in the year , a Bill called “The Benami Transactions ( Prohibition) Bill, ″, was introduced in the Parliament wherein.

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It is well known that there is wide circulation of black money in the society. With the intention to check the black money proliferation and transction in the society efforts have been made by the Government from time-to-time.

The aforesaid Act provided that no person shall enter into any benami transactions. It was further provided that the beneficial owner will not be entitled to file any claim or suit against the person in whose name the property is held. The Act also provided that all properties held benami shall be subject to acquisition by the Government. The Act, however, did not have comprehensive provisions. Pursuant to the Act, Rules had also not been framed.

As a result, the aforesaid Act remained ineffective for a long period, may be for the reason that there was no political will to implement the Act and make the same transavtion. The Bill, however, could not be passed and it had lapsed. It also contains provisions regarding prosecution and has also provided for mechanism in regard to the relevant matters.

Prohibituon of the Act for discussion purpose can be categorised in following four heads as under: Section 3 of the Act provides that no person shall enter into any benami transaction. Section 4 provides that no suit, claim or action to enforce any right in respect of any property held benami can be filed or taken against the person in whose name the property is held on behalf of the person claiming to be the real owner and the real owner can also not take any defence based on any right in respect of the property held benami.

Section 5 of the Act provides for confiscation of the property by the Central Government. Section 6 provides that benamidar shall not re-transfer the property to the beneficial owner or any other person acting on his behalf, meaning thereby that property cannot be transferred by the benamidar to the real owner or beneficiary.

This section, however, has an exception, which was provided in Income Disclosure Scheme, that in case the real owner has transactioj his undisclosed income under that scheme then benamidar can transfer the property to the real owner before Definition of above mentioned terms provided in section 2 of the Act are relevant for the purpose of applicability and enforcement of provisions of the Act. B A transaction or an arrangement in respect of a property carried out or made in a fictitious name; or.

C A transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, pfohibition knowledge of, such ownership. D A transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious.

The Act provides that no person shall enter into any benami transaction or even get any property transferred in his name or hold the same. The first limb of the definition is quite important and according to it any transaction or arrangement is benami transaction: The clause, however, excludes genuine family cases like holding of property in the name of spouse or children or in the name of Karta or a member of HUF or in a fiduciary capacity by a trustee, executor, partner or director of a company.

If the property is held in the name of brother or sister or lineal ascendant or descendant, exemption is available only if same is held jointly with the individual, who has provided the consideration for the property. A question can be raised that if property can independently be acquired in the name of spouse or children, why there is a condition that property in the name of brother or sister or even prohiibition the name of father bensmi mother can only be jointly with the individual providing the consideration and not singularly in their names.

The obvious reason for above provision is that normally a person would acquire the property in the name of the spouse or in the name of the children out of his own funds, but he will never acquire the property independently in the name of brother or sister with his bdnami money. He would also normally not acquire property in the name of father or mother unless there is intention to hide the real source of investment or to avoid tax on the income arising there from.

In case there is no mala fide bull of the individual in acquiring the property in the names of above-mentioned transactiom, then he can always consider the amount paid by him for purchase of the property as gift to the person, namely, brother or sister or mother or father and in terms of provisions of section 56 2 vii of the Act, such gift will also not be chargeable in their hands.

The property or the amount, however, will become their asset and they will be holding the same in their prohlbition capacity. Income will be their income and chargeable in their case. Tranaaction that situation property will not be held by them for benefit of the bemami providing consideration and, therefore, will be out of purview of “benami transactions” They will have full right to deal with the property in that case.

Further, in order to safeguard the genuine transactions of purchase and sale of property an exception has also been provided that a transaction covered by section 53A of Transfer of Property Act will also not be deemed to be benami transaction in case full consideration for the same has been paid by the buyer to the seller and possession of the property has been taken by the buyer and stamp duty on such transaction has also been paid and the contract has been registered though sale deed has not been executed and registered in favour of the buyer.

The definition further provides that in transactioon property has been converted in any other form then the property in converted form or sale proceeds behami the same will also be deemed to be benami property for the purpose of benami transaction.

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The Act provides for attachment and confiscation of benami property. For the purpose tansaction implementing the provisions of Act, the Act provides for appointment of following authorities: Chairperson or benaml member of Adjudicating Authority has to be a member of Indian Revenue Service who holds the post of Commissioner of Income-tax or a member of Indian Legal Service who holds the post of Joint Secretary or equivalent post thereto.

The Central Government shall appoint the seniormost member to be the Chairperson of the Adjudicating Authority.

The powers will be exercised by the Adjudicating Authority through a Bench which may constitute of at least two members. The Authorities appointed under the Act shall have same powers as are vested in a civil court under the Code of Civil Procedure,while trying a suit in respect of discovery and inspection, enforcing the attendance of any person compelling the production of books of account and other documents, transacion summons, receiving evidence on affidavits and any other matter which may be prescribed.

All the persons summoned by any of the Authorities appointed under the Act shall be bound to attend in yransaction or through agent brnami may be directed by the Authority and shall be bound to state the truth and produce such bnami as may be required.

Transacion shall also have the powers to call for information from any person and require production of documents or books of account and also to impound the books or documents. Section 24 of the Act provides for initiation of proceedings under the Act by the Initiating Authority, Assistant Commissioner or Deputy Commissioner as beanmi be designated. Sub-section 1 of section 24 reads as under:. The aforesaid section empowers the Bll Officer to issue a notice only if:.

New Benami law to allow property in spouse, siblings’ name – The Economic Times

Sub-section 2 of section 24 also provides where a notice has been issued to the benamidar in respect of the property, a copy of same shall also be issued to the beneficial owner if his identity is known. Sub-section 4 of the section 24 provides that the Initiating Officer shall make such enquiries and call for such reports or evidence as he may deem fit and after considering of relevant material shall within a period of 90 days take a decision whether proceedings have to be taken further in respect tranzaction the property or not.

The Initiating Officer shall within a period of 15 days from the date of his passing the necessary order for continuing the proceedings shall draw up a statement of facts and refer the matter to the Adjudicating Authority. The Adjudicating Authority on receipt of reference from the Initiating Officer shall issue a notice to the benamidar, 201 owner or any other interested trahsaction, including a banking company or a person having any interest in the property for furnishing such documents, particulars or evidence as may be necessary on a date to be specified in the notice.

The notice shall be issued by the Adjudicating Authority within a period of 30 days from the date on which a reference has been received from the Initiating Officer. It has further been provided that the notice shall provide a period of not less than 30 days to the person to whom the notice has been issued to furnish the information sought.

In case the property is held jointly by more than one person, notice shall be issued to all persons holding the property.

It has, however, been provided that in case notice is served on any of the persons, service shall not be deemed to be invalid on the ground that such notice has not been served to all the persons holding the property.

The Adjudicating Authority after considering the material and evidence as may be submitted by the parties concerned, shall pass an order within a period of one year from end of the month in which reference was received from the Initiating Officer holding whether property is in the nature of benami property or not.

In case it is held not to be benami property attachment order shall be revoked. In case it is held to be benami property attachment order shall be confirmed. Section 27 of the Act further provides that in case an order has been passed by the Adjudicating Authority holding the property to be benami property, a further order shall be passed by the Adjudicating Authority for confiscating the property after giving an opportunity of being heard to the person concerned.

Once the order for confiscation has been passed and the rights and title in such property shall vest absolutely in the Central Government free of all encumbrances and no compensation shall be payable in respect of such confiscation. Any right of any third party created in such property with a view to defeat the purpose of this Act shall also be deemed to be null and void. It has, however, been provided in sub-section 2 of section 27 that if any person has acquired the property from the benamidar for adequate consideration, prior to issue of the notice by the Initiating Officer without having knowledge of the benami transaction, the Adjudicating Authority shall have no power to confiscate such property.

The Act also provides for filing of appeal against the order passed by the Adjudicating Authority for confiscation of the property to the Appellate Tribunal. In case an appeal has been filed, the order of confiscation passed by the Adjudicating Authority shall be subject to the order of the Appellate Tribunal.

For the purpose of the Act, the Central Government has the power to constitute an Appellate Tribunal for hearing the appeals against the orders of the Adjudicating Authority and the Appellate Tribunal shall constitute of a Chairperson and at least two other members of which one shall be a Judicial Member and other shall be Administrative Member. Judicial Member shall be a member of Indian Legal Service who holds the post of Additional Secretary or equivalent post. Administrative Member shall be a member of Indian Revenue Service who holds the post of Chief Commissioner of Income-tax or equivalent post.

Chairman of Appellate Tribunal shall be either a sitting or a retired judge of a High Court who has completed not less than five years of service. It may be stated that the Central Government has not appointed separate Adjudicating Authority and Appellate Tribunal under the provisions of this Act and vide Notification datedit has been notified that the Adjudicating Authority and the Appellate Tribunal established under the provisions of the Prevention of Money Laundering Act,shall discharge the function under this Act until separate authorities are appointed by the Central Government under this Act.

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Section 49 of the Act further provides that any party aggrieved by any decision or order of Appellate Tribunal may file an appeal to the High Court within a period of sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law arising out of such order.

The High Court, however, can condone the delay in filing the appeal. The High Court on hearing the matter may pass such order as it may deem fit in appeal filed before it. Section 28 of the Act provides for management of property confiscated by the Government. The Administrator appointed under the Act, who will be the designated ITO, shall have the power to receive and manage the property. He is empowered to take such measures as may be necessary and as may be directed by the Central Government to dispose of the property vested in the Central Government in such manner and subject to such conditions as may be prescribed.

On passing the order of confiscation the Administrator shall issue a notice in writing to the person who is in possession of the benami property to surrender or deliver the possession of the same to the Administrator or any other person authorised by him in writing in his behalf within a period of seven days of the date of service of the notice.

He is also empowered to take service of any police officer to assist him in taking the possession of the property. It may be stated that the powers under the Act have been provided to Income-tax authorities to enforce the provisions of the Act and proper safeguards have been provided in section 24 of the Act for issuing the notice for initiating the proceedings. There are due checks provided in the form of prior approval of Approving Authority and for passing the order by the Adjudicating Authority.

It is also important that time limits have been provided under the Act for giving notices and passing the orders by different authorities and accordingly, a time bound procedure has been provided under the Act. Necessary safeguards have been provided in the form of making a provision for appeal to Appellate Tribunal and thereafter to the High Court. Hence, it can be stated a due balance has been maintained while making the provisions in the Act between achieving the purpose of the Act and also avoiding hardships in case of bona fide transaction.

It is hoped that machinery appointed under the Act shall also act reasonably while implementing the provisions of the Act. Apart from confiscation of benami property, sections 53 to 55 of the Act also provide for prosecution of the persons involved in benami transactions.

Section 53 provides that where any person enters into a benami transaction in order to defeat the provisions of any law or to avoid payment of statutory dues or to avoid payment to creditors, the beneficial owner, benamidar and any person who abates or induces any person to enter into a benami transaction shall be guilty of the offences of benami transaction. Section 55 of the Act provides that no prosecution shall be instituted against any person in respect of any offence under the Act without the previous sanction of Central Board of Direct Taxes.

It is stated that provisions of the Act are quite stringent and any person who is involved in benami transaction or any person who abets or induces such transaction shall be liable for the prosecution. Accordingly, even a Chartered Accountant or Legal Consultant who advises or induces the client to enter into a benami transaction shall be liable for the prosecution under the Act. Section 50 of the Act provides that the Central Government in consultation with the Chief Justice of the High Court shall designate one or more Courts of Sessions as special court or courts for respective area or for group of cases for the purpose of trial of offences punishable under the Act.

Such special courts shall have all the powers under the Code of Cr. Such designated courts shall take cognisance of any offence on a complaint in writing made by any authority appointed under the Act or any officer of the Central or State Government authorised in this behalf. With a view to have quick disposal of the matters it has also been provided that such courts shall make every endeavour to conclude the trial within a period of 6 months from the date of filing of the complaint.

Section 51 of the Act provides for appointment of Public Prosecutor conducting the cases on behalf of the authorities. Section 52 of the Act also provides for appeal to the High Court against the order passed by the special court.

In conclusion, it is stated that provisions of the Act appear to be quite effective for the purpose of checking the benami transactions and as a result thereof to check evasion of tax and black money circulation in the society.

All you need to know about benami transactions Bill

It can be expected that provisions of the Act will be implemented earnestly and with all fairness to achieve the purpose of the Act as well as not causing hardships in bona fide cases. All power is within you; you can do anything and everything.

Believe in that, do not believe that you are weak; do not believe that you are half-crazy lunatics, as most of us do nowadays. You can do any thing and everything, without even the guidance of any one.

Stand up and express the divinity within you. Society does not go down because of the activities of criminals, But because of the inactivities of the good people. Background It is well known that there is wide circulation of black money in the society.