ACS Divesh Goyal
The recently cleared amendment to Benami Transaction (Prohibition) Amendment Act, 2016 indicates the resolve of the Government of India to control the menace of black money and its by-product Benami transactions with the new stringent law and its effective implementation.
It looks like our PM will be hooking up several shikaars as the current demonetization drive is just the beginning of anti-corruption stir and will spur on a number of measures to rid India of its corrupt image: a warning has been issued by our PM Narendra Modi, who has said clearly in Goa, “I am not going to stop at this. I will expose the history of corruption of 70 years since Independence.
The Benami Transactions (Prohibition) Amendment Bill, 2015 was introduced in the Lok Sabha on May 13, 2015 to amend the Benami Transactions Act of 1988. The Amendment Bill received the presidential assent on August 10, 2016 and the Benami Transaction (Prohibition) Amendment Act, 2016 (hereinafter referred as the “Amendment Act, 2016”) was brought into force. The rules and all the provisions of the Benami Transactions (Prohibition) Act, came into force on November 1, 2016.
India has a new law on Benami Transactions- STRINGENT Law:
Highlights of the Act:
The Benami Transactions (Prohibition) Amendment Act, 2016 is an amendment of the older Benami Transactions (Prohibition) Act 1988.
The Amendment Bill received the presidential assent on August 10, 2016 and the Benami Transactions (Prohibition) Amendment Act, 2016 (hereinafter referred as the “Amendment Act, 2016”) was brought into force
What is Benami?
Benami essentially means property without a name. The term “Benami” has its origin from the Persian language. Benami property or assets, therefore, is a reference to property/assets whose actual owner is not the person in whose name it is.
Benami deals have been quite common in India; cases date back to the late nineteenth century, So the practice has got judicial recognition. Not all benami transactions are illegal.
Benami transactions proliferated during India’s socialist past. Large scale benami deals happened when land reforms entailed the abolition of zamindari, giving tillers rights to own the land as well as imposition of agricultural land ceilings. (In urban areas, this became quite rampant after the passage of the now-scrapped Urban Land (Ceiling and Regulation) Act, 1976.
The concern on Benami transaction comes into light with full energy, in the year 2014 “in the election manifesto of the political party now in power at the Centre, i.e., the Bharatiya Janata Party”
Meaning of Benami as per ‘Merriam Webster” dictionary: made, held, done, or transacted in the name of (another person) —used in Hindu law to designate a transaction, contract, or property that is made or held under a name that is fictitious or is that of a third party who holds as ostensible owner for the principal or beneficial owner
Denotation of Benami property:
As per Clause 2(8) of Benami Transactions (Prohibition) Amendment Act, 2016 Benami Property “means any Property which is the
Legal Meaning of Property: As per clause 2(26)
“Property” means assets of any kind, whether
includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property;
The word benami property means the property which has purchased in the name of some person other than the person who has financed it. The person who has rendered the required money for the said purchase has not purchased it in his name but in the name of some other person’s name. The person who financed the property has not really purchase and/or purchased it to the benefit of the person on whose name he has purchased it.
Rationale of hold the Benami property:
There are numerous purposes mainly of those are illegal ones and only to accomplish the illegal intentions of the populace:
What is Benami transaction?
As per Section Clause 2(9) of Benami Transactions (Prohibition) Amendment Act, 2016 Benami Transactions are as follow:
|TRANSACTIONS CONSIDERED AS BENAMI TRANSACTION|
|a)||(i) A Transaction or an arrangement:
(ii)The property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration
There are some exemptions in point (ii) as given below in Table – B
|b)||A transaction or an arrangement in respect of a property carried out or made in a fictitious name.|
|c)||A Transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies 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|
|TRANSACTIONS NOT CONSIDERED AS BENAMI TRANSACTION|
|The property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration except when the property is held by|
|i.||a Karta, or a member of a Hindu undivided family,
as the case may be, and the property is held for his benefit or benefit of other members in the family and the consideration for such property has been provided or paid out of the known sources of the Hindu undivided family
|ii.||a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 and any other|
|iii.||any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual|
|iv.||7any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendant and the individual appear as joint-owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual|
|v.||any transaction involving the allowing of possession of any property to be taken or retained in part performance of a contract referred to in section 53A of the Transfer of Property Act, 1882, if, under any law for the time being in force:
(i) consideration for such property has been provided by the person to whom
possession of property has been allowed but the person who has granted
possession thereof continues to hold ownership of such property;
(ii) stamp duty on such transaction or arrangement has been paid; and
(iii) the contract has been registered.
Anyone entering into a benami transaction for whatever reason – to defeat the law, avoid payment of statutory dues or creditors – or abetting such a transaction is liable for rigorous imprisonment for a period between one and seven years as well as fine up to 25 per cent of the fair market value of the property.
Anyone providing false information or providing false documentation can get rigorous imprisonment of six months to five years and may also have to pay fine up to 10 per cent of the fair market value of the property.
This new Benami Transactions (Prohibition) Act 2016 offers a wider scope. With its wider scope the new act will be a great help to deal with this social fallacy i.e. benami properties. Due to the narrow and ambiguous scope of the earlier Act many such cases regarding benami properties could not be solved. But now with the wider and specific scope of the said such cases can be easily proved in the court of law.
The popular perception of “Benami property” has now undergone to sea change and it will include all transactions and arrangements beyond the transactions in respect of immovable property.
There is a saying of Justice Holmes “Taxes are what we pay for civilized society. I like to pay taxes, with them I buy civilization .”
The Benami Transactions (Prohibition) Amendment Act is certainly a very comprehensive piece of legislation and also very stringent. There could be scope for harassment but how that plays out remains to be seen
(Author can be reached at [email protected] )