1. “Benami Property” means any property which is subject matter of a “Benami Transaction” and includes proceeds (money received) from such property.
2. “Benami Transaction” means:-
i. Where a property held by a person (Benamidar) and consideration has been paid by another person (Beneficial owner) &
ii. The property is held for the immediate or future benefit, directly or indirectly for the person who has paid the consideration.
iii. a transaction or an arrangement in respect of a property carried out or made in a fictitious name
iv. 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;
v. a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious Subject to few exceptions
Means where a person already held a or few property in his name by using his/her known source of income and he wanted to invest his unknown source of income called Black Money” then the famous option is to take property in another person’s name by using his unknown source of income, such property is known as Benami Property.
a) Any property, which is subject matter of Benami transactions, shall be liable to be confiscated by the Central Government.
b) No Benamidar shall re transfer the Benami property held by him to the beneficial owner or to any other person acting on his behalf.
If in any case property is transferred then such transaction is null & void.
Means there are prohibition on sale of property strictly.
1. Where the Initiating Officer (I.O) has reason to believe that any person is a Benamidar in respect of a property , he may after recording reasons in writing , issue a notice to the person to show cause within stipulated time why the property should not be treated as Benami property,
2. Notice is also served to Beneficial Owner if his identity is known,
3. If I.O is of the opinion that the person holding Benami property may alienate the property during notice period, then he may provisionally attach such Benami property for period not exceeding 90 days from date of notice.
4. The I.O after making such inquires within 90 days of notice:
i. Pass an order continuing the provisional attachment of the property (in case already attached) otherwise provisionally attach the property,
ii. Revoke the provisional attachment of the property (in case already attached) otherwise decide not to attach property.
Means there must be issue of notice if Benami property is identified or if needed the property will be attached by I.O.
1. The Beneficial owner, Benamidar and any other person who induces any person to enter into Benami transactions, shall be guilty of the offence of Benami transactions,
2. Such person shall be punishable with rigorous imprisonment for a term for at least 1 year which may extend to 7 years and liable to fine which may extend 25% of the FMV of the property.
3. If any person who is required to furnish information under this act knowingly gives false information to nay authority, then he shall be punishable with rigorous imprisonment for a term for at least 6 months which may extend to 5 years and liable to fine which may extend 10% of the FMV of the property.
There is very heavy penalty and imprisonment for holding Benami property along with attachment of property.
Benami transaction is now very risky to be made, if a person directly or indirectly engaged in these type of transaction then, he will be found guilty and liable to various proceedings like attachment of property, imprisonment and penalty.
(Republished with Amendments)