The existing provisions of section 23 of the Prohibition of Benami Property Transactions Act (‘the PBPT Act’) provide that the Initiating Officer, with the prior approval of the Approving Authority, shall conduct any inquiry or investigation. This power is exercised by the Initiating Officer where no case is pending before him. However, it is not expressly provided in the PBPT Act that the prior approval of Approving Authority shall not be required where the Initiating Officer has already initiated proceedings by issuing notice under section 24(1).

In order to clarify that no prior approval of the Approving Authority would be required in cases where notice under section 24(1) has been issued, it is proposed to suitably amend the provisions of section 23 of the PBPT Act.

This amendment will take effect retrospectively from 1st November, 2016.

[Clause 172]

Further, section 24(3) of the PBPT Act provides for attachment of property for a period of ninety days from the date of issue of notice under section 24(1) of the PBPT Act. Section 24(4) provides for passing of order within ninety days from the date of issuing notice under section 24(1).

In order to rationalize the aforesaid provisions, it is proposed to amend the section 24 so as to provide that the period of ninety days in respect of provisional attachment of the property under section 24(3) and passing of order under section 24(4) shall be reckoned from the end of the month in which the notice under section 24(1) is issued.

This amendment will take effect from 1st day of September, 2019.

[Clause 173]

The existing provisions of section 24(4) of the PBPT Act provide for passing of order by the Initiating Officer, of section 24(5) provide for making of reference by the Initiating Officer and of section 26(7) provide for passing of order by the Adjudicating Authority. However, no exclusion is provided for the period during which the proceedings are stayed by the Court. In order to provide for the exclusion and adequate time to pass the order or make the reference, it is proposed to suitably amend the provisions of sections 24 and 26.

This amendment will take effect from 1st September, 2019.

[Clauses 173 & 174]

With a view to ensure compliance with the summons issued and information required to be furnished under the PBPT Act, it is proposed to insert a new section 54A in the PBPT Act so as to provide for levy of penalty of rupees twenty five thousand for failure to comply with the summons issued or to furnish information under section 19 or section 21 respectively of the PBPT Act.

This amendment will take effect from 1st September, 2019.

[Clause 175]

The existing provisions of the section 55 of the PBPT Act provide that no prosecution shall be instituted against any person in respect of any offence under the said Act without the previous sanction of the Board. With a view to rationalise the provisions, it is proposed to amend the said section so as to provide that no prosecution shall be instituted against any person in respect of any offence under the said Act without the previous sanction of the competent authority.

This amendment will take effect from 1st September, 2019.

[Clause 176]

Extract of Clause 172, 173, 174, 175 & 176 of Finance Bill 2019

172. Amendment of section 23.

In the Prohibition of Benami Property Transactions Act, 1988 (hereafter in this Part referred to as the principal Act), in section 23, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of November, 2016, namely:––

Explanation.––For the removal of doubts, it is hereby clarified that nothing contained in this section shall apply and shall be deemed to have ever applied where a notice under sub-section (1) of section 24 has been issued by the Initiating Officer.”.

173. Amendment of section 24

In section 24 of the principal Act, with effect from the 1st day of September, 2019,—

(a) in sub-section (3), for the words, brackets and figure “from the date of issue of notice under sub-section (1)”, the words, brackets and figure “from the last day of the month in which the notice under sub-section (1) is issued” shall be substituted;

(b) in sub-section (4), for the words, brackets and figure “from the date of issue of notice under 40 sub-section (1)”, the words, brackets and figure “from the last day of the month in which the notice under sub-section (1) is issued” shall be substituted;

(c) the following Explanation shall be inserted, namely:-—

Explanation.––For the purposes of this section, in computing the period of limitation, the period during which the proceeding is stayed by an order or injunction of any court shall be excluded:

174. Amendment of section 26.

In section 26 of the principal Act, in sub-section (7), with effect from the 1st day of September, 2019, the following Explanation shall be inserted, namely:-—

Explanation.—For the purposes of this sub-section, in computing the period of limitation, the period during which the proceeding is stayed by an order or injunction of any court shall be excluded:

Provided that where immediately after the exclusion of the aforesaid period, the period of limitation available to the Adjudicating Authority for passing order is less than sixty days, such remaining period shall be deemed to be extended to sixty days.”.

175. Insertion of new sections 54A and 54B. 

In the principal Act, after section 54, the following sections shall be inserted with effect from the 1st day of September, 2019, namely:—

Penalty for failure to comply with notices or furnish information.

“54A. (1) Any person who fails to,––

(i) comply with summons issued under sub-section (1) of section 19; or

(ii) furnish information as required under section 21,

shall be liable to pay penalty of twenty-five thousand rupees for each such failure.

(2) The penalty under sub-section (1) shall be imposed by the authority who had issued the summons or called for the information.

(3) No order under sub-section (2) shall be passed by the authority unless the person on whom the penalty is to be imposed has been given an opportunity of being heard:

Provided that no penalty shall be imposed if, such person proves that there were good and sufficient reasons which prevented him from complying with the summons or furnishing information.

Proof of entries in records or documents.

54B. The entries in the records or other documents in the custody of an authority shall be admitted in evidence in any proceedings for the prosecution of any person for an offence under section 3 or this Chapter, as the case may be, and all such entries may be proved either by––

(i) the production of the records or other documents in the custody of the authority containing such entries; or

(ii) the production of a copy of the entries certified by the authority having custody of the records or other documents under its signature stating that it is a true copy of the original entries and that such original entries are contained in the records or other documents in its custody.”.

176. Amendment of section 55.

In section 55 of the principal Act, with effect from the 1st day of September, 2019,—

(i) for the word “Board”, the words “competent authority” shall be substituted;

(ii) the following Explanation shall be inserted, namely:––

Explanation.––For the purposes of this section, “competent authority” means a Commissioner, a Director, a Principal Commissioner of Income-tax or a Principal Director of Income-tax as defined in clause (16), clause (21), clause (34B) and clause (34C), respectively, of section 2 of the 43 of 1961. Income-tax Act, 1961.’.

Note on Clause 172, 173, 174, 175 & 176 of Finance Bill 2019

Clauses 172 to 176 of the Bill seek to amend the Prohibition of Benami Property Transactions Act, 1988.

Section 23 of the said Act provides that the Initiating Officer, after obtaining prior approval of the Approving Authority, shall have power to conduct or cause to be conducted any inquiry or investigation in respect of any person, place, property, assets, documents, books of account or other documents, in respect of any other relevant matters under this Act.

It is proposed to amend the said section so as to clarify that nothing contained in this section shall apply and shall be deemed to have ever applied where a notice under sub-section (1) of section 24 has been issued by the Initiating Officer.

This amendment will take effect retrospectively from 1st day of November, 2016.

Section 24 of the said Act provides that where the Initiating Officer is of the opinion that the person in possession of the property held benami may alienate the property during the period specified in the notice, he may, with the previous approval of the Approving Authority, by order in writing, attach provisionally the property in the manner as may be prescribed, for a period not exceeding ninety days from the date of issue of notice under sub-section (1) and Initiating Officer shall pass an order within a period of ninety days from the date of issue of notice under sub-section (1).

It is proposed to amend sub-section (3) of the said section so as to provide that instead of attaching the property for a period of ninety days from the date of notice, the said property may be attached for a period of ninety days from the last day of the month in which notice was issued.

It is further proposed to amend sub-section (4) of the said section so as to provide that instead of passing an order within a period of ninety days from the date of issue of notice under sub-section (1), the said order shall be passed from the last date of the month in which notice under sub-section (1) was issued.

It is also proposed to amend the said section so as to exclude the time on account of stay granted by any court from the period of time provided under sub-section (5) to refer the order passed under sub-section (4) within fifteen days from the date of attachment to the Adjudicating Authority and that if after exclusion of the period of stay if the remaining period is less than seven days, the remaining period shall be deemed to extend to seven days.

Sub-section (7) of section 26 of the said Act does not provide that in computing the period of one year for passing an order the period during which the proceeding is stayed by an order or injunction of any court shall be excluded.

It is proposed to amend the said sub-section so as to provide that in computing the period of one year for passing an order, the period during which the proceeding is stayed by an order or injunction of any court is excluded. It is also proposed that if after exclusion of the period of stay if the remaining period is less than sixty days, the remaining period shall be deemed to extend to sixty days.

It is also proposed to insert new sections 54A and 54B in the said Act.

Sub-section (1) of the proposed new section 54A provides that the person shall pay a penalty of twenty-five thousand rupees for each failure to comply with summons under sub-section (1) of section 19; or to furnish information which he was required to furnish under section 21.

Sub-section (2) of the said section provides for the authority who shall impose penalty.

Sub-section (3) of the said section provides that no penalty shall be imposed without affording an opportunity of being heard to the person in respect of whom penalty is sought to be imposed.

The proviso to the said sub-section provides that no penalty shall be imposed if such person proves that there were good and sufficient reasons for the contravention.

The proposed new section 54B provides that the entries in the records or other documents in the custody of an authority shall be admitted in evidence in any proceedings for the prosecution of any person for an offence under section 3 or Chapter VII, and all such entries may be proved either by the production of the records or other documents in the custody of the authority containing such entries, or by the production of a copy of the entries certified by the authority having custody of the records or other documents under its signature and stating that it is a true copy of the original entries and that such original entries are contained in the records or other documents in its custody.

It is also proposed to amend section 55 of the said Act so as to provide that no prosecution shall be instituted against any person in respect of any offence under sections 3, 53 or section 54 without the previous sanction of the Board.

It is further proposed to insert an Explanation to the said section so as to define the expression “competent authority”.

These amendments will take effect from 1st September, 2019.

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