The Benami Transactions (Prohibition) Amendment Bill, 2015 was introduced in Lok Sabha on May 13, 2015. The Bill aims to amend the Benami Transaction Act, 1988. After the passing of the bill by the Parliament, and getting the assent of the President on August 10, 2016, the Act came into force on 1 November, 2016 and the old Benami Transactions (Prohibition) Act, 1988 is renamed as Prohibition of Benami Property Transactions Act, 1988 (PBPT Act).
The old Act with just nine sections was not sufficient to prohibit Benami transactions as it had several loopholes such as lack of proper implementation machinery, absence of appellate mechanism, lack of provision with centre for vesting confiscated property etc. Hence, the need for the amendment of the Act rose up.
Definition in the Act:-
- Under section 2(9) of the amended Act, “benami transaction” is defined as a transaction or an arrangement where –
(a) the property is held by one person and paid for by another;
(b) it is held in a fictitious name;
(c) the owner of such property is unaware of or denies having knowledge of such ownership;
(d) the person financing such transaction is not traceable.
- Some exceptions to this definition are when the property is held by-
(a) a Karta and the property is held for his benefit or benefit of other family members
(b) a person standing in a fiduciary capacity for the benefit of another person
(c) any person being an individual in the name of his spouse or in the name of any child of such individual
(d) any person in the name of his brother or sister or lineal ascendant or descendant
and the consideration for such property has been provided or paid out of the known sources
- The person in whose name the benami property is transferred or held is defined as "benamidar".
- The person for whose benefit the benami property is held by a benamidar is defined as "beneficial owner".
- Under section 7, Central Government is to appoint Adjudicating Authorities to exercise jurisdiction, powers and authority conferred by or under this Act.
- The Adjudicating Authority for discharging its functions, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit.
- But the Adjudicating Authority shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Authority shall have powers to regulate its own procedure.
Adjudication And Confiscation Of Benami Property:-
- When the Initiating Officer finds that any person is a benamidar in respect of a property then he will issue a notice to the person to show cause why the property should not be treated as benami property and the copy of the same will also be send to the beneficial owner if his identity is known.
- When the Initiating Officer is of the opinion that the person in possession of the benami property may alienate the property then he may by order in writing attach provisionally the property for a period ninety days from the date of issue of notice.
- The Initiating Officer, after making such
- either continuing or revoking the provisional attachment of the property or
- decide to either attach or to not attach the property provisionally; if the property is not attached provisionally earlier
inquires and calling for such reports or evidence shall pass an order on-
- The Initiating Officer then, within 15 days from the date of the attachment, draw up a statement of the case and refer it to the Adjudicating Authority.
- On receipt of a reference the Adjudicating Authority, within 30 days, shall issue notice to furnish such documents, particulars or evidence, to the benamidar, beneficial owner, any interested party, any person who has made a claim in respect of the property.
- After considering the reply of the notice, making inquiries, taking into account all relevant materials; the Adjudicating Authority shall provide an opportunity of being heard to the benamidar, the Initiating Officer, and any other person who claims to be the owner of the property and then pass an order –
- holding the property not to be a benami property and revoking the attachment order; or
- holding the property to be a benami property and confirming the attachment order, in all other cases.
- Under section 30 of the Act, The Central Government shall establish an Appellate Tribunal to hear appeals against the orders of the Adjudicating Authority.
- The Appellate Tribunal shall, for discharging its functions, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit
- But the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Authority shall have powers to regulate its own procedure.
- Under section 46(1) of the Act, any person, including the Initiating Officer, aggrieved by an order of the Adjudicating Authority may prefer an appeal to the Appellate Tribunal against the order passed by the Adjudicating Authority, within a period of forty-five days from the date of the order.
- On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.
- Under section 49(1) of the Act, any party aggrieved by any decision or order of the 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.
Offences & Prosecution:-
- Any person who is required to furnish information under this Act knowingly gives false information to any authority or furnishes any false document in any proceeding under this Act, shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to five years and shall also be liable to fine which may extend to ten per cent. of the fair market value of the property.
- Under section 53(2) of the Act, whoever is found guilty of the offence of benami transaction referred to in sub-section (1) shall be punishable with rigorous imprisonment for a term which shall not be less than one year, but which may extend to seven years and shall also be liable to fine which may extend to twenty-five per cent of the fair market value of the property.