Benami Property is a property whose legal owner is not
its actual owner. That is, while the asset is legally held in the name
of a particular person (benamidar), it actually belongs to another person (beneficial owner) who has paid for it and continues to hold interest in it.
Under
the Act, the term ‘property’ has been defined comprehensively to
include not only immovable assets such as land, flat or house but also
movable assets such as gold, stocks, mutual fund holdings and even bank
deposits. Nothing has, in fact, been spared. If the property is sold
off, then the proceeds from it too are considered benami.
Under
the new Benami Act, property purchased in the name of a fictitious
person or where the payment for the property has been made by someone
who does not exist or cannot be traced too is considered benami. The Act
covers all domestic benami property transactions conducted since 1988.
However,
if you have bought some property in the name of your spouse or child
from your known sources of income, it will not be treated as benami.
You can also buy property for your brother, sister, a lineal ascendant
or a lineal descendant but that must be held jointly with you for it to
be excluded under the Act.
Lineal ascendants include
your father, mother, grandparents, great-grandparents and so on and
lineal descendants include your children, grandchildren,
great-grandchildren and so on. Apart from that, property held by the karta
or a member of the Hindu Undivided Family (HUF), the payment for which
has been made by known sources of income of the HUF, too will not be
treated as benami.
The
Act gives the Initiating Officer (Assistant or Deputy Commissioner of
Income Tax) the power to enquire into any person, place, documents or
property in the course of investigation into any matter related to a
benami property transaction.
It also mandates
officers from different government organisations such as the Customs and
Central Excise departments, the narcotics department, RBI and SEBI to
assist the authorities tasked with investigation. If the Initiating
Officer is convinced that you hold a benami property, you will be issued
a notice, and, if required, the property will also be provisionally
attached.
If the available
evidence confirms it, the Adjudicating Authority (appointed by the
Centre) will order confiscation of property by the government.
Apart
from awarding imprisonment of up to seven years to the beneficial owner
and the benamidar, others involved in the deal, too, will not be
spared. A fine of up to a fourth of the market value of the property can
be imposed on all parties.
Those providing false
information or documents to the authorities may be imprisoned for up to
five years and face a fine of up to 10 per cent of the market value of
the property involved. Appeals can however, be made against the
decision. The Act provides for an Appellate Authority, appointed by the
Central government, for this purpose.
Further appeals lie with the relevant High Court but have to be made within 60 days from the decision of the Appellate Tribunal.
Another
point worth noting is that there’s no way you can have a benami
property back in your name. The new Act clearly forbids re-transfer of a
property from the benamidar to the beneficial owner. And if a
re-transfer does happen, it will be considered invalid.
With the new Benami Act leaving no route for escape, it’s time you became an honest taxpayer.
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