Author Name:   Tanu Rathor

The article contain everything about Benami Property.How our government is dealing with benami property.

Benami Property: A concise analysis

After the attack of black money by demonetization of high value currency notes, Prime Minister Narendra Modi is preparing to take action on 'benami' properties to reduce the corruption. He has spoken about Benami Property many times in front of media that government will soon operationalize an effective law on 'benami' property. The government of India has enacted the Benami Transactions (Prohibition) Amendment Act, 2016 which provides for fine and rigorous imprisonment of up to seven years. A fine may extend to 25 per cent of the fair market value of the benami property. The major part of the money has been held in the form of gold or in the form of cash as benami property.

What is Benami Property?
The meaning of Benami in Hindi is without name. It means a property bought by an individual not under his or her name but at somebody else's name is known as benami property. Benami Property includes every property held in the name of third person like children or spouse and the amount for that property is paid by known sources of income. Furthermore, the property bought by brother, sister, or any other relative and where the amount is paid from the known sources of income. The transaction involved in the same is called benami transaction. People invest their money in buying benami property to evade taxation. Furthermore, the true owners of these properties are hard to find due to fake identities and name. The person on whose name the property is bought is called 'benamdar'. The benami transactions include buying any kind of assets — movable, immovable, tangible, intangible, any right or interest, or legal documents. Background The first Benami Transaction act came in India in the year 1988, although the concept of benami property is not alien in India. Till than there were various judgements on benami transactions.

The Hon'ble Supreme Court elaborated the concept of Benami Transaction in the leading case law Thakur Bhim Singh v. Thakur Kan Singh. The case includes two types of benami transactions. First when the property is bought by the person with his own money but in the name of another person without any intention to benefit that another person. According to second case benami transaction are, where a person who is the owner of the property executes a conveyance in favor of another without the intention of transferring the title to the property there under. In the following case the transferor continues to be the real owner. Benami transactions were not illegal in India before 1988 Act and there was no punishment or bar for entering into benami transaction.

The Supreme Court in the case Smt. Surasaibalini Debi v. Phanindra Mohan Majumdar relied on the pervious case law Petherpermal Chetty v. Muniandi Servai and explained the concept of recovery property by the real owners of the property. In the previous Benami Act all the aspects of benami property were not covered. Thus the act was not repealed but amended. The reason of the amendment was given in the 28th report of Standing Committee on Finance. It was believed by the Ministry of Law, that if the Act of 1988 will be repealed than no action would be possible to take on the cases held between 1988 and amended Act. That's why it was preferred to amend the Act rather than repealing it. Aadhaar and Benami Property To find a real beneficiary of the benami property is Herculean task and that is the reason the act has yet not been implemented in India. To speed up this process the government has came up with the idea of providing cash rewards up to Rs 1 crore to the secret informers. But it is expected that the success rate will be low because of the fear that the some rogue employees from the agencies will leak the details about the informer.

Similarly income tax rules are not fetching big information. So the best way to catch these property holders is to link the property with adhar card number. The main advantage of this strategy is that the tax authorities will get all the information about 'legal owner' of the property. The property deals which are on fictitious name will be stuck easily. Also these hoarders register their property in other person's name like on their servant's name. It will become easy to find out the legal owners of the property once the aadhar card is linked with property. Then the legal owner shall have to show his sources of income for buying the property. Glimpses of the Act The purpose of the amendment is to seek the amended definition of the benami transactions, establishing adjudicating authority and appellate tribunals and to amend the penalties for the transactions.

The Benami Transaction has been defined as - a. where a property is transferred to, or is held by, a person for a consideration provided, or paid by, another person; and b. the property is held for the immediate or future benefit, direct or indirect, of the person providing the consideration. The Amendment Act increases the scope of benami transaction as- i. transaction is made in a fictitious name, or ii. owner is not aware of or denies knowledge of the ownership of the property, or iii. person providing the consideration for the property is not traceable or is fictitious. Furthermore the Amendment Act covers the cases which are exempted from the scope of the definition of a benami transaction.

When a property is held by: i. a member of a HUF, and is being held for his or another family member's benefit, and has been provided for or paid from known sources of income of that family; ii. a person in a fiduciary capacity (such as a trustee, executor, partner, director of a company, depository or participant); iii. a person in the name of his spouse or child, and the property has been paid from the person's known sources of income; and iv. a person in the name of his brother or sister or lineal ascendant or descendant (where their respective names appear as joint-owners in any document), and the property has been paid from the person's known sources of income.

The authorities which establishes four authorities who will conduct inquiries regarding benami transactions are-
(i) Initiating Officer (i.e. Assistant Commissioner of Income-Tax or a Deputy Commissioner of Income-Tax);
(ii) Approving Authority (i.e. Additional Commissioner of Income-Tax or a Joint Commissioner of Income-Tax);
(iii) Administrator (Income Tax officer); and
(iv) Adjudicating Authority.

The procedure followed by the authority once they get information about benami property are-
(i) Issue of Show Cause Notice by Initiating Officer where he has reason to believe that any person is a benamidar in respect of a property.
(ii) Provisional attachment of property if necessary.
(iii) Revoke provisional attachment if satisfied the property is not benami.
(iv) Continuing provisional attachment or ordering provisional attachment where not satisfied that property is not benami and refer a statement of case to Adjudicating Authority.
(v) Adjudicating Authority to hear affected persons and pass order holding that property is benami or not. The authority will decide within a year if the property is benami.
(vi) Where adjudication order holds property as benami, hear affected persons and pass confiscation order. all rights and title in such property shall vest absolutely in the Central Government free of all encumbrances
(vii) Administrator to take possession of benami property and manage it. Appeals against orders of the Appellate Tribunal will be to the respective High Court with jurisdiction. The Act mandates Central Government to designate one or more Session Court as Special Court for trial of offence punishable under it.

The following people shall be guilty of the offence committed under Benami Transaction Act-
• Beneficial owner
• Benamidar
• Any other person who abets or induces any person to enter into benami transaction.
The offences are non-cognizable and non-bailable.

In cases where the price has not been certain the party shall have to pay fair Market Value price that the property would ordinarily fetch if sold in an open market. Politics and Benami Property Benami properties are next on PM's target. Prime Minister Narendra Modi marked the congress party as the promoter of the black wealth and of the benami property. Prime Minister Narendra Modi accused the bosses of the congress party to hold benami properties in the signature of their drivers, cooks and home servants. Recently Bihar deputy chief minister Sh. Sushil Kumar Modi accused the RJD (Rashtrriya Janata Dal) chief Lalu Prasad and his family members of having benami transactions through a cooperative bank investing in some benami property. The Income Tax department charged Lalu Prasad, his daughter Misa Bharti, Son-in-law Shailesh Kumar and son Tejashwi Yadav along with Prasad's wife Rabri devi under Beanmi Transactions Act 1988.

They were charged with benami transactions worth 1,000 crore. A total of 12 plots were attached. The Income Tax department has attached farm houses, land and buildings in Delhi and Patna, including plots located in Bihar capital where a mall was to be made. More properties of the family were likely to be attached. Further, an Income Tax inquiry has affirmed that Anand Kumar, the brother of BSP (Bahujan Samaj Party) chief Mayawati, may have acquired benami property worth between Rs2,000 crore and Rs3,000 crore . Even Congress chief Sonia Gandhi's son-in-law Robert Vadra was accused of purchasing a benami property in London worth approximately Rs.19 Crore which was subsequently sold. The congress chief further claimed that it was one of the government's conspiracies against the party in order to ensure a part of their Congress-Free India.

Vadra's lawyer denied such claims that he neither directly, nor indirectly owns any house in London. and has not entered into any transaction of a financial nature. Conclusion The Amendment defines benami transactions in clearer manner; it establishes adjudicating authorities and an Appellate Tribunal to deal with benami transactions. Also it establishes the punishment and fine for entering into benami transactions. The basic purpose of this act is to reduce generation and utilization of black money in our country. Rather than holding black money is cash people prefer to invest their money in benami property. The main motive to for this investment is to save money. Basically this whole process is hampering the growth and development of the state. Since the percentage of tax payers in the country is getting low. And the government fails to implement such policies and schemes because of lack of resources. A tough law against benami properties is the need of the hour to check corruption.

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