Sources said that the Benami Transactions (Prohibition) Act. 2017 has been published in the official gazette. The Act provides for prohibition of holding property in Benami. The basic objective of the Act is to deal with the problem of tax evasion and black money, especially in real estate sector; target transactions that are carried out in other people's name (Benami transactions); empower the government to restrict the right to recover or transfer property held in Benami and ensure if a person enters into a Benami transaction to evade tax or avoid payment to creditors, the ultimate beneficial owner and persons who abet or induce any person to undertake Benami transaction suffer rigorous punishment.
The board may sanction reward to whistleblowers in case of credible information leading to detection of Benami property or Benami transaction. Under the Benami Transactions (Prohibition) Act, 2017, the claim for reward by the whistleblowers shall be rejected if information provided is of no value or the board already had the information or the information was available in public records and appeal against confiscation of Benami property has not attained finality.
For the purpose of this section, whistleblower means a person who reports any property held Benami to the board. The board may, by notification in the official gazette, prescribe the procedure in this behalf and also specify the appointment for reward sanctioned under this section for whistleblowers, the Act added.
Experts said that Benami transaction in respect of a property (Benami property) means where a property is transferred to a person but the consideration for such property has been provided or paid by another person and the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration; or a property transaction carried out in a fictitious name; or the owner of the property in not aware of such ownership.
Benami transaction in respect of a property (Benami property) also means where the person providing the consideration is not traceable or fictitious. Benamidar means a person or a fictitious person in whose name the Benami property is transferred or held and includes a person who lends his name and beneficial owner means a person for whose benefit the Benami property is held by a Benamidar.
Prohibition of Benami transactions revealed that no person can enter into any Benami transaction; any Benami property will be liable to be confiscation by the federal government and Benamidar will not retransfer the Benami property to its owner or to any other person acting on his behalf.
Penalty for Benami transaction: Where any person enters into a Benami transaction or holds Benami property in order to defeat the provisions of any law or to avoid payment of statutory dues or to avoid payment to creditors, the beneficial owner, Benamidar and any other person who abets or induces any person to enter into the Benami transaction, shall be guilty of an offence of Benami transaction.
Any person or any officer, 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 percent of the fair market value of the property, the law said.
Sources said that under the new law, the federal government will notify adjudicating authorities that will consist of a chairperson and at least two members and will have powers to regulate its own procedure and will have the same powers as are vested in a civil court under the Code of Civil Procedure 1908 while trying a suit under the Act.
To enforce any provision of the Act, any authority under this Act will have full and free access to any premises, place, accounts, documents or computer without prior notice and will have powers to impound and retain such documents and record for a period of 3 months.
The initiating officer will have powers to attach provisionally Benami property for a period of 90 days and adjudicating authority will have powers to confiscate the property held to be a Benami property. Under the law, the federal government will establish Federal Appellate Tribunal to hear appeals against the orders of the adjudicating authority and the federal government will notify or designate one or more courts of session as special courts for trial of an offence punishable under the said Act.
Copyright Business Recorder, 2017