Sources told Business Recorder Monday that the Benami rules would be notified by the FBR after vetting from the Law and Justice Division. According to the new regulations for Benami transactions, any property held in Benami will be confiscated by the federal government.
According to sources, the problem of property held Benami has been causing concern to the tax authorities and past practices and experience show that Benami transactions have often been resorted to for furthering illegal or questionable objects, including the evasion of taxes. The assets, which are taken through illegally-earned money, can be used for evasion of material amounts of taxes or something more serious like financing terrorism.
The legislation defines the Benami transaction as an arrangement where property is held by a person (other than in fiduciary capacity) on behalf of another person who has paid for it; or the transaction is made for a property in a fictitious name; or the owner of the property is not aware of or denies knowledge of such ownership. The Act prohibits all persons from entering into Benami transactions. Any property held in "Benami" will be confiscated by the federal government.
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 is 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.
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.
Copyright Business Recorder, 2017