BUSINESS
The Act is an amendment of the 1988 Act that goes by the same name. Here are 5 things you need to know about it.
The Benami Transactions (Prohibition) Amendment Act, 2016 came into effect on Tuesday.
Here are 5 things you need to know about the Act:
1) The Benami Transactions (Prohibition) Amendment Act, 2016 is an amendment of the older Benami Transactions (Prohibition) Act 1988. It was first introduced in the Lok Sabha last year, on May 13 by Finance Minister Arun Jaitley, and was then referred to by a Standing Committee on Finance.
The Committee submitted its report on April 28 and following that, it was passed in the Lok Sabha and Rajya Sabha on July 27 and August 2 respectively. On Friday, the Central Board for Direct Taxes (CBDT) notified that the provisions of the Benami Act would come in effect from November 1, 2016. The CBDT stated that after coming into effect, the Benami Transactions (Prohibition) Act, 1988 will be renamed as the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act), stated CBDT through a press release on Friday. The Government extensively explained the Act, through a report released in August, in its public journal Gazette of India.
2) How does the Act define Benami Transaction?
The report stated that the Act defines a benami transaction, as a transaction where in a property is held by or transferred to a person, but has been provided or paid by another person. The definition also includes property transactions where i) a transaction been made under a fictitious name; ii) the owner is not aware or denies knowledge of the ownership of the property; iii) the person providing the property is not traceable.
3) What are the charges under this Act?
Earlier, any violation of the Act would lead to imprisonment of up to three years, or a fine, or both. Now, under the amended Act, any offender would stand to be punished with imprisonment of up to seven years and be charged a fine which may extend to 25% of the fair market value of the benami property. If any false information is provided, it would lead to imprisonment for a time period of six months to five years and a fine of up to 10% of the fair market value of the benami property, will be charged, stated the Gazette report.
4) Who are the authorities in charge and what are their roles?
According to the government release, there are four authorities who will conduct inquiries or investigations i) Initiating Officer, (ii) Approving Authority, (iii) Administrator, and (iv) Adjudicating Authority.
An Initiating Officer can issue a notice to any benamidar on suspicion. The officer may then hold the property for 90 days from the day the notice was issued, subject to permission from the Approving Authority. Upon the end of the 90 day period, the Initiating Officer may pass an order to continue holding the property following which, he/she may refer the case to the Adjudicating Authority. The Adjudicating Authority will then examine all the documents and evidence, and then pass an order on whether the property will be held as benami.
Based on this order, the Administer will receive and handle the property subject to conditions as prescribed. A Joint /Additional Commissioner of Income-tax, an Assistant / Deputy Commissioner of Income-tax, and a Tax Recovery Officer would be notified to perform the functions and exercise the powers of the Approving Authority, Initiating Officer and Administrator, respectively.
5) Why is an Appellate Tribunal formed?
An Appellate Tribunal will hear appeals against any orders passed by the Adjudicating Authority while appeals against orders of the Appellate Tribunal will go to the high court. The Tribunal, has a maximum time period of one year, from the last day of the month in which the appeal is filed, to hear and finally decide the appeal . The Appellate Tribunal will consist of a Chairperson and at least two other Members of which one shall be a Judicial Member and other shall be an Administrative Member, stated the report.
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