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India: Benami Property Liable To Confiscation Under New Law written by Vijaya Singh, published in http://www.mondaq.com. July 7, 2017

The Benami Transactions (Prohibition) Act, 1988 was enacted and has been a part of law for the last of 28 years. It was enacted to deal with black money in the country. However, it never came into force for some unknown reasons.

 

The Government introduced an amendment bill in the year 2015 which was passed by the Parliament. The amended Act, i.e. "The Benami Transactions (Prohibition) Amended Act, 2016" (Act) received the assent of the President on 10th August 2016. Pursuant thereto, it came into force effective 1st November 2016.

 

Under the Act, the definition of 'benami transaction' was amended with certain exceptions created. The Adjudicating Authority and Appellate Tribunal were established to deal with attachment and confiscation of 'benami property'. The 'benami transaction' has been made an offence punishable with rigorous imprisonment for the term which shall not be less than one year, which may extend to 7 years and shall also be liable to fine which may extend to 25 per cent of the fair market value of the 'benami property'.

 

The Act gives power to the Authority under the Act to attach benami property, if such Authority has reason to believe, based on the material in possession, that a person is benamidar in respect of such property. Post the enquiries, the matter is referred to the Adjudicating Authority appointed under the Act to confirm the attachment of such property.

 

If the Adjudicating Authority, after conducting enquiries and taking into account all the relevant material, holds such property to be a benami property, the attachment is confirmed and the benami property is ordered to be confiscated. There is provision for appeal before the Appellate Tribunal constituted for such purpose and to the High Court against the order passed by the Appellate Tribunal.

 

The Act has given wide powers to the Authority under the Act to summon, enforce attendance, discovery and inspection, compelling any person to produce books of accounts and other documents, receive evidence on affidavit etc.

 

The provisions related to the attachment of the 'benami property' are akin to the provisions of attachment under the Prevention of Money Laundering Act, 2002 (PMLA). Under the PMLA, the enforcement officer has similar powers to provisionally attach the property and then refer for conformation of attachment before the Adjudicating Authority under the PMLA, if it was revealed during enquiry that such property has been acquired by ill-gotten money (proceeds of crime). The PMLA also provides for confiscation of the property.

 

The Act has in-built mechanism to conclude adjudication and confirm attachment of benami property within a time-bound manner, i.e. within a period of one year from the date when the Authority specifies the property being held by benamidar. Further, there is specific provision to conclude the criminal trial for the offence under the Act within a period of six months from the date of filing of the complaint. The Act provides for constitution of a Special Court for trying offence under the Act.

 

The Act gives wide power to the Authority to deal with benami transactions firmly and enable the confiscation of benami property.

 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.