The word ‘Benami’ means ‘without a name’. Therefore, benami transaction includes transaction where property is purchased in the name of one person and the consideration is payed by another. Here the property included maybe movable or immovable, tangible or intangible, corporeal or incorporeal. Such transactions became a regular feature of the Indian economy, usually relating to the purchase of property (real estate), and were thought to contribute to the Indian black money problem. In 1973, the Law Commission of India after studying various Acts and prevailing benami system, recommended formulating an Act to tackle the issue. Accordingly, the Benami Transactions (Prohibition) Act, 1988 was enacted by the Parliament which came into force on 19 May 1988 to curb or prevent these kind of transactions. The act goes on to ban all benami transactions and the right to recover property held benami. The Act came into force on 5 September 1988. Although benami transactions are now illegal, the act had limited success in curbing them.
The inherent flaw of the original act was that it didn’t provide an adequate machinery for vesting confiscated property with the central govt or rule making power. To deal with these flaws and full fill the purpose of this act the government came up with major amendments in the years 2011 and 2016.
Amendment of 2016 :
The Benami Transactions (prohibition) Act, 1988 was amended by the Benami Transactions (prohibition) Amendment Act, 2016, which added significant provisions to the original act giving the authorities more power to prevent benami transactions and to confiscate properties acquired under such transactions. The amendments introduced are as follows :
- Now, under section 27 if a property is declared to be benami property the adjudicating authority, after giving the opportunity of being heard to the concerned person confiscate such property.
- In India, it has been a tradition that family property is held in the name of parents but the funds are provided by their children. But, now this kind of property is also considered as benami property after the amendment.
- The most important change being the retrospective application of the amended act. Under the old law the rules of acquisition of the property were not notified and hence, created obstacle for the concerned authorities to acquire such property. But after the amendment of 2016 an immunity has been granted to benami transactions that are under taken between 1988 to 2016. Therefore, property which could not be acquired previously can now be confiscated. Further, penal provision under S.53 of the act has been added that in addition to loss of property Whoever is found guilty of the offence of benami transaction shall be punishable with rigorous imprisonment for a term which shall not be less than one year, but which may extend to seven years and shall also be liable to fine which may extend to twenty-five per cent. of the fair market value of the property
- Under S. 57 its clearly been mentioned that “Notwithstanding anything contained in the Transfer of the Property Act, 1882 (4 of 1882) or any other law for the time being in force, where, after the issue of a notice under section 24, any property referred to in the said notice is transferred by any mode whatsoever, the transfer shall, for the purposes of the proceedings under this Act, be ignored and if the property is subsequently confiscated by the Central Government under section 27, then, the transfer of the property shall be deemed to be null and void.”
It can be concluded that the amendment act of 2016 is a great step toward prevention and reduction of unaccounted (black) money. The amendment seeks to define ‘Benami transaction’ and to correcting the mechanical flaws that existed previously in the original act by setting up adjudicating authority and appellate tribunal to deal with ‘benami transactions and included specific penalties for person entering such transactions. All this will also help the government in increasing their tax revenue. All this will benefit India in long term though currently it might lead to reduction in transaction volume. The amendment has also brought transparency in real estate sector, as it has become vital to add correct title to the property. Thus, increasing the faith of buyers that transaction will take place from real owner at reasonable rate. It will also reduce cases of bad debt as now lenders will have more confidence in giving loan to the real owner, instead of unknown Owner, or false owner.
I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.
If you are interested in participating in the same, do let me know.
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