Prohibition of Benami Property Transaction Act

Benami Property

Benami Property means any property which is the subject matter of a benami transaction and also includes the proceeds from such property such as Immovable property,Movable property like cash, jewellery, share, FD, bank deposits etc., Intangible property, Tangible Property, Corporeal property, Incorporeal property. Initially the Benami Transaction(Prohibition) Act was enacted in the year 1988 and it was renamed as Prohibition of Benami Property Transaction(PBPT) Act, 1988, after the amendment of 2016 which was enforced on 1/11/2016. Earlier it was applicable to the whole of India except the state of Jammu and Kashmir but after the Jammu and Kashmir Reorganisation Act, 2019 it applies to the whole of India.

Benamidar and Beneficial Owner

The Prohibition of Benami Property Transaction(PBPT) Act,1988 basically revolves between the Benamidar and the Beneficial Owner.

Benamidar means a person or a fictitious person,as the case may be, in whose name the Benami Property is transferred or held and includes a person who lends his name.

Beneficial owner means a person whether his identity is known or not for whose benefit the benami property is held by benamidar.

Authorities and Attachment Procedure

The benami law is being enforced by the machinery under the PBPT Act,i.e. Initiating Officer, Approving Authority, Administrator, Adjudicating Authority. Initiating officer(I.O.) is the ACIT/DCIT of the Income Tax (BPU). I.O. is the person who starts the process under the benami Act by issuing the notice u/s 24(1) of the Act to the Benamidar. If the identity of the beneficial owner is known then the I.O. also issues the notice u/s 24(2) to the beneficial owner.

I.O. provisionally attaches the property mentioned in the show cause notice for a period of 90 days with the previous approval of the approving authority if he has reasonable belief that the property may be alienated during the inquiry.

After the inquiry if the Initiating Officer (I.O.) is satisfied that the Property mentioned in the Show Cause Notice(SCN) is benami, he continues the Provisional Attachment Order (PAO) with prior approval of the approving authority and if he has not attached provisionally u/s24(3), then he does so with the prior approval of the Approving Authority U/S 24(4) of the PBPT Act. After that the I.O. files a Reference before Adjudicating Authority U/S 24(5) of the PBPT Act within 15 days from the provisional attachment order for the adjudication and the confiscation of the property.

In the receipt of the Reference U/S 24(5),the Adjudicating Authority issue notices u/s26(1) PBPT Act to the Benamidar, Beneficial Owner if identified and any interested party including banking company and any person who has made a claim in respect of any property to furnish documents, evidence,particulars etc in his support.Then the noticee files his reply to the notice issued by the Adjudicating Authority U/S 26(1) and Adjudicating Authority after considering the reply and all relevant materials, provides an opportunity to the parties for the personal hearing and thereafter pass the order u/s 26(3) either by holding the property not to be Benami and revoking the attachment or holding the property to be a Benami Property and confirming the attachment order.

Appellate Tribunal and High Court

Aggrieved party approaches to the Appellate Tribunal by filing an Appeal u/s 46 of PBPTA within 45 days against the order passed by the Adjudicating Authority. If any party is aggrieved by any decision or order of the Appellate Tribunal then he may file an appeal to the High Court within a period of 60 days from the date of communication or decision or the Order of the Tribunal on any question of Law arising out of such order.

Prosecution under PBPTA

In addition to this, the department also initiates the prosecution proceedings against the persons who have been alleged as benamidar , beneficial owner and any other persons( who have entered into a benami transactions in order to defeat the provisions of any law or to avoid payment of statutory dues or to avoid payment to creditors) by filing the complaint under section 46 of the PBPTA, 1988 before the designated Special Court. If the Special Court after the conclusion of trial finds that the persons are involved in the benami transactions then the court punishes them as per the provisions of the Act with imprisonment for a term which shall not be less than one year but which may extend to seven years and also shall be liable to fine which may extend to twenty five per cent of the fair market value of the property.

If the any party is aggrieved with the judgement/order, they may approach to the jurisdictional High Court by filing an Appeal and Revision under Chapter XXIX and XXX of the Code of Criminal Procedure ,1973 respectively.

The NN Legal Partners guide its clients on each and every steps of the proceedings initiated by the Initiating Officer (I.O.) under the PBPT Act and help them to file a proper and effective reply dealing with the legal and technical issues therein to the SCN issued by the Authorities and provide help to the litigants to conduct the cases on their behalf before Authority, Tribunal and Courts.