After the crackdown on the black money hoarders with demonetization last year, the Government is now planning to bring the hammer down on the Benami Act violators. In a stern warning, the Income Tax department has said that those undertaking Benami transactions would invite Rigorous Imprisonment (RI) of up to seven years. Violators would also be charged under the normal I-T Act.
Here's all the information related to the Benami Act:
What are Benami Transactions?
Any property held by a person on behalf of the real owner for any gain is called benami. A property transaction in a fictitious name or in which the owner claims no knowledge of the arrangement is also a benami deal and will be covered by the proposed law. Even movable properties like gold and company stocks will come under the purview of benami transactions.
Why the crackdown?
Benami transactions are one of the notorious sources of circulation and investment of black money. The government has been facing heat on black money from the Supreme Court, civil society and Opposition for not doing enough to deal the menace.
Benami transactions are illegal under the Benami Transactions (Prohibition) Act, 1988, as well. However, the existing law does not lay down detailed rules or gives the government power to confiscate benami properties.
What has the Income Tax Department said?
Today, the I-T Department published advertisements in leading dailies warning the taxpayers. It said, "Do not enter into benami transactions" as the Benami Property Transactions Act, 1988, is "now in action" from November 1, 2016".
"Black money is a crime against humanity. We urge every conscientious citizen to help the government in eradicating it," it said.
These are the key points to note, according to the I-T Department:
- Benamidar (in whose name benami property is standing), beneficiary (who actually paid consideration) and persons who abet and induce benami transactions are prosecutable and may get Rigorous Imprisonment (RI) up to 7 years besides being liable to pay fine up to 25 per cent of fair market value of benami property.
- Persons who furnish false information to authorities under the Benami Act are prosecutable and may be imprisoned up to 5 years besides being liable to pay fine up to 10 per cent of fair market value of benami property.
- The department made it clear that the benami property "may be attached and confiscated by the government" and that these actions are in addition to actions under other laws such as Income Act, 1961.
The Income Tax Department, since the enactment of the law last year, has registered over 230 cases and attached assets worth Rs 55 crore nationwide, which also coincided with the action against black money post demonetisation. It also issued the show cause notices for attachment have been issued in 140 cases where benami assets worth Rs 200 crore are involved.