The Benami Transactions (Prohibition) Amendment Act, 2016 ...puneweststudycircle.com › wordpress...
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The Benami Transactions (Prohibition) Amendment Act, 2016 CA Sagar S. Tilak
Transcript of The Benami Transactions (Prohibition) Amendment Act, 2016 ...puneweststudycircle.com › wordpress...
The Benami Transactions
(Prohibition) Amendment
Act, 2016
CA Sagar S. Tilak
Benami Transaction – The Concept 2
CA Sagar Tilak
Seller Mr. X
Mr. B Benamidar
Mr. A Real Owner
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Purpose of Benami Transactions
Joint Family System
Fraud on Creditors
Tax Evasion
Black Money
Corrupt Practices
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Observations by Judiciary
The burden of proving the benami transaction is on the claimant
Who paid the purchase consideration ?
Intention of the parties
The intentions are to be decided on the basis of surrounding circumstances, relationship of parties, motives governing their actions and subsequent conduct.
Physical possession of the title deeds
Payment of taxes, if any relating to property
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Important Definitions
(26) Property :
Assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property (8) Benami Property :
Any property which is the subject matter of a benami transaction and also includes the proceeds from such property.
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Important Definitions
(9) Benami Transaction :
(A) A transaction or an arrangement -
a) where a property is transferred to, or held by, a person, and the consideration for such property has been provided, or paid by, another person; and
b) the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration
Except when the property is held by :
i. A Karta or a member of a HUF ii. A person standing in a fiduciary capacity iii. Any person being an individual in the name of his spouse or in the name of any child
of such individual iv. Any person in the name of his brother or sister or lineal ascendant or descendant as
a joint owner
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Important Definitions
(9) Benami Transaction (continued) :
(B) A transaction or an arrangement in respect of a property carried out or made in a fictitious name or;
(C) A transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of such ownership
(D) A transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious;
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Prohibition of Benami Transaction
Section 3 :
Whoever enters into any Benami Transaction on and after the date of commencement of the Benami Transactions (Prohibition) Amendment Act, 2016, shall, be punishable in accordance with the provisions contained in Chapter VII
Section 4 :
Recovery of property: No suit, claim
No defence
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Prohibition of Benami Transaction
Section 5 :
Any property which is subject matter of benami transaction, shall be liable to be
confiscated by the Central Government.
Section 6 :
No re-transfer Re-transfer Null & Void
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Authorities ( Chapter III )
Type of Authority Assigned to
Initiating Officer Assistant Commissioner or Deputy
Commissioner of Income Tax
Approving Authority Additional Commissioner or Joint
Commissioner of Income Tax
Administrator Income Tax Officer as per section 2(25) of
Income Tax Act
Adjudicating Authority As Appointed u/s 7 of the Act
Appellate Tribunal As Established u/s 30 of the Act
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Initiating Officer
Section 24 : Initiating officer having reasons to believe
Notice to beneficial owner also
Provisional attachment after approval
Pass order within 90 days
Reference to Adjudication within 15 days from attachment
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Adjudication
Section 26 :
Issue notice within 30 days from reference
Notice to all joint owners
Opportunity of being heard, submission
Pass order within 1 year from end of the month of reference
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Confiscation of Benami Property
Section 27 : Adjudicating Authority passes the order of confiscation No confiscation if bonafide buyer Rights vests with Central Government
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Administrator
Section 28 : Administrator receives and manages the property Issues notice for possession Possession within 7 days from notice Forceful Possession
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Offences & Prosecution [ Chapter VII ]
Section 53 :
Where any person enters into a benami transaction in order to defeat the provisions of any law or to avoid payment of statutory dues or to avoid payment to creditors, the beneficial owner, benamidar and any other person who abets or induces any person to enter into the benami transaction, shall be guilty of offence of benami transaction.
Rigorous imprisonment & Penalty
Section 54 :
Penalty & Punishment for furnishing false information knowingly.
Section 55 :
No prosecution without previous approval of the Board
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CA Sagar Tilak
Case 1
There is a restriction under Land Revenue Act where Non Agriculturist cannot purchase the agriculture land.
Mr. A (Non-Agriculturist) has provided consideration to
his employee Mr. B (Agriculturist) to purchase
Agricultural Land in his name.
However Mr. A has disclosed such agriculture land in his
Balance sheet as consideration has been paid by him
even though legal title is held by Mr. B
Is it a benami transaction?
What are the consequences?
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CA Sagar Tilak
Case 2
Mr. A intends to purchase House Property from Mr. B Mr. B is not willing to sale the house property to Mr. A due to their personal disputes. Hence Mr. A has provided consideration of house property to his friend Mr. C & requests him to purchase house property in his own name from Mr. B
Is it a benami transaction? What are the consequences?
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CA Sagar Tilak
Case 3 18
Members of “Low income group” incorporated one company
by investing their funds. The company was incorporated to
build houses for members of “Low income group”. The land on which they want to build houses was agriculture land. However none of them was agriculturist to purchase land in their name.
Mr. A (Agriculturist) who is social worker helped them by purchasing agriculture land in his own name & gave the development rights of the land to the company to build houses. Is it a benami transaction? What if Mr. A is the director of the company?
CA Sagar Tilak
Case 4 19
During demonetization period employer paid cash advances to employees
Search by I.T. Authorities on employer
Employees received notice from Benami Cell
Many of the employees have already spent the cash
received from employer & very less cash was with
employee to return back. No cash was deposited in bank.
The Benami Cell attached bank account of employee for the same
Is the action justified? CA Sagar Tilak
Case 5 20
Mr. X who is an agriculturist having his entire income in cash from agriculture activities.
He has purchased a Car of Rs. 10 lacs and entire consideration
has been paid in cash to car dealer.
Mr. X received the notice from Initiating Officer (IO)
Is it a benami transaction?
CA Sagar Tilak
Case 6 21
Mr. D purchased an apartment for Rs.1 crore jointly with his mother
Payment for the property is made as under :
- Rs. 75 Lacs by cheque from his own bank account
- Rs. 25 Lacs unaccoutned cash.
For the registration & stamp duty purposes consideration
was treated as Rs. 75 Lacs which was paid by cheque.
Later on it has been identified by authority that cash of Rs.25 Lacs has been
paid by Mr. D from unknown sources.
CA Sagar Tilak
Case 7 22
ABC Developers Ltd. entered into sale agreements, MOUs etc. for flats
without name of the buyer.
Situation 1:
Consideration received in cash
Situation 2:
Consideration received in bank
Is it a benami transaction?
ABC Developers Ltd. has sold the same flats to various buyers CA Sagar Tilak
Case 8 23
Mr. A who is CFO of XYZ Ltd, a listed company. He has access to share price sensitive information of a company.
With such price sensitive information, Mr. A has provided the money in form of loan to his various relatives and related entities and instructs them to purchase the shares of XYZ limited in their respective names for his benefit.
He indirectly indulging in insider trading.
Is it a Benami Transaction?
CA Sagar Tilak
Important Points Exemption to Charitable and Religious Trusts (Section 58) Sham Transaction vs. Benami Transaction
Insertion of the word “held” in the definition of Benami Transaction
Intentions of the parties are now redundant?
Confiscation of assets like shares, right in partnership?
Can Chartered Accountant be the Authorized Representative?
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