In the backdrop of the government’s efforts to unearth black money and probable action against Benami properties, lawyers are inundated with queries on possible action under recently amended Benami Transactions (Prohibition) Amendment Act, 2016. The amendment allows the government to confiscate properties or assets held in another person’s name or fictitious names to evade tax and hide unaccounted wealth. While some queries are direct, most queries are made through friends and shown as being made on behalf of someone to avoid any inquiries later on. Benami means without name. “Given the action against black money, fear psychosis seems to have gripped many.
Several enquiries are being made to understand the extent to which the newly amended Benami properties act can be used and if there are any options to avoid that. Even the queries are being made in benami form and clarity is sought for a friend or a fictitious person,” said veteran property lawyer Parimal Shroff of Parimal K Shroff & Co. Late October, income-tax department notified the revised provisions of the Benami Transactions (Prohibition) Act, 1988 with effect from November 1, just a week ahead of government’s move to ban Rs 500 and Rs 1,000 currency notes from midnight of November 9.
“I have been getting many calls from people who are also under the benami name, one does not know the actual client. The act itself is an old one with higher penalty and imprisonment, fear of losing property is making people run for legal opinions,” said a senior partner at the law firm in Bengaluru. Any violation of the act will be punishable with imprisonment up to seven years and confiscation of the property by the government without any compensation to the owner.
The act will cover movable, immovable, tangible and intangible properties and includes any right or interest in such property. In the fight against black money, Prime Minister Narendra Modi has already announced the government’s plan to go after benami properties and this has unnerved people holding multiple assets through unaccounted wealth. Benami transaction would encompass any deal in which the asset is transferred to one person for a consideration paid or provided by another person. While this would cover all assets and financial instruments, more queries are being raised with regards to property transactions, lawyers said.
ET View: Comply with the law
The noose is tightening on people hiding their wealth in the real estate. With a law in place now, there is bound to be a crack-down on benami properties. Anyone who tries to game the system will end up in trouble. However, the government should also make sure that people are not harassed by officers empowered under the law to confiscate benami properties that are registered in the name of third parties, fictitious or otherwise, by the owner who remains anonymous. There must be safeguards to prevent any misuse of power.
Credits ET Realty