V.S. Wahi's Law Relating to Benami Proprty Transactions

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Description
In India, the practice of entering into benami transactions or carrying on business in benami name has been prevalent for a very long time and had also received judicial recognition from very earlier times. The benami transactions were first noticed in 1778, in Justice Hyde's notes during the period of British rule in India. These transactions for the first time were given legal recognition in sections 81 and 82 of the Indian Trusts Act, 1882. In 1988, the Indian Parliament enacted Benami Transactions (Prohibition) Act, 1988 (45 of 1988) which debarred the real owners from claiming back the benami property on the basis of real title against the benamidar. This Act, originally had nine sections which came into effect from May 19, 1988. During this period several disputes relating to benami transactions had arisen as law at that time recognised only ownership rights of real or beneficial owner; and disregarded rights of benami who asserted ownership rights. The Law Commission of India in its 130th Report on Benami Transaction, in Para 2.19, recommended that it is time that benami ceases to be a part of Indian law because it was resorted to usually (but not always) with the object of concealing the real owner, fraud on creditors, desire to evade taxes and also to avoid certain political and social risks. This report was published and it was notice to all benamidar as well as the so-called real owners that Government may contemplate enacting a legislation to put an end to Benami as part of Indian law. The Central Government, considering the recommendation of the Law Commission, introduced the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, in May 1988, so as to prohibit the right of the real owner to recover the benami property though this measure did not evoke sufficient response to curb practice of entering into benami transactions. This Ordinance paved the way for the enactment of Benami Transactions (Prohibition) Act, 1988 (45 of 1988). The said Benami Act of 1988, was later amended by the Benami Transactions (Prohibition) Amendment Act, 2016 (43 of 2016) with effect from 1-11-2016, which brought salutary changes in the benami law. Under the Amendment Act of 2016, the earlier Benami Act was renamed as The Prohibition of Benami Property Transactions Act, 1988, (45 of 1988) and the number of sections in the Act was increased from nine sections to seventy-two sections.
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Contents
Chapter I
Preliminary
1.Short title, extent and commencement
2.Definitions
Chapter II
Prohibition of benami transactions
3.Prohibition of benami transactions
4.Prohibition of the right to recover property held benami
5.Property held benami liable to confiscation
6.Prohibition on re-transfer of property by benamidar
Chapter III
Authorities
7.Adjudicating Authority
[8.Composition of Authority.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021]
[9.Qualifications for appointment of Chairperson and Members.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021] Section
[10.Constitution of Benches of Adjudicating Authority.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021]
[11.Power of Adjudicating Authority to regulate its own procedure.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021]
[12.Term of office of Chairperson and Members of Adjudicating Authority.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021]
[13.Terms and conditions of services of Chairperson and Members of Adjudicating Authority.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021]
[14.Removal of Chairperson and Members of Adjudicating Authority.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021]
[15.Member to act as Chairperson in certain circumstances.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021]
[16.Vacancies, etc., not to invalidate proceedings of Adjudicating Authority.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021]
[17.Officers and employees of Adjudicating Authority.—Omitted by the Finance Act, 2021, w.e.f. 1-7-2021]
18.Authorities and jurisdiction
19.Powers of authorities
20.Certain officers to assist in inquiry, etc
21.Power to call for information
22.Power of authority to impound documents
23.Power of authority to conduct inquiry, etc.
Chapter IV
Attachment, Adjudication and Confiscation
24.Notice and attachment of property involved in benami transaction
25.Manner of service of notice
26.Adjudication of benami property
27.Confiscation and vesting of benami property
28.Management of properties confiscated
29.Possession of the property
Chapter V
Appellate Tribunal Section
30.Establishment of Appellate Tribunal
31.Composition, etc., of Appellate Tribunal
32.Qualifications for appointment of Chairperson and Members of Appellate Tribunal
33.Terms and conditions of services of Chairperson and Members of Appellate Tribunal
34.Term of office of Chairperson and Members
35.Removal of Chairperson and Member from office in certain circumstances
36.Vacancies, etc., not to invalidate proceedings of Appellate Tribunal
37.Resignation and removal
38.Member to act as Chairperson in certain circumstances
39.Staff of Appellate Tribunal
40.Procedure and powers of Appellate Tribunal
41.Distribution of business amongst Benches of Appellate Tribunal
42.Power of Chairperson of Appellate Tribunal to transfer cases
43.Decision to be by majority
44.Members, etc., to be public servants
45.Bar of jurisdiction of civil courts
46.Appeals to Appellate Tribunal
47.Rectification of mistakes
48.Right to representation
49.Appeal to High Court
Chapter VI
Special Courts
50.Special Courts
51.Application of Code of Criminal Procedure, 1973 to proceedings before Special Court
52.Appeal and revision
Chapter VII
Offences and Prosecution Section
53.Penalty for Benami transaction
54.Penalty for false information
54A.Penalty for failure to comply with notices or furnish information
54B.Proof of entries in records or documents
55.Previous sanction
Chapter VIII
Miscellaneous
56.Repeal of provisions of certain Acts
57.Certain transfers to be null and void
58.Exemption
59.Power of Central Government to issue directions, etc.
60.Application of other laws not barred
61.Offences to be non-cognizable
62.Offences by companies
63.Notice, etc., not to be invalid on certain grounds
64.Protection of action taken in good faith
65.Transfer of pending cases
66.Proceedings, etc., against legal representative
67.Act to have overriding effect
68.Power to make rules
69.Laying of rules and notifications before Parliament
70.Power to remove difficulties
71.Transitional provision
72.Repeal and saving
Division II
APPENDICES
Appendix 1Benami Transactions (Prohibition) Amendment Act, 2016
Appendix 2Amendments made by the Finance (No. 2) Act, 2019
Appendix 3Amendments made by the Finance Act, 2020, w.e.f. 1-4-2020
Appendix 4Amendments made by the Finance Act, 2021, w.e.f. 1-7-2021
Appendix 5Prohibition of Benami Property Transactions Rules, 2016
Appendix 6Prohibition of Benami Property Transactions (Conditions of Services of Members of Adjudicating Authority) Rules, 2019
Appendix 7The Second Schedule: Procedure for Recovery of Tax
Appendix 8Notifications issued under the Act
Appendix 9Application of Cr PC to proceedings before Special Court
Appendix 1057th Report of Law Commission on Benami Transaction
Appendix 11130th Report of Law Commission on Benami Transaction
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Author Details
V.S. Wahi, B.Com (Hons), LL.B., M.B.A., M. Phil, Advocate, Former Chief Commissioner of Income Tax & Ex-Member, Company Law Board