Introduction
The Indian government has taken an affirmative stance against Benami property transactions, which involve a property being held by or transferred to one person, but financed by another. To address this, it has approved the installation of an Adjudicating Authority and the establishment of an Appellate Tribunal under the Prohibition of Benami Property Transactions Act (PBPT), 1988. The headquarters of these entities will be located in Delhi, with benches of the Adjudicating Authority set up in Kolkata, Mumbai, and Chennai.
The Four Pillars of Inquiry and Investigation
The PBPT Act, 1988 is designed to create four pillars of authority that will spearhead inquiries or investigations about Benami transactions. These authorities include: (i) Initiating Officer, (ii) Approving Authority, (iii) Administrator, and (iv) Adjudicating Authority. The Initiation Officer plays a pivotal role in the proceedings; if they suspect a person of being a Benamidar – a person in whose name the Benami property is transferred or held – they have the power to issue a notice to the suspected party.
The Role of the Initiating Officer and Adjudicating Authority
Post the issuance of the said notice, the Initiating Officer can exercise their discretion to hold the property for a period of 90 days from the date of issue, granted they have the consent from the Approving Authority. Beyond the notice period, the officer may pass an order to further extend the holding of the property. If such an order is passed, the case is then referred to the Adjudicating Authority. This body meticulously examines every piece of document and evidence related to the matter and decides whether or not to classify the property as Benami.
The Incorporation of an Appellate Tribunal
The Act also constitutes an Appellate Tribunal whose primary function is to hear appeals against any orders passed by the Adjudicating Authority. In instances where an appeal is filed against the orders of the Appellate Tribunal, the matter can be escalated to the high court.
Key Benefits of This Setup
The establishment of these bench offices will result in more effective and efficient administration of cases that are referred to the Adjudicating Authority. Additionally, it paves the way for speedy disposal of appeals that have been filed before the Appellate Tribunal.
A Closer Look at the ‘Tribunal’
A tribunal is essentially a quasi-judicial body which comes into being through an Act of Parliament or State Legislature under Article 323A or 323B. It serves as a platform to resolve disputes that are brought to its attention. While Article 323A governs Administrative tribunals, Article 323B pertains to Tribunals handling other matters.
PBPT Act – Understanding Benami Property Transactions
According to the PBPT Act of 1988, a Benami transaction refers to a deal where a property is held by or transferred to one individual, but has been financed by another. In such deals, the property is registered not under the name of the actual owner, but under someone else’s.
| Benami Property Transactions include: |
|---|
| (i) Deals made under fictitious names |
| (ii) Cases where the owner denies knowledge of the ownership or is unaware of it |
| (iii) Instances where the person providing the payment for the property cannot be traced |
Penalties under the Act
The act imposes severe penalties for participating in Benami transactions. This includes rigorous imprisonment ranging from one to seven years, and a fine that may extend up to 25% of the fair market value of the Benami property. The Act also prescribes heavy punishment for providing false information with potential imprisonment between six months to five years and a fine amounting to upto 10% of the fair market value. It’s critical to note that the Act allows the government to confiscate Benami properties without offering any compensation to the Benamidar.
Wider Scope of the Term ‘Property’
The PBPT Act has broadened the characterization of the term “property” to include movable, immovable, tangible, and intangible properties. The Act aligns with the stringent Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, and the Fugitive Economic Offenders Act, 2018, all of which form a part of the Indian government’s crusade against black money both within and beyond the country’s borders.
