Will Benami Property Act Serve Its Purpose?

The law is to prohibit people from holding property in Benami

Benami Property Act
Benami Property Act

The Benami Property Act amended, but will it help?

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]A[/dropcap] toothless “Prohibition of Benami Property Transactions Act, 1988” was amended by Modi Government in 2016 through “Benami Transactions (Prohibition) Amendment Act, 2016” to prohibit holding property in ‘benami’. The objective of this law is to prohibit people from holding property in benami, restrict their right to transfer benami properties and to facilitate confiscation of benami properties.

One estimate of the size of black economy in India is about Rs 1 crore crores (US $ 1.5 Trillion).

Property means assets of any kind, movable/ immovable, tangible/ intangible, or rights/ interest/ legal document evidencing ownership of property (like X holding a property as a trustee in favour of an unrelated Y, a minor, where the holding is actually on behalf of Z, a politician/ bureaucrat parent of Y). Even if a benami property is converted into other forms, the proceeds are considered benami property. This is really a very good aspect of this Act.

One estimate of the size of black economy in India is about Rs 1 crore crores (US $ 1.5 Trillion). A significant part of this is held in benami, though no estimates are available, not even approximate. We can see that it is likely to be several lahks of crores of rupees (several Billion US $). If all this can be unearthed and attached by the Government, the nation will benefit immensely.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]P[/dropcap]ost-demonetisation, with the additional linking of Aadhar Number to PAN, Bank Accounts, etc, the income tax department identified over 400 benami transactions and attached immovable properties in 40 cases valued at over Rs 530 crore. Over 200 other properties have also been identified, and searches conducted on 10 senior government officials last month. Provisional attachment of properties has been done in over 240 cases involving properties worth Rs 600 crore. All this is only the tip of the iceberg. We can expect that a lot more of such cases will be filed in the coming months and years.

The Government will do well to advice its law officers to cite the Jayalalithaa – Sasilaka DA case as a precedent and argue their cases, very strongly and forcefully.

But what could come in the way of the Government succeeding in attaching a large part of the benami property is its ability to win cases in courts. A lot depends on the stand taken by the judiciary in these cases. If they take a position similar to the Jayalalithaa – Sasilaka DA case (where the SC held that it is for the disproportionate asset holders to prove the source of their DA properties), most of the benami properties confiscated by the Government could stay confiscated.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]O[/dropcap]n the other hand, if the courts take a different position and expect that the prosecution should prove that these are indeed benami properties, differentiating between these cases and DA cases, most of the cases could fizzle out. Proving criminal acts is already difficult (in view of the very liberal framing and interpretations of the laws, the legal fire power that crooks can buy, and sometimes, the complicity of judges at certain levels). And in cases like benami properties where proof is personal information and is extremely difficult to obtain, it will be even more difficult.


The Government will do well to advice its law officers to cite the Jayalalithaa – Sasilaka DA case as a precedent and argue their cases, very strongly and forcefully.


Note:
1.The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.

An Engineer-entrepreneur and Africa Business Consultant, Ganesan has many suggestions for the Government and sees the need for the Govt to tap the ideas of its people to perform to its potential.
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