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Benaami Property: Are you at risk?
August 16, 2022 हिंदी में पढ़ेंTable of Contents
After demonetization, Prime Minister Narendra Modi and the Indian Government may crack the whip on Benami property holders. Many citizens are unsure if the property they own will come under Benami properties.
What is a Benami property?
Benami essentially means property without a name. In this kind of transaction, the person who pays for the property does not buy it under his/her own name. The person on whose name the property has been purchased is called the benamdar and the property so purchased is called the Benami property. The person who finances the deal is the real owner. '
What isn't a Benami transaction?
1. Property held under the name of spouse or child, for which the amount is being paid through a known source of income.
What falls under a Benami transaction?
Assets of any kind & mdash movable, immovable, tangible, intangible, any right or interest, or legal documents. As such, even gold or financial securities could qualify to be Benami.
How it affect the people?
It is being done to curb black money. People booked under the act may face loss of property, penally, and up to 7 years in jail. People with unaccounted income will sure have a tough time ahead. As for the general public, it won't be much of an issue if their transactions are legal.
Why do you need a Lawyer?
A lawyer, being an expert in the application and enforcement of laws can provide you assistance with your legal issues and can guide you through the procedure of how a case should be dealt with. He can help you formulate a strategy and effectively assist you with the execution of the same. A lawyer is well aware of the laws and having experience in dealing with similar cases can help you understand the laws and implications involved if any. He can also assist you in getting a time-bound remedy for your legal issue and can also help you make sure that any steps taken may not cause such errors that may not be even be rectified with future legal proceedings. You can also use LawRato's Free Legal Advice service to get free advice on your case from expert property lawyers.
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Legal Questions Answered by Top Lawyers
Answer
What is Benami?
Benami essentially means property without a name. In this kind of transaction the person who pays for the property does not buys it under his/her own name. The person on whose name the property has been purchased is called the benamdar and the property so purchased is called the benami property. The person who finances the deal is the real owner. '
The property is held for the benefit - direct or indirect - of the person paying the amount.
What constitutes Benami property?
Property that does not stick to the following criteria:
a) Property held in the name of spouse or child for which the amount is paid out of known sources of income
b) A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income
c) Property held by someone in a fiduciary capacity
This means, by law, if you buy a property in name of your parents, too, can be declared as benami.
ALSO READ: Here's how PM Modi plans to hunt down benami property holders
In August, Parliament had passed the Benami Transactions (Prohibition) Act, with the assurance from Finance Minister Arun Jaitley that genuine religious trusts would be kept out of the purview of this new legislation.
The new legislation will make a provision of seven year imprisonment and fine, replacing the three-year jail term, or fine, or both.
An Act to prohibit benami transactions and the right to recover property held benami and for matters corrected therewith or incidental thereto. Citation. Act No. 45 of 1988. ... The benami transaction is any transaction in which property is transferred to one person for a consideration paid by another person.
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Answer
Benami transaction is the one where a person purchases a property in the name of another person. For example, if you buy a land in the name of your father or mother, then it is a benami transaction as you have paid the price of the land but the owner is your father or mother as the case may be.
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Answer
The Benami Transactions (Prohibition) Amendment Act, 2016 is a modified version of older Benami Transactions (Prohibition) Act 1988 and was tabled in Lok Sabha last year by Finance Minister Arun Jaitley. The same is passed by the Lok Sabha on 27th July and Rajya Sabha on 2nd August this year respectively. The rules and provisions of the Benami Transactions (Prohibition) Act made effective from 1st November, 2016 and is now renamed as Prohibition of Benami Property Transactions Act, 1988 (PBPT Act).
Benami means a “Property without a Name”. Here property includes movable, immovable, tangible, intangible, any right or interest, or legal documents, even gold or financial securities could qualify to be benami.
In the layman term Benami Transaction is a transaction where the property is purchased in the name of the person who has not paid for it. The person who has rendered the required money for the said transactions is not named in the transaction but the property is held for the immediate or future benefit, direct or indirect, of the person who has provided its payment. For example if you want to buy a piece of land but don’t want your name to be appeared in the deal then you can buy the same in the name of your sister. This is called benami transaction because you have paid the money but the owner is your sister.
The act defines the benami transaction as a transaction or an arrangement where a property is held by or transferred to a person, but has been provided for or paid by another person.
This practice has started mainly due to superstition where some names or alphabets were considered lucky and some unlucky. Another reason was to hide family affairs from public eye or to evade wealth tax.
This concept is used widely by con people to do fraudulent activities. For instance if Mr A is highly indebted, he would purchase property in the name of Mr Z, so that Mr A’s creditors could not attach such property for recovery.
This malpractice is also adopted by corrupt Government official who take bribe in kind such as land, properties, cars, jewellery etc. Since they cannot directly get these on their or their family member’s name, the same is done in name of their in-laws, cousins, close friends etc.
There are instances where an individual may acquire property from the known source of income in the name of his wife or unmarried daughter for the benefits of rebates or interest charged on home loan, or for saving charges of property registration or stamp duty or for saving taxes on rental income from the property etc. These types of transactions cannot be termed as benami transaction. But determination of the actual status of the property lies with the competent authorities, however few factors which shall be taken into considerations are:
Sources of the fund which were used for making the payment for the property is disclosed by the buyer or not.
Intention behind buying property in the name of another person i.e. spouse, children, siblings etc.
Actual Possession of the property and custodian of the documents of the property.
Disclosure of the income from the property, if any, while filing income tax return.
If above questions lead to the fact that property is purchased to take various benefits under government schemes, interests, rebates etc. and not to hide black money or any fraudulent activities, the said property will not be treated as benami property.
As per the new law of Prohibition of Benami Property Transactions Act (PBPT Act), the guilty person shall be punishable with rigorous imprisonment for not less than one year which may be on severity of the offence extended to seven years. He shall also be charged with a fine which may extend to 25 percent of the fair market value of the benami property. Under the old law, the violation of the act would lead to imprisonment up to three years, or a fine, or both.
The New Law also has a provision of penalty for providing false information. Any person, required to furnish information under this Act, intentionally provided false information or document to any authority shall be punishable with rigorous imprisonment for not less than six months which may be on severity of the offence extended to five years. He shall also be charged with a fine which may extend to 10 per cent of the fair market value of the benami property. However, no prosecution shall be initiated against any person under this law without the prior approval of Central Board of Direct Taxes (CBDT).
The point to ponder is that benami transactions are not confined only to purchases, leasing of immovable property in the name of another person or mortgaging property for a fictitious consideration is also considered as a benami transaction and is subject for prosecution under Benami Transaction Act.
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Answer
Yes the transaction is totally valid, as Under section 9 "benami transaction" means,—
(A) a transaction or an arrangement—
(a) where a property is transferred to, or is 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 Hindu undivided family, as the case
may be, and the property is held for his benefit or benefit of other members
in the family and the consideration for such property has been provided or
paid out of the known sources of the Hindu undivided family.
Thus, being a Karta of the Hindu Undivided Family, this transaction is valid.
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Answer
This is my response to you:
1. Do you have proof about benami property?
2. It will depend on the documentary evidences you place before the court;
3. If you have been illegally dispossessed feom ancestral property then file a suit;
4. Consult a local lawyer and take steps.
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