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Is the benami owner punishable under the new Act
23-Nov-2023 (In Property Law)
Is the apparent owner ( benami owner or benamdar) punishable under the new Act? If yes, What may be the penalty imposed? Suppose, A and B are brothers. A purchases (and pays for) a plot of land or a shop in the name of B. B is aware of this and enters the transaction under the impression that he will be the real owner of the property. When the papers are being signed, he comes to know that the Power of Attorney rests with the wife of A. Still, being a family member, B thinks there should be no issues as it is a Hindu family matter. All the legal documents rest with A. B has NO profit or interest from the property except that the property was purchased in his name. How will A and/or B be affected by the new Act 2016? Also, is there any way to willingly relinquish ownership so that penalty is minimized/ended?
Dear Querist,
The answer to your query could be situational and I leave it to you to determine whether you fall within the exceptions under the new Benami Transactions Prohibition Act.
The property would not be bemami property if (i) such property in question was brought from known sources of income (ii) if the property holder and the purchaser are members of HUF and such is brought from income of HUF (iii) intention of the buyer / financier at the time of buying such property i.e. whether property is brought with the intention to take benefit of government schemes, rebates etc. AND not to hide black money or conceal income from illegal means (iv) whether income from such property was declared in the ITR.
If you fall within the above exceptions and if such property is then shared with brother, then it is not a concern. However if that is not the case then certainly it would be deemed as benami property.
An opportunity to declare Benami Property was provided by the Governmemnt as per the Income Declaration Scheme 2016 which ended in the month of September. After the expiry of this Scheme it is now very difficult to escape the Benami Transaction. The punishment for holding or purchasing benami property as per the amended law is 7 years, besides confiscation of such property and additional fine of 10-25 % of the property value. Please note not only immovable property but also shares, gold and silver ornaments, movable property whether tangible or intagible as well as legal documents or any right, title or interest in such movable or immovable properties are termed as benami property / transaction and both holder and beneficiary can be subject to fine and imprisionment upto 7 years.
The answer to your query could be situational and I leave it to you to determine whether you fall within the exceptions under the new Benami Transactions Prohibition Act.
The property would not be bemami property if (i) such property in question was brought from known sources of income (ii) if the property holder and the purchaser are members of HUF and such is brought from income of HUF (iii) intention of the buyer / financier at the time of buying such property i.e. whether property is brought with the intention to take benefit of government schemes, rebates etc. AND not to hide black money or conceal income from illegal means (iv) whether income from such property was declared in the ITR.
If you fall within the above exceptions and if such property is then shared with brother, then it is not a concern. However if that is not the case then certainly it would be deemed as benami property.
An opportunity to declare Benami Property was provided by the Governmemnt as per the Income Declaration Scheme 2016 which ended in the month of September. After the expiry of this Scheme it is now very difficult to escape the Benami Transaction. The punishment for holding or purchasing benami property as per the amended law is 7 years, besides confiscation of such property and additional fine of 10-25 % of the property value. Please note not only immovable property but also shares, gold and silver ornaments, movable property whether tangible or intagible as well as legal documents or any right, title or interest in such movable or immovable properties are termed as benami property / transaction and both holder and beneficiary can be subject to fine and imprisionment upto 7 years.
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Adv. Abhiraaj Sanjeev Kulkarni
Pune | 25+ Answers
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