The Benami Transactions (Prohibition) Amendment Act will come into force on November 1, 2016, the Central Board of Direct Taxes said on Friday. Following this, the existing Benami Transactions (Prohibition) Act will be renamed as the Prohibition of Benami Property Transactions Act (PBPT Act).
“The PBPT Act defines benami transactions, prohibits them and further provides that violation of the PBPT Act is punishable with imprisonment and fine,” the official notification said. “The PBPT Act prohibits recovery of the property held benami from benamidar by the real owner. Properties held benami are liable for confiscation by the Government without payment of compensation.”
According to the new law, people caught with ‘benami’ properties could serve up to seven years of rigorous imprisonment and have to pay a significant fine. Additionally, the properties will be confiscated. Under the Act, a transaction is named ‘benami’ if property is held by one person, but has been provided or paid for by another person.
A person could also face rigorous imprisonment for up to five years for knowingly giving false information and will have to pay a fine of up to 10 per cent of the market value of the property.The PBPT Act provides for the creation of an appellate mechanism called the Adjudicating Authority and Appellate Tribunal.
“A Joint/Additional Commissioner of Income Tax, an Assistant/Deputy Commissioner of Income Tax and a Tax Recovery Officer… have been notified to perform the functions and exercise the powers of the Approving Authority, Initiating Officer and Administrator, respectively under the PBPT Act,” the statement added.
