The Union Cabinet on Thursday paved the way for bringing in new legislation on benami transactions under which properties purchased in the name of the spouse or siblings would be allowed and not subjected to penal provisions.
The move to bring the Benami Transactions (Prohibition) Bill 2011 in Parliament as a replacement to the Benami Transactions (Prohibition) Act, 1988, was deemed necessary as the 22-year-old legislation had remained unimplemented due to its “infirmities.”
Briefing the media on the Cabinet decision, Information and Broadcasting Minister Ambika Soni said: “Properties held by a coparcener in a Hindu Undivided Family and property held by a person in fiduciary capacity are excluded from the definition of benami transaction. Further, properties acquired by an individual in the name of the spouse, brother or sister or any lineal ascendant or descendant are benami transactions which are not prohibited. Consequently, they are not subject to penal provisions.”
The new Bill, she said, contains elaborate provisions dealing with the definition of benami transaction and benami property, prohibited benami transactions, consequences of entering into a prohibited benami transaction and the procedure for implementing the benami law.
Parliament passed the Benami Act in 1988, but it was never implemented as the rules were not framed.
The Act had allowed such deals in the name of wife or unmarried daughter. Besides, it had a longer term of imprisonment of up to three years.
Explaining why there was need for a fresh law in this regard, Ms. Soni said: “...it was found that owing to infirmities in the [1988] legislation, formulation of rules would not be possible without a comprehensive legislation by repealing the Act”.
As benami transactions are one of the sources of circulation and investment of black money, anyone violating the rule under the proposed new legislation can be jailed for not less than six months, which may be extended to two years, and is also liable to a fine.
According to an official statement, any person who “enters into a benami transaction in order to defeat the provisions of any law or to avoid payment of statutory dues or to avoid payment to creditors, the beneficial owner, benamidar and any other person who abets or induces any person to enter into such benami transaction, shall be punished with imprisonment…”
A benami property shall also be liable for confiscation by the Adjudicating Authority after the person concerned has been given due opportunity of being heard,” it said.
