Back

BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT ACT, 2016

THE BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT ACT, 2016

NO. 43 OF 2016

[10th August, 2016.]

An Act further to amend the Benami Transactions (Prohibition) Act, 1988.

Be it enacted by Parliament in the Sixty-seventh Year of the Republic of India as follows:—

Short title and commencement

1. (1) This Act may be called the Benami Transactions (Prohibition) Amendment Act, 2016.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

Insertion of new heading before section 1.

45 of 1988.

2. In the Benami Transactions (Prohibition) Act, 1988 (hereinafter referred to as the principal Act), before section 1, the following heading shall be inserted, namely:—

‘‘CHAPTER I

PRELIMINARY.’’

Amendment of section 1

3. In section 1 of the principal Act, for sub-section (1), the following sub-section shall be substituted, namely:—

"(1) This Act may be called the Prohibition of Benami Property Transactions Act, 1988.".

Substitution of new section for section 2.

Definitions.

4. For section 2 of the principal Act, the following section shall be substituted, namely:—

‘2. In this Act, unless the context otherwise requires,—

(1) "Adjudicating Authority" means the Adjudicating Authority appointed under section 7;

(2) "Administrator" means an Income-tax Officer as defined in clause (25) of section 2 of the Income-tax Act, 1961;

(3) "Appellate Tribunal" means the Appellate Tribunal established under section 30;

(4) "Approving Authority" means an Additional Commissioner or a Joint Commissioner as defined in clauses (1C) and (28C) respectively of section 2 of the Income-tax Act, 1961;

(5) "attachment" means the prohibition of transfer, conversion, disposition or movement of property, by an order issued under this Act;

(6) "authority" means an authority referred to in sub-section (1) of section 18;

(7) "banking company" means a company to which the provisions of the Banking Regulation Act, 1949, applies and includes any bank or banking institution referred to in section 51 of that Act;

(8) "benami property" means any property which is the subject matter of a benami transaction and also includes the proceeds from such property;

(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;

(ii) a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 and any other person as may be notified by the Central Government for this purpose;

(iii) any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual;

(iv) any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendant and the individual appear as joint-owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual; or

(B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or

(C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership;

(D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious;

4 of 1882

Explanation.—For the removal of doubts, it is hereby declared that benami transaction shall not include any transaction involving the allowing of possession of any property to be taken or retained in part performance of a contract referred to in section 53A of the Transfer of Property Act, 1882, if, under any law for the time being in force,—

(i) consideration for such property has been provided by the person to whom possession of property has been allowed but the person who has granted possession thereof continues to hold ownership of such property;

(ii) stamp duty on such transaction or arrangement has been paid; and

(iii) the contract has been registered.

(10) "benamidar" means a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name;

(11) "Bench" means a Bench of the Adjudicating Authority or the Appellate Tribunal, as the case may be;

(12) "beneficial owner" means a person, whether his identity is known or not, for whose benefit the benami property is held by a benamidar;

54 of 1963

(13) "Board" means the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963;

18 of 2013

(14) "director" shall have the same meaning as assigned to it in clause (34) of section 2 of the Companies Act , 2013;

39 of 1925

(15) "executor" shall have the same meaning as assigned to it in clause (c) of section 2 of the Indian Succession Act, 1925;

(16) "fair market value", in relation to a property, means—

(i) the price that the property would ordinarily fetch on sale in the open market on the date of the transaction; and

(ii) where the price referred to in sub-clause (i) is not ascertainable, such price as may be determined in accordance with such manner as may be prescribed;

(17) "firm" shall have the same meaning as assigned to it in section 4 of the Indian Partnership Act, 1932 and shall include a limited liability partnership as defined in the Limited Liability Partnership Act, 2008;

(18) "High Court" means—

(i) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and

(ii) where the Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain;

(19) "Initiating Officer" means an Assistant Commissioner or a Deputy Commissioner as defined in clauses (9A) and (19A) respectively of section 2 of the Income-tax Act, 1961;

(20) "Member" means the Chairperson or the Member of the Adjudicating Authority or the Appellate Tribunal, as the case may be;

(21) "notification" means a notification published in the Official Gazette and the expression "notified" shall be construed accordingly;

(22) "partner" shall have the same meaning as assigned to it in section 4 of the Indian Partnership Act, 1932, and shall include,—

(a) any person who, being a minor, has been admitted to the benefits of partnership; and

(b) a partner of a limited liability partnership formed and registered under the Limited Liability Partnership Act, 2008;

(23) "partnership" shall have the same meaning as assigned to it in section 4 of the Indian Partnership Act, 1932, and shall include a limited liability partnership formed and registered under the Limited Liability Partnership Act, 2008;

(24) "person" shall include—

(i) an individual;

(ii) a Hindu undivided family;

(iii) a company;

(iv) a firm;

(v) an association of persons or a body of individuals, whether incorporated or not;

(vi) every artificial juridical person, not falling under sub-clauses (i) to (v);

(25) "prescribed" means prescribed by rules made under this Act;

(26) "property" means assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property;

(27) "public financial institution" shall have the same meaning as assigned to it in clause (72) of section 2 of the Companies Act, 2013;

(28) "Special Court" means a Court of Session designated as Special Court under sub-section (1) of section 50;

(29) "transfer" includes sale, purchase or any other form of transfer of right, title, possession or lien;

(30) "trustee" means the trustee as defined in the section 3 of the Indian Trusts Act, 1882;

(31) words and expressions used herein and not defined in this Act but defined in the Indian Trusts Act, 1882, the Indian Succession Act, 1925, the Indian Partnership Act, 1932, the Income-tax Act, 1961, the Depositories Act, 1996, the Prevention of Money-Laundering Act, 2002, the Limited Liability Partnership Act, 2008 and the Companies Act, 2013, shall have the same meanings respectively assigned to them in those Acts.’.

Insertion of new heading before section 3

5. Before section 3 of the principal Act, the following heading shall be inserted, namely:—

"CHAPTER II

PROHIBITION OF BENAMI TRANSACTIONS"

Amendment of section 3

6. In section 3 of the principal Act,—

(a) sub-section (2) shall be omitted;

(b) sub-section (3) shall be renumbered as sub-section (2) thereof;

"(3) Whoever enters into any benami transaction on and after the date of commencement of the Benami Transactions (Prohibition) Amendment Act, 2016, shall, notwithstanding anything contained in sub-section (2), be punishable in accordance with the provisions contained in Chapter VII.";

(d) sub-section (4) shall be omitted.

Amendment of section 4.

7. In section 4 of the principal Act, sub-section (3) shall be omitted.

Substitution of new sections for sections 5 and 6.

8. For sections 5 and 6 of the principal Act, the following sections shall be substituted, namely:—

Property held benami liable to confiscation.

"5. Any property, which is subject matter of benami transaction, shall be liable to be confiscated by the Central Government.

Prohibition on re-transfer of property by benamidar

6. (1) No person, being a benamidar shall re-transfer the benami property held by him to the beneficial owner or any other person acting on his behalf.

(2) Where any property is re-transferred in contravention of the provisions of sub-section (1), the transaction of such property shall be deemed to be null and void.

(3) The provisions of sub-sections (1) and (2) shall not apply to a transfer made in accordance with the provisions of section 190 of the Finance Act, 2016.".

Insertion of new Chapters III to VII

28 of 2016

9. After section 6 of the principal Act, the following shall be inserted, namely:—

‘CHAPTER III

AUTHORITIES

Adjudicating Authority

7. The Central Government shall, by notification, appoint one or more Adjudicating Authorities to exercise jurisdiction, powers and authority conferred by or under this Act.

Composition of Authority.

8. An Adjudicating Authority shall consist of a Chairperson and at least two other Members.

Qualifications for appointment of Chairperson and Members

9. (1) A person shall not be qualified for appointment as the Chairperson or a Member of the Adjudicating Authority unless he,—

(a) has been a member of the Indian Revenue Service and has held the post of Commissioner of Income-tax or equivalent post in that Service; or

(b) has been a member of the Indian Legal Service and has held the post of Joint Secretary or equivalent post in that Service.

(2) The Chairperson and other Members of the Adjudicating Authority shall be appointed by the Central Government in such manner as may be prescribed.

(3) The Central Government shall appoint the seniormost Member to be the Chairperson of the Adjudicating Authority.

Constitution of Benches of Adjudicating Authority

10. (1) Subject to the provisions of this Act,—

(a) the jurisdiction of the Adjudicating Authority may be exercised by Benches thereof;

(b) a Bench may be constituted by the Chairperson of the Adjudicating Authority with two Members, as the Chairperson may deem fit;

(c) the Benches of the Adjudicating Authority shall ordinarily sit in the National Capital Territory of Delhi and at such other places as the Central Government may, in consultation with the Chairperson, by notification, specify;

(d) the Central Government shall, by notification, specify the areas in relation to which each Bench of the Adjudicating Authority may exercise jurisdiction.

(2) Notwithstanding anything contained in sub-section (1), the Chairperson may transfer a Member from one Bench to another Bench.

Power of Adjudicating Authority to regulate its own procedure

11. The Adjudicating Authority shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Authority shall have powers to regulate its own procedure.

Term of office of Chairperson and Members of Adjudicating Authority.

12. The Chairperson and Members of the Adjudicating Authority shall hold office for a term not exceeding five years from the date on which they enter upon their office, or until they attain the age of sixty-two years, whichever is earlier and shall not be eligible for reappointment.

Terms and conditions of services of Chairperson and Members of Adjudicating Authority

13. (1) The salary and allowances payable to, and the other terms and conditions of service of the Chairperson and other Members of the Adjudicating Authority shall be such as may be prescribed.

(2) Any vacancy caused to the office of the Chairperson or any other Member shall be filled up within a period of three months from the date on which such vacancy occurs.

Removal of Chairperson and Members of Adjudicating Authority

14. (1) The Central Government may, by order, remove from office, the Chairperson or other Members of the Adjudicating Authority, if the Chairperson or such other Member, as the case may be,—

(a) has been adjudged as an insolvent; or

(b) has been convicted of an offence, involving moral turpitude; or

(d) has acquired such financial or other interest as is likely to affect prejudicially his functions; or

(e) has so abused his position as to render his continuance in office is prejudicial to the public interest.

(2) No Chairperson or Member shall be removed from his office under clause (d) or clause (e) of sub-section (1) unless he has been given a reasonable opportunity of being heard in the matter.

Member to act as Chairperson in certain circumstances.

15. (1) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the seniormost Member shall act as the Chairperson of the Adjudicating Authority until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.

(2) When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the seniormost Member shall discharge the functions of the Chairperson until the date on which the Chairperson resumes his duties.

Vacancies, etc., not to invalidate proceedings of Adjudicating Authority

16. No act or proceeding of the Adjudicating Authority shall be invalid merely by reason of—

(a) any vacancy in, or any defect in the constitution of the Authority; or

(b) any defect in the appointment of a person acting as a Member of the Authority; or

Officers and employees of Adjudicating Authority

17. (1) The Central Government shall provide each Adjudicating Authority with such officers and employees as that Government may think fit.

(2) The officers and employees of the Adjudicating Authority shall discharge their functions under the general superintendence of the Chairperson of the Adjudicating Authority.

Authorities and jurisdiction

18. (1)The following shall be the authorities for the purposes of this Act, namely:—

(a) the Initiating Officer;

(b) the Approving Authority;

(d) the Adjudicating Authority.

(2) The authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, assigned, as the case may be, to it under this Act or in accordance with such rules as may be prescribed.

Powers of authorities

5 of 1908.

19. (1) The authorities shall, for the purposes of this Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit in respect of the following matters, namely:—

(a) discovery and inspection;

(b) enforcing the attendance of any person, including any official of a banking company or a public financial institution or any other intermediary or reporting entity, and examining him on oath;

(d) issuing commissions;

(e) receiving evidence on affidavits; and

(f) any other matter which may be prescribed.

(2) All the persons summoned under sub-section (1) shall be bound to attend in person or through authorised agents, as any authority under this Act may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.

(3) Every proceeding under sub-section (1) or sub-section (2) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code.

(4) For the purposes of this Act, any authority under this Act may requisition the service of any police officer or of any officer of the Central Government or State Government or of both to assist him for all or any of the purposes specified in sub-section (1), and it shall be the duty of every such officer to comply with the requisition or direction.

(5) For the purposes of this section, "reporting entity" means any intermediary or any authority or of the Central or the State Government or any other person as may be notified in this behalf.

Explanation.—For the purposes of sub-section (5), "intermediary" shall have the same meaning as assigned to it in clause (n) of sub-section (1) of section 2 of the Prevention of Money-Laundering Act, 2002.

Certain officers to assist in inquiry, etc

20.The following officers shall assist the authorities in the enforcement of this Act, namely:—

(a) income-tax authorities appointed under sub-section (1) of section 117 of the Income- tax Act, 1961;

(b) officers of the Customs and Central Excise Departments;

+Clients Back

+Lawyers

+Law Students

+Law Schools

Central Act

BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT ACT, 2016

Lawyers Network

Users

Cities Serving

Law Schools Network

Law Students Network