Scrambling up the operation against the black money and corruption, benami, or proxy-owned property worth Rs. 600 crores has been seized by the Income Tax Department over the last six months under a renewed law that lets the government takeover properties bought in fake names. In all, the tax authorities have detected over 400 benami transactions in 240 cases. This is informed by authorities to media without disclosing the names of the defaulters. No one knows who these people are and when are they raided and their properties are caught.
Modi’s demonetization move resulted in loss of more than 2 lakh crores. Miniscule of the colossal loss thrust upon the nation by the unwise demonetisation. The government and RBI have kept hidden from the nation, the final figures of notes surrender upon demonetisation. Upto 15th December, figures were promptly furnished. When the final figures revealed the colossal failure, the final figures were hidden. Anyway, there are many questions that need to be answered by the government. When will BJP government bring back black money from Switzerland? Is it possible before 2019? How much black money has been collected after note ban? Why benami property raids after so long and only 600 crores have been recovered? What government is doing with these recovered funds? Where these benami funds are going? How many new jobs were created in last three years?
The Benami Prohibition Law was first enacted back in 1988 but was not implemented for over 28 years because of technical problems in the law. The gaps were finally fixed last year; it stipulates a seven year jail term for people who violate this law. In the weeks after he made the surprise decision to scrap 86 per cent of the currency notes on November, Prime Minister Modi had declared the government would go after benami properties next.
Tax officials found a driver with land worth Rs. 7.7 crore in Madhya Pradesh’s Jabalpur, a professional in Mumbai who had been buying properties in the name of shell companies that exist only on paper and a former employee of a jeweller who had nine properties registered in his name, all of them belonging to the jeweller. The tax department said immovable properties valued at Rs. 530 crores were attached in 40 cases alone. In these cases, the properties were located in Kolkata, Mumbai, Delhi, Gujarat, Rajasthan and Madhya Pradesh. However, it is only during the last one month that the IT department has stepped on the gas. The government has also setup 24 dedicated Benami Prohibition Units under the tax department across the country to intensify the scrutiny on land transfers and big purchases.
Officials expect it to be increasingly difficult for the corrupt to make benami transactions in the future because of rules in many states that require buyers and sellers of land to provide their Aadhaar numbers. A similar rule for Permanent Account Number (PAN) cards would also help.
The Act defines a benami transaction as a transaction where a property is held by or transferred to a person, but has been provided for or paid by another person. The Bill amends this definition to add other transactions which qualify as benami, such as property transactions where the transaction is made in a fictitious name, the owner is not aware of denies knowledge of the ownership of the property, or the person providing the consideration for the property is not traceable.
The Bill also specifies certain cases will be exempt from the definition of a benami transaction. These include cases when a property is held by a member of a Hindu undivided family, and is being held for his or another family member’s benefit, and has been provided for or paid off from sources of income of that family; a person in a fiduciary capacity; a person in the name of his spouse or child, and the property has been paid for from the person’s income; and the Bill defines benamidar as the person in whose name the benami property is held or transferred, and a beneficial owner as the person for whose benefit the property is being held by the benamidar.
If an Initiating Officer believes that a person is a benamidar, he may issue a notice to that person. The Initiating Officer may hold the property for 90 days from the date of issue of the notice, subject to permission from the Approving Authority. At the end of the notice period, the Initiating Officer may pass an order to continue the holding of the property. If an order is passed to continue holding the property, the Initiating Officer will refer the case to the Adjudicating Authority. The Adjudicating Authority will examine all documents and evidence relating to the matter and then pass an order on whether or not to hold the property as benami. Based on an order to confiscate the benami property, the Administrator will receive and manage the property in a manner and subject to conditions as prescribed. Under the Act, the penalty for entering into benami transactions is imprisonment up to three years, or a fine, or both. The Bill seeks to change this penalty to rigorous imprisonment of one year up to seven years, and a fine which may extend to 25% of the fair market value of the benami property. Certain sessions courts would be designated as Special Courts for trying any offences which are punishable under the Bill.
Inspite of all the explanations, rules and regulations, one need to understand that the Property purchased is mostly accounted in tax returns. How such properties can be treated as ‘benami’? Such acts will only open doors for harassment and more corruption. Mere IT law is actually sufficient if implemented honestly. Or is it just Jaitley’s new idea to fool PM Modi and the public? The PM says he is soon going to target Benami property. He should also concentrate on other defaulters. When the property is rented, the tenants don’t pay rent or stick to old rents and do not want to upgrade it to conform to contemporary rent increases. They are difficult to be evicted. They demand phenomenal amount of money in cash. Litigation in the courts takes several years where the advocates make lucrative amounts of money. This can be seen as blackmailing and a form of corruption. This needs to be tackled in a stringent way as well. Let us hope that government will start a new initiative Sab Ki Jaanch, Sabka Hisab, without being biased.
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