What is benami property?
The Income Tax department (Tamil Nadu and Puducherry region) has unearthed a bank deposit of Rs 246 crore, made in a single transaction, in a benami...
The Income Tax department (Tamil Nadu and Puducherry region) has unearthed a bank deposit of Rs 246 crore, made in a single transaction, in a benami account in Tamil Nadu.
The Benami Transactions (Prohibition) Amendment Act, 2016, defines benami transaction as one where a property is held by or transferred to person ‘A’ but is paid for or money for which is provided for by person ‘B’. Also, this property is held for the immediate or future benefit of person ‘B’; where a transaction has been carried out in a fictitious name;
where the person in whose name the property is denies any knowledge of ownership; and where the person paying for a transaction or property-related arrangement is either not traceable or found to be fictitious. However, certain transactions are exempt from this definition:
(a) property held by a karta of a Hindu undivided family (HUF) for other members of the family or by an individual in the name of the spouse or children or by siblings who appear as joint owners in any document and (b) property held by a person in a fiduciary capacity for another person,
for example, a trustee, executor, partner, director of a company or a depository. In the case of property held by the karta of a HUF, spouse, parent or siblings, the money for the transaction should have come from `known sources’ (known source is a wider term than known source and covers loans, which are not classified as income).
Any property found under the Benami Act will be confiscated by the central government without paying any compensation to the real holder of the property, says a Financial Express report. The real owners of the property who were buying the property on a fake name or on behalf of somebody else’s name will have to face severe charges held under the Benami Act.