In a recent advisory, the Central Board of Direct Taxes ( CBDT ) has warned the benami transactions which are illegal and punishable under the law.
According to the advisory issued by the Board today, Benami Transaction is an arrangement in which property (movable or immovable) is transferred to or held in the name of one person (Benamidar), but is actually owned and enjoyed by another person (beneficial owner). For exceptions – refer to The Prohibition of Benami Property Transactions Act 1988.
Benamidar (in whose name benami property is standing), the beneficiary (who actually paid consideration) and persons who abet and induce benami transactions are prosecutable and may face Rigorous Imprisonment up to 7 years besides being liable to pay fine upto 25% of fair market value of benami property.
It was said that the persons who furnish false information to authorities under Prohibition of Benami Property Transactions Act, 2016, are prosecutable and may be imprisoned up to 5 years besides being liable to pay fine up to 10% of fair market value of benami property.
“Benami property may be attached and confiscated by the Government,” the advisory said. “These actions are in addition to actions under other laws such as Income-tax Act, 1961,” it added.
Income Tax Department has already attached and confiscated benami properties worth more than 6,900 Crores.