For scores of chartered accountants (CAs) and tax experts across the country, their phones did not stop ringing since Wednesday morning. It all started off with an advertisement by the income-tax (I-T) department in leading national dailies on Wednesday, sensitising people about the pitfalls of entering into benami property transaction.
“Many clients have expressed their concern and apprehensions around implementation of the Benami Transactions Act,” said a Delhi-based CA, conceding he and his team have received at least a dozen-odd such enquiries in the course of the day. Similar was the case with many other tax experts.
Some experts said this could be a precursor to the government seeking more information from people about the ownership status of immovable properties. “The government may build a database of suspected benami properties before acting on them,” said a tax consultant.
The advertisement titled Keep Away from Benami Transactions talks about the penal provisions if a person is caught purchasing or selling a benami property. Citing the provisions of the Benami Transactions (Prohibition) Amendment Act, 2016, the advertisement said any person who abets and induces benami transaction is prosecutable and may face rigorous imprisonment up to seven years. While the concerned property may be confiscated, a person indulging in such a transaction is liable to pay a fine up to 25 per cent of fair market value of the property, the advertisement added.
“The move is in line with the government’s concerted efforts to clampdown on black money,” said Riaz Thingna, director, Grant Thornton. Pavan Kumar Vijay, MD, Corporate Professionals, agreed that the issue of benami transactions has gone live. “I expect the next step would be to solicit information about such transactions from the people,” he added.
However the implementation of the Act may not be easy. “There is likely to be a legal pushback to defend and delay the implementation,” said a lawyer. Legal experts noted that the tax department has to follow the due process of law for the issue of notification against suspected benami properties. “The process of confiscation of such properties and the time taken to act against offenders could be time-consuming,” added another legal expert.
Real estate and tax experts expect several benami property holders to transfer ownership of such properties back to their own name. This may not save them from the scrutiny by tax officers, but allow them to get their books in order, said experts. According to reports, the I-T department has invoked the provisions of the Act to attach assets worth Rs 18.33 billion till October 2017.
IMPLEMENTING THE ACT
* The Benami Transactions (Prohibition) Act, 1988, has been on the statute book for over 28 years, but is not operational
* The Act was amended through the Benami Transactions (Prohibition) Amendment Act, 2016. Its provisions came into effect from November 1, 2016
* The amended law empowers I-T department to provisionally attach benami properties that can eventually be confiscated
* A person found guilty is punishable with rigorous imprisonment from 1-7 years
* The guilty is liable to a fine up to 25% of fair market value of the property