How to stop benami transactions of property?
Benami property ownership means ownership of a property in the name of a person who has not actually paid the consideration for purchase of the property. Benami owner(s) only lend their name(s) for purchase of a property where consideration is paid by some other person. Such lending of name is done for some gain and the property is held by the owner on behalf of some other person who has actually paid the consideration. A person lending his name for such transaction is called “Benamidar” and such transaction is called “Benami transaction”.
Ostensible ownership and Beneficial ownership Ownership
Ownership of the property standing in the name of a “Benamidar” is “ostensible ownership” but the “beneficial ownership” of the property does not vest with him, rather it vests with the person who has actually paid the consideration money.
Purpose of benami transactions
Benami transactions are a conduit to channelize black money earned through corrupt and illegal practices. This route is also used to circumvent certain socially beneficial acts such as Land ceiling act and to conceal assets disproportionate to the known source of income. Property is purchased in the names of family members, relatives, friends and sometimes in fictitious names. Such transactions are very common and rampant in real estate sector. Very recently it has been alleged in 2G scam that even some telecom companies which got 2G license, were in fact merely acting as front face hiding the actual investor behind them. The scam in Adarsh Housing, Mumbai has also revealed that a good chunk of properties therein was “Benami property”.
Benami Transaction (Prohibition) Act, 1988
To tackle the menace of black money, benami transactions and corruption, this Act was enacted in 1988. The act has provisions of imprisonment of up to 2 years and/or fine or both, but the act has never become effective because rules to make it operational could not be framed. Central Board of Direct Taxes was the implementing authority for the law and was supposed to frame the rules.
Benami Transactions (Prohibition) Bill, 2011
The Government proposes to replace the earlier act with enactment of the new law for stricter control over benami transactions by plugging off the loopholes in the existing law. This Bill has provisions for confiscation of benami property by the Adjudicating Authority after the person concerned has been given due opportunity of being heard.
 |
This article is contributed by -IndianPropertyLawyers, simplifying property
|
