The Benami Transactions (Prohibition) Amendment Bill, 2015

The Benami Transactions (Prohibition) Amendment Bill, 2015 was introduced in Lok Sabha on May 13, 2015 by the Minister of Finance Mr. Arun Jaitley.  The Bill seeks to amend the Benami Transactions Act, 1988.  The Act prohibits benami transactions and provides for confiscating benami properties. The Bill seeks to: (i) amend the definition of benami transactions, (ii) establish adjudicating authorities and an Appellate Tribunal to deal with benami transactions, and (iii) specify the penalty for entering into benami transactions.  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: (i) the transaction is made in a fictitious name, (ii) the owner is not aware of denies knowledge of the ownership of the property, or (iii) 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: (i) 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; (ii) a person in a fiduciary capacity; (iii) 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.  Under the Act, an Authority to acquire benami properties was to be established by the Rules.  The Bill seeks to establish four authorities to conduct inquiries or investigations regarding benami transactions: (i) Initiating Officer, (ii) Approving Authority, (iii) Administrator and (iv) Adjudicating Authority.  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.  The Bill also seeks to establish an Appellate Tribunal to hear appeals against any orders passed by the Adjudicating Authority.  Appeals against orders of the Appellate Tribunal will lie to the high court. 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.  The Bill also specifies the penalty for providing false information to be rigorous imprisonment of six months up to five years, and a fine which may extend to 10% 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.  The Initiating Officer or the Adjudicating Authority may impound or retain any books of accounts that it may feel is required for the inquiry, for a period not exceeding three months from the date of attachment of the property. The Adjudicating Officer, after hearing the person whose property is attached, may make an order for the confiscation of the property held benami.  The Administrator shall have the power to receive and manage the property which has been confiscated.  The Administrator shall issue the notice for the surrender or forcible takeover of possession of the benami property. Any person aggrieved by an order of the Adjudicating Officer shall appeal to the Appellate Tribunal.  Any person aggrieved by the Appellate Tribunal in turn may appeal to the High Court. Any person who enters into benami transactions, or abets or induces another person to enter into such transactions shall be punishable with an imprisonment for six months to two years, and liable to a fine of up to 25 per cent of the fair market value of the property held in benami.  In addition, any person who wilfully gives false information shall be liable to an imprisonment of three months to two years and a fine of up to 10 per cent of the market value of the property.  The Bill provides for Special Courts to try such cases.

Rs 2 lakh fine for not answering tax queries

NEW DELHI: Failure to answer questions from the tax department can entail a penalty of up to Rs two lakh from the next financial year under the new black money law, which has got the assent of the President.

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 provides for a minimum penalty of Rs 50,000.

Besides, tax authorities would be able to send summons or notices via electronic mails (emails) and fax to seek information from those under probe for suspected black money stashed abroad.

The Act got the President's assent on Tuesday and will come into force from April 1, 2016.

The new law, which has provisions to deal with the problem of the undisclosed foreign income and assets, was passed in the Rajya Sabha on May 13, two days after it got the Lok Sabha nod.

A person shall be liable to a penalty if he has, without reasonable cause, failed to answer any question put to him, by a tax authority in the exercise of its powers, the Act says.

The penalty will be imposed if he fails to sign any statement made by him in the course of any proceedings which a tax authority may legally require him to sign and also for their failure to attend or produce books of account or documents called in response to summons issued to him.

The penalty "shall not be less than fifty thousand rupees but which may extend to two lakh rupees", it said.

The service of any notice, summons, requisition, order or any other communication may be made by delivering or transmitting a copy to a person by post or by such courier service as may be approved by the Central Board of Direct Taxes (CBDT).

It can also be issued in the form of any electronic record and "by any other means of transmission of documents, including fax message or electronic mail message, as may be prescribed".

The CBDT may make rules providing for the addresses including the address for electronic mail or electronic mail message to which the communication may be delivered or transmitted to a person, as per the Act.

A notice or any other document required to be issued, served or given under the Act by any tax authority shall be authenticated by that authority.

"Every notice or other document to be issued, served or given for the purposes of this Act by any tax authority shall be deemed to be authenticated, if the name and office of a designated tax authority is printed, stamped or otherwise written thereon," it said.

The person shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice, issued for assessment, was not served upon him, not served upon him in time or served upon him in an improper manner.

However, this provision shall not apply, if the person has raised the objection before the completion of the assessment, the Act said.

THE KARNATAKA LAND REFORMS

KARNATAKA ACT NO. 27 OF 2014

THE KARNATAKA LAND REFORMS AND CERTAIN OTHER LAW (AMENDMENT) ACT, 2014

Arrangement of Sections

Sections:

1.Short title and commencement

2.Amendment of Karnataka Act 10 of 1962

3.Amendment of Karnataka Act 12 of 1964

STATEMENT OF OBJECTS AND REASONS

Amending Act 27 of 2014.- It is considered necessary to amend section 109 of the Karnataka Land Reforms Act, 1961 (Karnataka Act 10 of 1962) and section 95 of the Karnataka Land Revenue Act, 1964 (Karnataka Act 12 of 1964) to provide that once the permission under section 109 of the Karnataka Land Reforms Act, 1961 is taken the permission under section 95 of the Karnataka Land Revenue Act, 1964 is deemed to have been taken as the procedure under the two enactments is similar but is time consuming one as separate permission has to be taken under each enactment which result in undue delay. It is considered necessary to simplify the said procedure.

Provision is also made in cases where the land in any area, cannot be utilized for the purpose of industrial development, educational institutions, places of worship, a housing project approved by the State Government or Horticulture purpose under sub-section (1) within the prescribed time such land shall be surrendered to the Land Bank of the Government, failing which the exemption shall be cancelled and same be forfeited to the Government without paying compensation. Hence, the new proviso to sub-section (2) of section 109 of Karnataka Land Reforms Act, 1961, is proposed to be inserted.

Hence the Bill.

[L.A. Bill No.47 of 2014, File No. Samvyashae 24 Shasana 2014]

[entry 5 and 18 of List II of the Seventh Schedule to the Constitution of India.]

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KARNATAKA ACT NO. 27 OF 2014

(First Published in the Karnataka Gazette Extra-ordinary on the Twenty eighth day of August 2014)

THE KARNATAKA LAND REFORMS AND CERTAIN OTHER LAW (AMENDMENT) ACT, 2014

(Received the assent of the Governor on the Twenty fifth day of August 2014)

An Act further to amend the Karnataka Land Reforms Act, 1961 and the Karnataka Land Revenue Act, 1964.

Whereas it is expedient further to amend the Karnataka Land Reforms Act, 1961 (Karnataka Act 10 of 1962) and the Karnataka Land Revenue Act, 1964 (Karnataka Act 12 of 1964) for the purposes hereinafter appearing;

Be it enacted by the Karnataka State Legislature in the sixty fifth year of the Republic of India, as follows:-

1.Short title and commencement.- (1) This Act may be called the Karnataka Land Reforms and Certain Other Law (Amendment) Act, 2014.

(2) It shall come into force at once.

2.Amendment of Karnataka Act 10 of 1962.- In the Karnataka Land Reforms Act, 1961

(Karnataka Act 10 of 1962) in section 109,-

(i) after sub-section(1A), the following shall be inserted, namely:-

"(IB) in cases where the land in any area, cannot be utilized for the purpose of industrial development, educational institutions, Places of worship, a Housing Project approved by the State Government or Horticulture purpose under sub-section (1) within the prescribed time, such land shall be surrendered to the land bank of the Government, failing which the exemption shall be cancelled and same be forfeited to the Government without paying compensation."

(ii) after sub-section (2) the following proviso shall be inserted, namely:-

"Provided that, any of the Company or Organization, after a period of seven years from the date of obtaining permission under section 109, for the purpose of expansion of project or to tide over the financial crisis or for changing of land usages, submit application, which shall be considered by the High Power Committee headed by the Chief Secretary to Government subject to such conditions as deemed fit on case to case basis."

3. Amendment of Karnataka Act 12 of 1964.- In the Karnataka Land Revenue Act, 1964, (Karnataka Act 12 of 1964) in section 95, after sub-section (7), before explanation, the following shall be inserted, namely:-

"(8) The permission for diversion of agricultural land for industrial development, educational institutions, Places of worship a Housing Project approved by the State Government, or for purpose of Horticulture under this section shall be deemed to have been granted when permission for purchase of agricultural land is accorded under section 109 of the Karnataka Land Reforms Act, 1961 (Karnataka Act 10 of 1962) for industrial development, educational institutions, Places of worship, a Housing Project approved by the State Government, or for purpose of Horticulture as the case may be subject to the payment of fees as may be prescribed."

By Order and in the name of the Governor of Karnataka,

S.B. GUNJIGAVI

Secretary to Government

Department of Parliamentary Affairs

Acquisition/Purchase of land by certain persons prohibited

Section 79-A. Acquisition of land by certain persons prohibited. - (1) On and from the commencement of the the Karnataka Land Reforms (Amendment) Act, 1995, no person who or a family or a joint family which has an assured annual income of not less than 1[rupees two lakhs] from sources other than agricultural lands shall be entitled to acquire any land whether as land owner, landlord, tenant or mortgagee with possession or otherwise or partly in one capacity and partly in another.

1. Substituted for the words rupees fity thousand by Act No.31 of 1995 w.e.f. 20-10-1995.

Please Note :

1) KARNATAKA LAND REFORMS ACT 1961, (Karnataka Act No.10 of 1962) AS AMENDED BY ACT NO.1 & 31 OF 1991 - Section 79A - Interpretation by reference to entire provisions as amended by Act 1 of 1991 - Must be held Rs.50,000/- always in enactment - From 1.3.1974, no acquisition of agricultural land if Income from non-agricultural sources in excess of Rs.50,000/-.

HELD - Whenever an Amended Act has to be applied subsequent to the date of amendment, the various unamended provisions of the Act have to be read along with the amended provision as though they are part of it The amended part of the provision having got incorporated into the Act the provision of Section 79A of the Act as such should be read. Section 79A of the Act has the opening words on and from the commencement of the Amended Act. The amended Act, is defined to be Act 1 of 1974 which came into effect from 1.3.1974. From that date, no one can acquire an agricultural land if his income from sources other than agricultural lands is in excess of Rs.50,000/-... The interpretation to be placed on Section 79A of the Act is only by reference to the entire provisions of the Section as amended by Act 1 of 1991 and it must be held that the said words Rs.50,000/- as always being there in the enactment because the language of the Section permits no other construction. [Vijayakumar Sankrayya Sardar Vs State of Karnataka w.p.No. 20403 of 1991 dated 16th August 1993 : ILR 1993 KAR 2586].

2) It has been noticed that the Vijayakumar Vs State, ILR 1993 Kar. 2586, the Division Bench has held that the amendments effected by Acts 1 & 31 of 1991, substituting the words Rs.12,000-00 with the words Rs.50,000/- got incorporated into Section 79A and the amendments are effective from 1.3.1974, but not from the date of amendment Acts 1 and 31 of 1991.

Act 31/1995, has substituted the words Amendment Act with the words the Karnataka Land Reforms (Amendment) Act, 1995 and also substituted the words Fifty thousand, with the words Two lakhs. The legislature has made its intention very clear as to the prospective nature of the amendments. For this purpose the words the Karnataka Land Reforms (Amendment) Act 1995 have been substituted, for the words amendment Act, which according to Section 2A(4) means Karnataka Land Reforms (Amendment) Act 1973. Now the amendments clearly state that the amendments should take effect from the date of commencement of Act 31/1995, which has come into force on 20-10-1995.

(2) For purposes of sub-section (1) -

(i) the aggregate income of all the members of a family or a joint family or a joint family from sources other than agricultural land shall be deemed to be income of the family or joint family, as the case may be, from such sources;

(ii) a person or a family or a joint family shall be deemed to have an assured annual income of not less than rupees two lakhs from sources other than agricultural land on any day if such person or family or joint family had an average annual income of not less than rupees two lakhs from such sources during a period of five consecutive years preceding such day.

Explanation. A person who or a family or a joint family which has been assessed to income tax under the Income Tax Act, 1961 (Central Act 43 of 1961) on an yearly total income of not less than rupees two lakhs for five consecutive years shall be deemed to have an average annual income of not less than rupees two lakhs from sources other than agricultural lands.

(3) Every acquisition of land otherwise than by way of inheritance or bequest in contravention of this section shall be null and void.

(4) Where a person acquires land in contravention of sub-section (1) or acquires it by bequest or inheritance he shall, within ninety days from the date of acquisition, furnish to the Tahsildar having jurisdiction over the Taluk where the land acquired or the greater part of it is situated a declaration containing the following particulars, namely:

(i) particulars of all lands;

(ii) the average annual income of himself or the family;

(iii) such other particulars as may be prescribed.

(5) The Tahsildar shall, on receipt of the declaration under sub-section (4) and after such enquiry as may be prescribed send a statement containing the prescribed particulars relating to such land to the Deputy Commissioner who shall, by notification, declare that with effect from such date as may be specified in the notification, such land shall stand transferred to and vest in the State Government without further assurance free from all encumbrances. From the date specified in such notification the Deputy Commissioner may take possession of such land in such manner as may be prescribed.

(6) For the land vesting in the State Government under sub-section (5), where the acquisition of the land was by bequest or inheritance, an amount as specified in Section 72 shall be paid and where the acquisition was otherwise than by bequest or inheritance, no amount shall be paid.

Section 79-B. Prohibition of holding agricultural land by certain persons. - (1) With effect on and from the date of commencement of the Amendment Act, except as otherwise provided in this Act, -

(a) no person other than a person cultivating land personally shall be entitled to hold land; and

(b) it shall not be lawful>

(i) an educational, religious or charitable>

(ii) a company;

(iii) an association or other body of individuals not being a joint family, whether incorporated or not; or

(iv) a co-operative society other than a co-operative farm, to hold any land.

(2) Every such institution, society, trust, company, association, body or co

operative society;-

(a) which holds lands on the date of commencement of the Amendment Act and which is disentitled to hold lands under sub-section (1), shall, within ninety days from the said date furnish to the Tahsildar within whose jurisdiction the greater part of such land is situated a declaration containing the particulars of such land and such other particulars as may prescribed; and

(b) which acquires such land after the said date shall also furnish a similar declaration within the prescribed period.

(3) The Tahsildar shall, on receipt of the declaration under sub-section (2) and after such enquiry as may be prescribed, send a statement containing the prescribed particulars relating to such land to the Deputy Commissioner who shall, by notification, declare that such land shall vest in the State Government free from all encumbrances and take possession thereof in the prescribed manner.

(4) In respect of the land vesting in the State Government under this section an amount as specified in Section 72 shall be paid.

Explanation.- For purposes of this section it shall be presumed that a land is held by an institution, trust, company, association or body where it is held by an individual on its behalf.

THE UNDISCLOSED FOREIGN INCOME AND ASSETS (IMPOSITION OF TAX) BILL, 2015

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
North Block, New Delhi

Dated: 20th March, 2015

PRESS RELEASE

INTRODUCTION OF THE UNDISCLOSED FOREIGN INCOME AND ASSETS (IMPOSITION OF TAX) BILL, 2015

The Finance Minister, in his budget speech, while acknowledging the limitations under the existing law, had conveyed the considered decision of the Government to enact a comprehensive new law on black money to specifically deal with black money stashed away abroad. He also promised to introduce the new Bill in the current Session of the Parliament.

2.  In order to fulfil the commitment made by the Government to the people of India through the Parliament, the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 has been introduced in the Parliament on 20.03.2015. The Bill provides for separate taxation of any undisclosed income in relation to foreign income and assets. Such income will henceforth not be taxed under the Income-tax Act but under the stringent provisions of the proposed new legislation.

3.The salient features of the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 are as under:-

Scope – The Act will apply to all persons resident in India. Provisions of the Act will apply to both undisclosed foreign income and assets (including financial interest in any entity).

Rate of tax – Undisclosed foreign income or assets shall be taxed at the flat rate of 30 percent. No exemption or deduction or set off of any carried forward losses which may be admissible under the existing Income-tax Act, 1961, shall be allowed.

Penalties – Violation of the provisions of the proposed new legislation will entail stringent penalties.

4. The penalty for non-disclosure of income or an asset located outside India will be equal to three times the amount of tax payable thereon, i.e., 90 percent of the undisclosed income or the value of the undisclosed asset. This is in addition to tax payable at 30%.

5. Failure to furnish return in respect of foreign income or assets shall attract a penalty of Rs. 10 lakh. The same amount of penalty is prescribed for cases where although the assessee has filed a return of income, but he has not disclosed the foreign income and asset or has furnished inaccurate particulars of the same.

Prosecutions – The Bill proposes enhanced punishment for various types of violations.

6.  The punishment for willful attempt to evade tax in relation to a foreign income or an asset located outside India will be rigorous imprisonment from three years to ten years. In addition, it will also entail a fine.

7. Failure to furnish a return in respect of foreign assets and bank accounts or income will be punishable with rigorous imprisonment for a term of six months to seven years. The same term of punishment is prescribed for cases where although the assessee has filed a return of income, but has not disclosed the foreign asset or has furnished inaccurate particulars of the same.

The above provisions will also apply to beneficial owners or beneficiaries of such illegal foreign assets.

8. Abetment or inducement of another person to make a false return or a false account or statement or declaration under the Act will be punishable with rigorous imprisonment from six months to seven years. This provision will also apply to banks and financial institutions aiding in concealment of foreign income or assets of resident Indians or falsification of documents.

Safeguards – The principles of natural justice and due process of law have been embedded in the Act by laying down the requirement of mandatory issue of notices to the person against whom proceedings are being initiated, grant of opportunity of being heard, necessity of taking the evidence produced by him into account, recording of reasons, passing of orders in writing, limitation of time for various actions of the tax authority, etc. Further, the right of appeal has been protected by providing for appeals to the Income-tax Appellate Tribunal, and to the jurisdictional High Court and the Supreme Court on substantial questions of law.

9.  To protect persons holding foreign accounts with minor balances which may not have been reported out of oversight or ignorance, it has been provided that failure to report bank accounts with a maximum balance of upto Rs.5 lakh at any time during the year will not entail penalty or prosecution.

10.    Other safeguards and internal control mechanisms will be prescribed in the Rules.

One time compliance opportunity – The Bill also provides a one time compliance opportunity for a limited period to persons who have any undisclosed foreign assets which have hitherto not been disclosed for the purposes of Income-tax. Such persons may file a declaration before the specified tax authority within a specified period, followed by payment of tax at the rate of 30 percent and an equal amount by way of

penalty. Such persons will not be prosecuted under the stringent provisions of the new Act. It is to be noted that this is not an amnesty scheme as no immunity from penalty is being offered. It is merely an opportunity for persons to come clean and become compliant before the stringent provisions of the new Act come into force.

Amendment of PMLA – The Bill also proposes to amend Prevention of Money Laundering Act (PMLA), 2002 to include offence of tax evasion under the proposed legislation as a scheduled offence under PMLA.

11. Thus, in keeping with the commitment of the government for focussed action on black money front, an unprecedented and multi-pronged attack has been launched to root out the menace of black money. The Government is confident that this new law will act as a strong deterrent and curb the menace of black money stashed abroad by Indians.

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