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.