• By ADMIN
• Posted 24 Jul, 2024
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Amendments to the Prohibition of Benami Property Transactions Act, 1988

Introduction

This article highlights the significant amendments to the Prohibition of Benami Property Transactions Act, 1988. The key changes include:

1. A 3-month deadline for Benamidars/Beneficial Owners to respond to Show Cause Notices.
2. An extension of the period for deciding on provisional attachment actions by Initiating Officers (IO) from 90 days to 4 months.
3. Empowering Initiating Officers to grant immunity from penalties to benamidars and other involved parties.

Detailed Amendments

1. 3-Month Deadline for Responses to Show Cause Notices

Currently, the Prohibition of Benami Property Transactions Act, 1988 does not specify a time limit for Benamidars or Beneficial Owners to respond to Show Cause Notices (SCNs). The proposed amendment introduces a 3-month deadline for such responses.

Impact:
- Provides a clear timeframe for responses.
- Enhances procedural efficiency.
- Reduces delays in classifying Benami properties.
- Improves enforcement under the PBPT Act.

2. Extension of Provisional Attachment Period from 90 Days to 4 Months

The current law allows an IO to provisionally attach Benami property for up to 90 days with the Approving Authority's prior approval. The Finance Bill, 2024 proposes to extend this period to 4 months.

Impact:
- Gives IOs more time for comprehensive investigations.
- Leads to more accurate and justified decisions.
- Enhances deterrence against Benami transactions.
- Improves compliance and legal clarity.

3. Extension of the Decision Period for Provisional Attachment Actions from 90 Days to 4 Months

Under the current law, IOs must decide on provisional attachment actions within 90 days. This includes continuing or revoking provisional attachments or deciding whether to attach the property, all with the Approving Authority's prior approval. The Finance Bill, 2024 proposes to extend this period to 4 months.

Impact:
- Provides IOs with more time for thorough investigations.
- Reduces the risk of rushed or premature actions.
- Ensures more accurate and fair decisions.

4. One Month for Case Referrals to Adjudicating Authority After Passing Attachment Orders

Currently, if an IO passes an order continuing or provisionally attaching property, they must refer the case to the Adjudicating Authority within 15 days. The Finance Bill, 2024 proposes to extend this period to one month.

Impact:
- Allows IOs more time to prepare detailed and comprehensive case statements.
- Improves the quality and accuracy of documentation and evidence.
- Leads to better-informed and fairer decisions.

5. Empowering Initiating Officers to Grant Immunity from Penalties

Under the current law, Benami transactions are punishable by rigorous imprisonment for one to seven years and a fine up to 25% of the property's fair market value. These penalties apply equally to benamidars, beneficial owners, and facilitators, often deterring benamidars from testifying against beneficial owners.

Recognizing that many benamidars are poor and illiterate, the Finance Bill, 2024 proposes to empower IOs to grant immunity from penalties to benamidars and others (excluding beneficial owners) who fully disclose details of the Benami transaction, with prior approval from the competent authority.

Impact:
- Encourages benamidars to testify against beneficial owners.
- Promotes justice and fairness.
- Enhances compliance and enforcement under the PBPT Act.
- Prevents prosecution or fines for those granted immunity, unless conditions are not met or false evidence is given.

Conclusion

The proposed amendments in the Finance Bill, 2024 aim to enhance the efficiency and fairness of the Prohibition of Benami Property Transactions Act, 1988. By introducing clear deadlines, extending investigation periods, and empowering IOs to grant immunity, these changes seek to improve compliance and enforcement, ensuring a more effective fight against Benami transactions.