Business Mantra News
Indian Income Tax Authorities have started cracking down on Benami Asset and action against illicit asset holders is getting stronger after demonetarization.
The Income Tax Department is now scrutinizing the Income Tax Fillings of both Individuals and Corporates who failed to explain the deposits, investments and having Benami Properties.
Those who have unexplained credits, actions may be initiated under Benami Act by the Income Tax Authorities.
What is Benami Property?
Benami property is the property or asset without name or the same is purchased in the name of another person.
The Tax Department is scanning the “tax profile” of all property registrations of above the value of 30 lacs and in cases the value do not match with the tax profile of the assesses, the department may take action under the Prohibition of Benami Property Transaction Act, 1988 (PBPT Act). However, there might be another justified reasons for such Benami transaction like purchase of property in the name of wife to save 2% stamp duty or to purchase property in the name of brother or sister.
What is Benami Transaction?
It is transaction where the actual purchaser does not buy the asset or property in his own name rather he purchased the same in the name of another person. Like two different persons are involved in this transaction one who actually paying the money or another who is legal owner as the property get registered in his name.
What is law against Benami Transactions?
With a view to put curb on Benami Transactions the Parliament enacted Benami Transactions (Prohibition) Act, 1988 which came into force on 19 May 1988. The Act was amended in July 2016 and amended Act came in to effect from 1st November 2016.
The Income Tax Department may take recourse against those suspicious profiles who have invested in the name of another and failed to explain the source of investment.
Following are the investments and transactions which may be considered as Benami Transactions:-
- A transaction made in a fictitious name.
- A transaction where consideration is being paid by unknown persons.
- A transaction where owner of the property denies ownership or not known the person who credited money in his account suspiciously.
- Where a person purchased property in the name of another person except gift deed etc.
- Any unexplained investment and deposits in one’s account which he failed to explain the source.
So one must be aware of the legal implications and make investment cautiously while buying a property or asset.