Benami Transaction In India

Benami Transaction In India

1. Prohibition of benami transaction.

The Benami Transaction (Prohibition) Act, 1998 speaks loud and clear ''no person shall enter into any benami transaction."

                        Nothing in the section 3(1) shall to the purchase of property by any person in the name of wife unmarried daughter and it shall be presumed , unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter.

Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or fine or both and it is an offence which shall be non-cognizable and bailable.

Though the question  whether a particular sale is benami of not, is largely one of the fact, and determining this question, no absolute formulae or acid test, uniformly applicable in all situations, the Courts are usually guided by these circumstances;

                     i. The source from which the purchase money came;

                     ii. The nature and profession of the property, after the purchase;

                     iii. Motive, if any, for giving the transaction a benami transaction;

                     iv. The position the parties and the relationship, if any, between the claimant and the                                     alleged benamidar;

                      v. The custody of the title deeds after the sale;

                      vi. The conduct of the parties concerned in dealing with the property after the sale.

2. Prohibition of the right to recover property held benami.

No suit ,claim or action to enforce any right in respect of any right of any property is held against the person in whose name the property is held or against any other person shall lie by or on behalf of person claiming to be the real owner of such property.

Nothing in this section shall apply :

                    a) where the person in whose name property is held is coparcener in a Hindu Undivided Family and the property is held for the benefit of the coparcener in the family;

                    b) where the person in whose name the property is held is trustee or other person standing in fiduciary capacity and the property is held for the benefit of the another person for whom he stands in such capacity.

Under the Income Tax Act,1992 certain items of income are exempt from liability to tax, and do not enter into the computation of total income; there are other items of income, which through exempt from tax are liable to be included in total income of the assessee for determining the rate applicable.

3. Property held benami liable acquisition.

All property to acquisition by such authority, in such manner and after following such procedure, as may be prescribed.

When section 3(2) permits a person to enter into a benami transaction of purchase of property in name of his wife or unmarried daughter, the question of punishing him under section 3(3) or question acquiring the property concerned under section 5 can never arise.The ostensible owner where realesed the property in favour of real owner, the title of ostensible owner held will stand extinguished and such transaction into prior to Act is valid.

4. Act not to apply in certain cases.

Nothing in this Act shall affect the provisions of section 53 of Transfer Of Property Act 1882, or any law relating to transfer for an illegal purpose.

The Act Section 7 has effected a repeal of Section 82 of the Indian Trust Act. While dealing a case under section 55 of the Presidency Towns Insolvency Act, that the expression 'voluntary transfer' is wide enough to cover all sort devices that may be practiced .

5. Conclusion.

These benami transaction are very popular among people for hide their income to pay tax in many ways. This transaction are usually taken place in the name wife, unmarried daughter or their close ones. After the Benami Transaction(Prohibition) Act, 1998. The law Commission of India recommended formulating an act in 1973 to deal the problem. It was enacted to efface the then existing rights of the real owners of properties held by other benami.