Benami properties are the ones that are not registered in the name of real property owner but in some other person’s name who is called “Benamdar” in legal parlance. We are all aware that the rich usually owns benami properties to evade taxes and channelize their black money. Mr. Narendra Modi in his speech in Goa specifically mentioned that there are numerous benami properties in Goa and rest of the India which will now be targeted and declared illegal. The demonetisation scheme targeted to eradicate black money out of the economic system of India and is doing its job. This is a medicine for the black money in the form of cash with people and will also dissuade these people to hold illegal benami properties in future.
To hit the already wounded black money holders even harder, our Prime Minister has declared tough times for them ahead. After demonetisation, another bomb ready to be bombarded on the benami property holders is the Benami Transaction (Prohibition) Amendment Act, 2016 which came into effect on November 1, 2016. This Act gives the government full liberty to confiscate the Benami properties. The real owner will now not be able to recover his property from the fictitious person on whose name the property was registered. Moreover, benami property holders would be liable to pay 25% of the fair market value of the property as a penalty and may be imprisoned for up to 7 years.
The four authorities in charge of the Act are Initiating Officer, Approving Authority, Administrator and Adjudicating Authority. An initiating officer can issue a notice to a suspect and he may confiscate the property for 90 days upon the approval from the Approving Authority. 90 days later, the initiating officer may either continue holding the property or refer the case to Adjudicating Officer, who after enquiry of the property may declare it as Benami. Thereafter, the administrator would hold the property and handle it according to the conditions prescribed in the Act.
An Appellate Tribunal is also formed to hear the cases against the decision of Adjudicating Officer. The Tribunal will have a time period of 1 year to settle the case, which if unsettled will be passed on to the High Court.
History states that whenever a political scam has born, benami properties have seen an uplift. Be it Lalu Prasad Yadav’s Rs. 950 Cr scam, 2g scam or DLF-Vadra scam, the black money generated form these scams have been hidden in the name of Benami properties. This suggests that most of the Benami properties belong to our politicians. This is the root of all evil and corruption in the economy which will now get a big hit, giving the most dangerous nightmare to those involved.
The government is hyperactive of the issue of black money. Demonetisation, RERA and now, the Benami Transaction Act are all the government weapons to hit the 70 years old corruption and accumulated black money in the roots. Although there would be a short term degradation of the real estate sector due to a tremendous fall in demand, the future for the industry is bright with high transparency and investments.