Hyderabad: To avoid imprisonment, benamis or proxies are opting to let go of the property registered in their names by the actual owner to avoid paying tax, and are also paying an additional penalty of three per cent, which also includes tax.
According to the Prevention of Benami Act Benami Transactions (Prohibition) Amendment Act, 2016, if the accused and the benami are proven guilty, both will face imprisonment. In order to avoid this, the benami lets go of the property in addition to paying penalty.
It is interesting to note that, to date, no benami property holder has been jailed despite the income tax department identifying 2,000 such transactions in 2018 and provisionally attaching properties in 1,800 cases registered across India. The value of this benami property is Rs 6,900 crore according to records of the ministry of finance.
In a certain case registered under the Vijayawada I-T department’s jurisdiction, the benami, a chauffeur, in whose name a villa worth '1.2 crore was registered by the real owner, said that he had earned money in various ways, including tailoring, and had purchased the property. He let go of the villa and in addition paid the penalty in order to evade imprisonment.
In another case registered in Vijayawada, the benami, who is a business partner of the accused, confessed that the fictitious transaction amount was his and he let go of the amount.
A source familiar with these transactions told this newspaper, “Under the law, if a person is found guilty of the offence of benami transaction by the competent court, he/she shall be punishable with rigorous imprisonment. The term may extend from one to seven years and the benami shall also be liable to fine which may extend to 25 per cent of the fair market value of the property. But we see that the benamis are admitting to ownership of the ill-gotten money or property and opting to let it go, in addition to paying the penalty.”
Action under the Benami Properties Transactions Act, 1988, is taken by the Income-Tax authorities. The 2,000 benami transactions identified till December 31, 2018, include deposits in bank accounts, plots of land, flats and jewellery. Provisional attachment of properties under the Act has been done in over 1,800 cases.
The value of properties under attachment is more than Rs 6,900 crore, according to finance ministry officials.
