Context: The Appellate Tribunal on Disputes in Benami Matters has ruled that “Held” used in the Benami Act 2016 also covers the proceeds of crime committed before 2016, and is currently being held or possessed by the beneficiary. 

Tribunal Ruling On Benami Property

• The tribunal ordered that if somebody is ‘holding’ a Benami property subsequent to the 2016 amendment to Benami Act 1988, it would come in the sweep of benami transaction(s). 
• If higher courts support this interpretation, it could have significant implications by bringing old deals back under legislation previously invalidated by the Supreme Court.
  • The appeal to the judgment lies with High Court and Supreme Court 

What is Benami? (As per the Act of 2016)

• Definition: A benami deal is a transaction or an arrangement where a property or assets like stocks is “transferred” to or is “held” by a person but the consideration of such property has been provided or paid by another person.
  • Therefore, the holder of the asset is not its true beneficial owner.

What is the Benami Transactions (Prohibition) Amendment Act 2016?

• Expanded Definition Of Benami Transactions: Introduced the concept of “held” alongside “transferred”. 
• Increased Penalties: Enhanced imprisonment term from 3 years to 7 years, with fine up to 25% of the benami property’s value.
• Confiscation Of Property: Introduced confiscation of property acquired through benami transactions.
• Strengthened Administrative And Legal Procedures: Established designated officers for investigation and adjudication:
  • Initiating Officer
  • Approving Authority
  • Administrator
  • Adjudicating Authority
• Streamlined Procedures and created an Appellate Tribunal For Appeals.
• Impact of the Legislation: The income tax department sent hundreds of notices to companies and individuals and initiated criminal prosecution against them, confiscating properties with the retrospective clause of the new law. 
  • SC Judgement in August 2022: Declared the retrospective use of the benami law as unconstitutional.
  • Present Tribunal Ruling: Existence of a transaction, reflected in holding of an asset post November 2016, would be construed as continuance of the offense under the law.

Source: The Economic Times