A Special Bench of the Supreme Court recalled its 2022 judgment which declared provisions and amendments made in the Benami property law In 2016 as “unconstitutional and manifestly arbitrary”.
- Review petitions filed by the Union government and Deputy Commissioner of Income Tax (Benami Prohibition) to recall and have a relook at the issue
- The Supreme Court consequently allowed the review petition.
Supreme Court directives on Bemani Law
- Whether the 1988 Act, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 had a prospective effect?
- Prospective effect means that a law or statute only applies to events or conduct that happen after the law comes into effect.
- The 2022 verdict was delivered on an appeal of the Centre challenging the Calcutta High Court judgment which held that the amendment made in the 1988 Act in 2016 would be applicable prospectively.
- Centre had contended that the 2016 Act would be applicable retrospectively.
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What is a Benami Transaction?
Act Defines a Benami transaction as a transaction where
- A property is held by or transferred to a person, but has been provided for or paid by another person.
- Transactions are made in a fictitious name.
- Owner is not aware of denies knowledge of the ownership of the property,
- Person providing the consideration for the property is not traceable.
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Amendments introduced in 2016
- Applied retrospectively: Section 3(3) of 2016 Act extended the three-year imprisonment to seven years and fine of up to 25% of the fair market value of the property, if a person enters into any benami transactions.
- Empowered the Centre to confiscate “any property” subject to a benami transaction.
- August 2022 Verdict: Provision in the 1988 Act regarding forfeiture of benami properties (Section 3(2) and 5) as unconstitutional, and Provision in the 2016 amended Act on the same can only be applied prospectively.
- Apex Court had held that: Benami law did not have a retrospective application, authorities couldn’t initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to when the legislation came into force.
Article 20: Protection in Respect of Conviction for Offenses
- It contains three provisions:
- No ex-post-facto law: No person shall be convicted of any offense except for violation of a law in force at the time of the commission of the act, nor
- Subjected to a penalty greater than that prescribed by the law in force at the time of the commission of the act.
- No double jeopardy: No person shall be prosecuted and punished for the same offense more than once.
- No self-incrimination: No person accused of any offense shall be compelled to be a witness against himself.
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About Benami Transactions (Prohibition) Amendment Act 2016
- Act established four authorities to conduct inquiries or investigations regarding benami transactions:
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- Initiating Officer: Conducts preliminary inquiries.
- Approving Authority: Reviews the decision of the Initiating Officer.
- Administrator: Manages properties confiscated under benami law.
- Adjudicating Authority: Finalizes decisions on benami transactions.
- Appellate Tribunal: Hears appeals against the Adjudicating Authority.
- Appeals: Decisions of the Appellate Tribunal can be appealed in the High Court.
19 Oct 2024
