How and why Modi’s Benami law failed | Fusion - WeRIndia

One of the promises of Prime Minister Narendra Modi was to drive black money out of the Indian market. He put this goal into action, enacting the strict Benami Transactions (Prohibition) Amendment Act.

This law was enacted only a week before Modi announced demonetization in November of 2016. However, the Benami Transactions (Prohibition) Amendment Act may turn out to be ineffectual in the end, unless the government decides to act quickly.

24 benami properties units have been set up by the Income Tax Department in its investigation wings. These units have been set up across the country in order to streamline functioning under this new law.

Up until the end of last year, the Income Tax Department had attached assets worth over ₹2,000 crore. The department had issued over 530 notices and made 550 attachments for these assets.

In benami properties, a property has been purchased in one person’s name, but another person is the real beneficiary.

In the near future, over 780 benami asset attachments are at risk of being invalidated. These asset attachments are worth crores of rupees. They are at risk because the government has failed to make a designed adjudicating authority for the entire year-and-a-half since the Benami Transactions (Prohibition) Amendment Act was enacted.

The Benami Transactions (Prohibition) Amendment Act empowers both provisional attachment and subsequent confiscation of benami properties.

The Act also allows for the beneficial owner, the benamidar, the abettor, and the inducer to be prosecuted. Section 7 of this law attracts a rigorous imprisonment of up to seven years, as well as a fine up to 25% of the fair market value of the property. This section of the Act requires the government to create an independent Adjudicating Authority composed of 3 members.

This Adjudicating Authority will decide on the validity of the attachment of properties made under the Income Tax Department’s legislation.

However, since the government has not created such an authority in over a year and a half, they have entrusted these cases to the Adjudicating Authority for the Prevention of Money Laundering Act (PMLA).

If a proper Adjudicating Authority is not set up for this Act soon, it may be impossible to dispose of benami cases in the prescribed time limit.

Image Credit: Narendra Modi / CC BY-SA 2.0

Image Reference: https://www.flickr.com/photos/narendramodiofficial/23795890516