1- Introduction:

Benami transactions, a term deeply ingrained in the Indian financial and legal landscape, refer to deals where the real beneficiary conceals their identity under the guise of someone else. These transactions often involve the purchase of assets, both movable and immovable, where the property is held in the name of another person or entity. The term "benami" itself is derived from the Persian word "benamdar," meaning without a name. This practice raises significant concerns related to tax evasion, money laundering, and the integrity of financial systems.{1}

2- Historical content

The concept of benami transactions is not new to India, and historical records indicate that it has been prevalent for centuries. However, recognizing the need for stringent measures to curb such practices, the Benami Transactions (Prohibition) Act was first enacted in 1988 but remained largely ineffective due to various loopholes.{2}

3- Revised Legislation:

In 2016, the Indian government took a significant step by amending and strengthening the Benami Transactions (Prohibition) Act, making it more robust and effective in tackling this clandestine practice. The amended Act empowers authorities to confiscate benami properties and imposes stringent penalties on those involved in such transactions.{3}

4- Challenges and Implementation:

While the amended Act is a significant step forward, challenges remain in the effective implementation and enforcement of its provisions. A lack of awareness, complex legal procedures, and the need for efficient coordination among various authorities are hurdles that need to be addressed to fully realize the potential impact of the legislation.{4}

5- Role of Technology and Public Awareness

Utilizing technology for data analysis and cross-referencing financial transactions can enhance the government's ability to detect and prevent benami transactions. Simultaneously, creating awareness among the public about the consequences of engaging in benami deals is crucial for fostering a culture of compliance and discouraging such practices.{5}

6- What is Benami property?

Any property, whether movable or immovable, tangible or intangible, which has been the subject matter of a Benami transaction, is a Benami property. This would also include the consideration received from such property. Benami property would also include the right or such other document evidencing title or interest in such property.{6}

7- What is a Benami transaction?

Let us understand what a Benami transaction is and who are the parties involved with this example:

A property is purchased and registered in the name of Mr A. However, it is Mr B who actually pays for the same. Mr A only agrees to hold the property for Mr B. This makes Mr B the beneficial owner of the property.

In a Benami transaction, a property is transferred or held by one person (Mr A, the Benamidar) and the consideration for such property is paid by another person (Mr B, the beneficial owner) for whose benefit such property is held. The following transactions also fall under the definition of Benami transactions:

• Where a property related transaction is carried out under a fictitious name The Benamidar can also be a fictitious person-
• Where the owner of the property has no knowledge / denies having any knowledge of the ownership of such property
• Where the person providing the consideration is untraceable or fictitious the identity of the beneficial owner may also be unknown.

Exceptions The following type of transactions will not be treated as Benami transactions:

Property is held by a member of the HUF for the benefit of the HUF and the consideration is paid from the known sources of income of such HUF; A person who holds the property in a fiduciary capacity for the other person for example, a trustee for the trust, a director for his company, a depository/depository participant for a trader (holder ofshares in demat form), etc An individual holding property in the name of his spouse or child and where the consideration is paid from the known sources of such individual.{7}

8- Punishment under the benami act

The various forms of punishment under the Benami Act are as follows:

Where a benami transaction has been entered into to defeat the provisions of any law, avoid payment of statutory dues or avoid payment to creditors, any person who enters or abets/induces another person to enter into such a transaction would be punishable with: Imprisonment between 1to 7 years and Fine up to 25% of the fair market value of the property Where a person who is required to provide information under this Act provides false information, he shall be punishable with: Imprisonment between 6 months to 5 years and Fine up to 10% of the fair market value of the property.{8}

9- Conclusion:

Benami transactions pose a serious threat to the transparency and integrity of financial systems. The amended Benami Transactions (Prohibition) Act represents a commendable effort by the government to curb this illicit practice. However, continued vigilance, improved implementation mechanisms, and public awareness are essential to effectively combat benami transactions and promote a fair and accountable financial environment. A benami transaction involves property held by one person on behalf of another, with the intention to conceal the real owner. It is considered illegal in many jurisdictions due to its potential for fraud and tax evasion. To prevent such transactions, various countries have enacted laws and regulations that empower authorities to confiscate benami properties. In conclusion, benami transactions represent in a deceptive practice where property is held by one person for another, concealing the true ownership. This can lead to legal consequences, including fraud and tax evasion charges. Governments globally have a implemented laws to combat a benami transactions, emphasizing the importance of transparency and accountability in property dealings.

10- Citation

1: Byjus," introduction " available at: https://byjus.com (last visited on December 22,2023)

2: wikipedia,"Historical content " available at : https://en.m.wikipedia.org (last visited on December 22,2023)

3:Gurjeet,"Revised Legislation" available at : https://www.legalserviceindia.com (last visited on December 22,2023)

4:Samir,"Challenges and Implementation" available at : https://www.legal500.com (last visited on December 23,2023)

5: Unacademy,"-Role of Technology and Public Awareness" available at: https://unacademy.com (last visited on December 23,2023)

6: Manali jain,"What is Benami property?" available at : https:// taxguru.in (last visited on December 23,2023)

7: Kalaskarnetra,"What is a Benami transaction?" available at : https://www.legalserviceindia.com last visited on December 24,2023)

8: Bradley Dunseith,"Punishment under the benami act" available at : www.india-briefing.com (last visited on December 24,2023)