‘Property acquired through illicit income is benami transaction’
Property acquired through income beyond known means by a government employee is to be called benami property, ruled the Delhi Appellate Tribunal (PBPTAT) under the Prohibition of Benami Property Transactions Act.
The tribunal’s ruling came while it was hearing a case of an agriculture department employee charged with buying property worth ₹4.58 crore, which did not align with his income.
Experts have flagged ambiguity with respect to the law’s retrospective application to litigation, which is likely to be settled by the Supreme Court on a review petition on the issue.
The employee in question had acquired approximately 12 acres of agricultural land and 12 plots/houses in the name of his wife and two sons at a circle rate of ₹4.58 crore, along with other immoveable properties that were purchased in the early 1990s and 2000s while both sons were still minors. Subsequently, it came to light that although the benamidar had earned ₹63.95 lakh till March 2020 from his job, his only source of income, ₹42.94 lakh was the balance in his sons’ bank accounts.
Some of these properties were acquired and accounts opened on or before October 25, 2016. As the amendment to the Benami Act became effective only from November 1, 2016, attachment of these was not confirmed by the adjudicating authorities.
After examining the facts, the Tribunal noted that the employee’s net earning was not sucient to acquire the said property.
TRIBUNAL’S RULE
“The property was acquired by the benamidar, while in service, for a sum that exceeded his earning. The unaccounted amount was used to acquire the property in the name of wife and sons for his own benefit and therefore it becomes a case of benami transaction,” the tribunal said in a recent ruling.
According to Amit Maheshwari, Tax Partner, AKM Global, after the Benami Act was amended, there was a flurry of notices seeking investigation and attachment in cases where properties were acquired before November 1, 2016, but continued to be held by the benamidars. The top court’s judgment against the law’s retrospective application in the Ganpati Dealcom case in 2022 had halted the pace of notices. It was challenged through a review petition, which is currently sub judice.