Brief guidance note regarding the Prohibition of Benami Property Transactions Act, 1988, being implemented by the Income Tax Department - Income Tax - F. No. 414/63/2016-IT(Inv-I)

F. No. 414/63/2016-IT(Inv-I) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Room No. 269, North Block, New Delhi, Dated 2nd December, 2016 To, All the Principal CCsIT, All the DsGIT(Inv.), The DGIT(I Cl) Sub.: Brief guidance note regarding the Prohibition of Benami Property Transactions Act, 1988, being implemented by the Income Tax Department Madam/Sir, 1. As you are aware, the Benami Property Transaction Act, 1988 has been amended by the Benami Transactions (Prohibition) Amendment Act, 2016 (BTP Amendment Act). The rules and all the provisions of the BTP Amendment Act have come into force on 1st November, 2016. The existing Benami Transactions (Prohibition) Act, 1988 has been renamed as Prohibition of Benami Property Transactions Act, 1988. The Act is to be implemented by the Income-tax Department. 2. Major consequences under the Act include confiscation of any property which is subject matter of benami transaction and rigorous imprisonment up-to 7 years and fine up-to 25% of the fair market value of the property. It also seeks to prohibit the benamidar from re-transferring the benami property held by him to the beneficial owner or any other person acting on his behalf. The action for attachment of the benami property is to be initiated by the Initiating Officer , who is DCIT/ACIT as defined under section 2 of the Income-tax Act, 1961 . 3 The Act defines benami property as any property which is the subject matter of a benami transaction and also includes the proceeds from such property [section 2(8)]. Benami property, inter-alia, includes movable or immovable property, tangible or intangible property, corporeal or incorporeal property [section 2(26)]. Section 2(9) defines benami transaction to mean - (A) a transaction or an arrangement (a) where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and (b) the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration; (subject to specified exceptions) or (B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or (C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership; or (D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious. 4. Having regard to the above and with a view to enable appropriate action under the Act expeditiously, the officers of the Investigation Directorates and Directorate of I CI while conducting investigations under the Income-tax Act, 1961 which include searches, surveys, summons, etc. may also collect evidence/ information relevant for the proceedings under the Act, inter alia keeping in view the following: (a) Identification and examination of legal/apparent owner(s) and beneficial/real owner(s) of the property, inter-alia w.r.t. holding/transferring of the property and payment of consideration for such property. (b) Whether the property is held/transferred for the immediate or future benefit, direct or indirect, of a person other than the person who has provided the consideration, (c) Examination of the source of fund through which the property was acquired. (d) Whether a transaction or an arrangement in respect of the property has been made in a fictitious name. (e) Whether the apparent owner is not aware of or denies knowledge of the property? Such a situation may lead to classification of the property as benami property. (f) A property where the person providing the consideration is not traceable or is Fictitious may also be classified as benami property. (g) Upon identification of a property as benami property or in case where the Investigating Officer has prima facie reason to believe that the property in question may be a benami property, the information, after the approval of the controlling officer, should be passed on to the Initiating Officer within a period of 60 days. The Initiating Officer, thereafter, may take necessary action u/s 24 and under other provisions of the Act. 5. The CBDT vide Notification S.O. 3290(E) dated 25.10.2016 has notified the Approving Authority, Initiating Officer and Administrator in respect of different jurisdictions for the purposes of the Act. Further vide CBDT s notification no. 97/2016 dated 25.10.2016 ; the Adjudicating and Appellate Tribunal have been notified. Copies of the same are enclosed. 6. In view of the above, I am directed to request you to advise the officers concerned under your region to go through the provisions of the Act as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 along with the Prohibition of Benami Property Transactions Rules, 2016 and Notifications issued by the CBDT in this regard for taking appropriate action, expeditiously. 7. Whenever a case is initiated under the Act, intimation of the same may please be sent to the Board at the earliest in the following format: a. Name and address of the (i) benamidar (apparent/legal owner) (ii) the beneficial owner (if identified) and (iii) abettor/inducer (if any) b Brief facts leading to invoking the Act c Prima facie value of the property d Status of the action taken under the Act e Any other relevant information End. As above . Yours faithfully, Sd/- (Mritunjaya Sharma) DCIT OSD Inv. I, CBDT