The Income Tax Department has attached assets worth over ₹18,400 crore till July 21, 2022, under Benami Transaction Prohibition Act. However, it does not have segregated data for transaction made before and after October 24, 2016, when the amendment Act came into force and the cut-off date set by the Supreme Court for a bar on criminal/confiscation proceedings.

The information was in response to an RTI filed by businessline to elicit details about action under the act and also on details regarding pre October 26, 2016 offences and post that.

Retrospective use

The law, originally enacted in 1988, was amended in 2016 and prescribed retrospective application of provisions such as jail term beside others. However, on August 23, 2022, the Supreme Court declared retrospective use of Benami law unconstitutional. Also, it debarred authorities to initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., October 25, 2016.

In its reply, the Income Tax Department said as on July 31, 2022, under the amended law show cause notices issued in 3175 cases, involving amounting to ₹19,222 crore.  Further, provisional attachments have been made in 2,967 cases, involving assets amounting to ₹18,401 crore. In 13 cases, assets amounting to ₹118.28 crore have been confiscated. Also, 125 prosecution complaints have been filed, the reply added.

No clarity

However, on the issue of data related with transactions till October 24, 2016, and post that, the Department said such segregated data is not maintained. This means there is no clarity on how many cases will be declared null and void on the basis of ruling and how many will continue to be taken forward.

Ashish K Singh, Managing Partner with Capstone Legal says, once the provision has been declared unconstitutional, there is no scope for interpretation left with the department. The cut-off date, which is October 25, 2016, will have to be adhered with, when taking a decision to continue prosecution or not. Moreover, “if the prosecution is continued illegally, the aggrieved person has the right to approach constitutional courts (High Courts of respective jurisdictions) seeking remedies,” he said.

Specific provision

Almost for 28 years after enactment, Benami Law could not be made operational on account of mainly four reasons as did not contain any specific provision for vesting of confiscated property with Centre, , had any provision for an appellate mechanism against an action taken by the authorities under the Act, while barring the jurisdiction of a civil court; did not confer the powers of the civil court upon the authorities for its implementation; and did not provide for adequate enabling rule making powers. All these achieved, as the government claimed through the amendment.

However, one specific provision of the reworked law took it to the apex court. Section 3 (2) of the Act mandates punishment of three years’ imprisonment for those who have entered into Benami transactions between September 5, 1988, and October 25, 2016. That is, a person can be sent behind bars for a Benami transaction entered into 28 years before the section even came into existence. Now, this section has been struck.

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