<p>The Supreme Court on Tuesday brought into effect changes to the Benami Transactions (Prohibition) Amendment Act, 2016 by <a href="http://www.deccanherald.com/national/benami-transactions-laws-cant-be-applied-retrospectively-says-sc-strikes-down-stringent-amendment-1138491.html" target="_blank">dismissing parts of the law</a> as "unconstitutional" and "manifestly arbitrary and vague", which is sure to bring relief to individuals and companies.</p>.<p>The Narendra Modi government at the Centre had made black money its target early on in the first term, implementing controversial moves like demonetisation in its battle against the issue. This is when the terms 'Benami transaction' and 'Benami property' hit the news more frequently.</p>.<p>Let us understand in detail the law, related terms, its amendments and the latest changes.</p>.<p><strong>What is a Benami transaction?</strong></p>.<p>Consider a property, bought and registered in the name of a Mr X. But it is actually being paid for by a Mr Y. In this case, Mr X is only holding the property in name for Mr Y, and the latter is actually the beneficial owner of the property. This would be called a 'Benami' property.</p>.<p>Literally meaning 'without a name', a property-related transaction carried out under a fictitious name, or one where the owner of the property denies having knowledge of the ownership, or if the identity of the real or beneficial owner is unknown, is known as a 'Benami' transaction.</p>.<p>This is not to be confused with a situation where an individual buys property in the name of his spouse or a family member, or jointly owns property with a sibling or another relative.</p>.<p><strong>What is the Benami Transactions (Prohibition) Act, 1988 and amendments in 2016?</strong></p>.<p>This law came into effect in 1988 with just 8 sections. It was amended in 2016 with multiple additions and had 72 sections. The new law had expanded the definition of a "Benami' transaction and added stringent punishments, which brought a lot of companies and individuals under the government's lens.</p>.<p>Punishments under the Benami Act include:</p>.<p>-Confiscation of benami property</p>.<p>-Under a benami transaction which has been done to avoid provision of law, avoid payment of dues to creditors, or any person who enters or abets another person to enter into such a transaction is punishable with:</p>.<p>1- Imprisonment between 1 to 7 years</p>.<p>2- Fine up to 25 per cent of the fair market value of the property</p>.<p>-When a person asked for information under this Act gives wrong information, they shall be punishable with:</p>.<p>-6 months to 5 years of imprisonment</p>.<p>-Fine up to 10 per cent of the fair market value of the property</p>.<p><strong>What has the SC said, while striking down provisions in the law?</strong></p>.<p>After the government tried to tighten the net around Benami transactors with its 2016 amendment, the income tax department sent hundreds of notices to companies and individuals and initiated criminal prosecution against them, confiscating properties with the retrospective clause of the new law. The Supreme Court struck down provisions in the law on Tuesday which will make these moves invalid now.</p>.<p>"Section 3 (criminal provision) read with Section 2(a) and Section 5 (confiscation proceedings) of the 1988 Act are overly broad, disproportionately harsh, and operate without adequate safeguards in place," the court said.</p>.<p>The SC held that Benami Transactions (Prohibition) Amendment Act, 2016 does not have retrospective application and the authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the legislation.</p>.<p>"In view of the fact that this Court has already held that the criminal provisions under the 1988 Act were arbitrary and incapable of application, the law through the 2016 amendment could not retroactively apply for confiscation of those transactions entered into between September 5, 1988, to October 25, 2016, as the same would tantamount to punitive punishment, in the absence of any other form of punishment," a bench headed by Chief Justice N V Ramana said.</p>.<p>(<em>With PTI inputs</em>)</p>
<p>The Supreme Court on Tuesday brought into effect changes to the Benami Transactions (Prohibition) Amendment Act, 2016 by <a href="http://www.deccanherald.com/national/benami-transactions-laws-cant-be-applied-retrospectively-says-sc-strikes-down-stringent-amendment-1138491.html" target="_blank">dismissing parts of the law</a> as "unconstitutional" and "manifestly arbitrary and vague", which is sure to bring relief to individuals and companies.</p>.<p>The Narendra Modi government at the Centre had made black money its target early on in the first term, implementing controversial moves like demonetisation in its battle against the issue. This is when the terms 'Benami transaction' and 'Benami property' hit the news more frequently.</p>.<p>Let us understand in detail the law, related terms, its amendments and the latest changes.</p>.<p><strong>What is a Benami transaction?</strong></p>.<p>Consider a property, bought and registered in the name of a Mr X. But it is actually being paid for by a Mr Y. In this case, Mr X is only holding the property in name for Mr Y, and the latter is actually the beneficial owner of the property. This would be called a 'Benami' property.</p>.<p>Literally meaning 'without a name', a property-related transaction carried out under a fictitious name, or one where the owner of the property denies having knowledge of the ownership, or if the identity of the real or beneficial owner is unknown, is known as a 'Benami' transaction.</p>.<p>This is not to be confused with a situation where an individual buys property in the name of his spouse or a family member, or jointly owns property with a sibling or another relative.</p>.<p><strong>What is the Benami Transactions (Prohibition) Act, 1988 and amendments in 2016?</strong></p>.<p>This law came into effect in 1988 with just 8 sections. It was amended in 2016 with multiple additions and had 72 sections. The new law had expanded the definition of a "Benami' transaction and added stringent punishments, which brought a lot of companies and individuals under the government's lens.</p>.<p>Punishments under the Benami Act include:</p>.<p>-Confiscation of benami property</p>.<p>-Under a benami transaction which has been done to avoid provision of law, avoid payment of dues to creditors, or any person who enters or abets another person to enter into such a transaction is punishable with:</p>.<p>1- Imprisonment between 1 to 7 years</p>.<p>2- Fine up to 25 per cent of the fair market value of the property</p>.<p>-When a person asked for information under this Act gives wrong information, they shall be punishable with:</p>.<p>-6 months to 5 years of imprisonment</p>.<p>-Fine up to 10 per cent of the fair market value of the property</p>.<p><strong>What has the SC said, while striking down provisions in the law?</strong></p>.<p>After the government tried to tighten the net around Benami transactors with its 2016 amendment, the income tax department sent hundreds of notices to companies and individuals and initiated criminal prosecution against them, confiscating properties with the retrospective clause of the new law. The Supreme Court struck down provisions in the law on Tuesday which will make these moves invalid now.</p>.<p>"Section 3 (criminal provision) read with Section 2(a) and Section 5 (confiscation proceedings) of the 1988 Act are overly broad, disproportionately harsh, and operate without adequate safeguards in place," the court said.</p>.<p>The SC held that Benami Transactions (Prohibition) Amendment Act, 2016 does not have retrospective application and the authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the legislation.</p>.<p>"In view of the fact that this Court has already held that the criminal provisions under the 1988 Act were arbitrary and incapable of application, the law through the 2016 amendment could not retroactively apply for confiscation of those transactions entered into between September 5, 1988, to October 25, 2016, as the same would tantamount to punitive punishment, in the absence of any other form of punishment," a bench headed by Chief Justice N V Ramana said.</p>.<p>(<em>With PTI inputs</em>)</p>