I-T dept warns of jail term for proxy transactions

new delhi — India’s Income Tax Department on Friday cautioned those engaging in ‘benami’ (proxy) transactions that they stand to face Rigorous Imprisonment (RI) of up to 7 years and would also invite prosecution under the Income Tax Act.

“Do not enter into benami transactions,” the department warned citizens through newspaper advertisements issued on Friday, given that the Benami Property Transactions Act is “now in action from November 1, 2016.”

“Persons who furnish false information to authorities under the Benami Act are prosecutable and may be imprisoned up to 5 years besides being liable to pay fine up to 10 per cent of fair market value of benami property,” it said.

“Benamidar (in whose name benami or proxy property is standing), beneficiary (who actually paid consideration) and persons who abet and induce benami transactions are prosecutable and may get RI up to 7 years besides being liable to pay fine up to 25 per cent of fair market value of benami property,” it added.

The department also said that benami property “may be attached and confiscated by the government” and these actions are in “addition to actions under other laws such as Income Act, 1961”.

The benami property refers to property purchased by a person in the name of some other person. The person in whose name the property has been purchased is called the benamdar and the property so purchased is called the benami property. The person who finances the deal is the real owner. The act prohibits recovery of the property held benami from benamdar by the real owner. —