Benami transactions in India a study with special reference to the state of Punjab

Abstract

Unfolding the past, we find that Benami Transactions were acceptable in India right from pre-British era which quite apparent from various judicial pronouncements recognising validity of Benami transactions. The reason for derivation and augmentation of such transaction in India can be rooted in the age-old tradition of Joint Hindu family and Karta system. However, with the passage of time, benami transactions were entered mainly with an intention to evade taxes and slowly it became a source of corruption and black money. Government took many initiatives to curb such irregular practice and the responsibility was given to the Law Commission to come up with a report in respect of Benami Transaction which prevailed in India since long time. Taking a long journey of reports submitted by the Law Commission from time to time, for the first time the ordinance titled Benami Transactions (Prohibition of Right to Recover Property), 1988 , was passed to keep a check on such activities. The Ordinance was eventually given the shape of legislation, declaring Benami Transactions to be prohibited. The legislation was titled, Benami Transactions (Prohibition) Act, 1988. Somehow, the legislation just acted as a paper tiger and was widely criticised for its ineffectiveness. Finally in year 2016 the present legislation titled, Benami Transactions (Prohibition) Amendment Act, 2016 saw its dawn. Indeed the 2016 Act is any time better than the previous legislation prohibiting benami transaction, but by inclusion of few more clear and stringent provisions, the object of this Act can be truly achieved. newline