The document provides an overview of benami transactions and the Benami Transactions (Prohibition) Act 1988 in India. Some key points: - Benami means "property without name" and refers to transactions where property is purchased in someone else's name without intending to benefit them. - The 1988 Act was introduced to prohibit benami transactions and recover properties held benami, as such transactions were previously abused to evade taxes, circumvent land ceilings, and commit fraud. - Under the Act, benami transactions are prohibited and no suits can be filed to claim rights over benami properties. Benami properties are also liable for acquisition by authorities. However, the Act had deficiencies in implementation and scope

1. Benami
Transactions
(Prohibition) Act
1988
BY- PALAK BEHL

2. INTRODUCTION
Benami means “ property
without name”
Benami Transaction:
According to section 2(a)
means any transaction in
which a person buys
property in the name of
another person or
gratuitously transfers
property to another person
without an intention to
benefit that other person.

3. HISTORY
 Benami purchases are purchases in false name of another
person, who does not pay consideration but merely lend his
name, while the real title vest in another person who actually
purchased the property and he is the beneficial owner.
 In 1778, in Gopeekrist Gosin Vs. Gungapersuad held that
benami transaction is a custom of the country and must be
recognised by law.
 In 1882 section 81 and 82 of Indian Trust Act gave legal
recognition to the practice of benami transaction.
 These kind of benami transaction abused and defrauded public
revenues and creditors. The Parliament for the first time
intervened in 1976 when it introduced section 281A in the
Income tax Act 1961 barring the institution of suit in relation
to benami properties.

4.  The Parliament in order to stop the abuse and fraud
by the benami transaction property without
compensation repealed section 82 of Indian Trust
Act and section 281A of the Income tax Act
alongwith other consequential repeals.
 The Law Commission submitted its 57th Report. To
implement the recommendations of the Law
Commission promulgated the Benami Transaction
(Prohibition of the Right to Recover Property)
Ordinance, 1988.
 The Ordinance was converted into an Act by
introduced of a Bill in the Parliament.

5. Definitions
Benamidar
A person or fictitious (false) person in the name of whom the benami
property is transferred and held.
Property
Under Section 2(c)of the Benami Transactions (Prohibition) Act,
1988 states,” Property means property of any kind, whether movable or
immovable, tangible or intangible, and includes any right or interest in
such property.”
Beneficial Owner
A person who enjoys the benefits of ownership even though title is in
another name.

6. Why Benami
Transactions
The desire to
evade tax
thereby
committing
frauds on the
state
to find a way
with the land
ceiling laws, so
the real owner
can have more
landed property.
Commit frauds on
creditors
To avoid certain
political and
social risks
to conceal black
money obtained
through corrupt
practices

7. BENAMI TRANSACTION (PROHIBTION) ACT,
1988
Enacted on
September 5,
1988.
It extends to whole of
India except to the
state of Jammu and
Kashmir.
Purpose of this act to prohibit
benami transactions and
prohibit the right to recover
property held benami.

8. Contd.
 Section 3 of the Benami Transaction Act lays down
Prohibition of Benami Trasactions
(1) No person shall enter into any benami transaction.
(2) Nothing in sub- section (1) shall apply to the purchase
of property by any person in the name of his wife or
unmarried daughters and it shall, be presumed , unless
contrary is proved, that the said property had been
purchased for the benefit of wife or the unmarried
daughter.
(3) whosoever enter into benami transaction shall be
punishable with the imprisonment for a term which may
extend to three years or with fine or with both.

9. Contd.
 Section 4 of the Benami Transaction Act lays down
Prohibition of right to recover property held benami
(1) No suit, claim and action to enforce any right in
respect of any property held benami against the person
in whose name the property is held and against any
other person shall lie by, or, on behalf of, a person
claiming to be real owner of such property.
(2) No defence based on any right in respect of any
property held benami against the person in whose
name the property is held and against any other
person shall lie by, or, on behalf of, a person claiming
to be real owner of such property.

10. Contd.
 Section 5 of the Benami Transaction Act lays
down Benami Property liable to acquisition.
(1) All properties held benami shall be subject to
acquisition by such authority, in such manner
and after following such procedure as may be
prescribed.
(2) For the removal of doubts, it is hereby declared
that no amount shall be payable for the
acquisition of any property under sub-section
(1)

12. Burden of Proof
 According to the Benami Transactions
(Prohibition) Act, 1988 the burden of proof lies on
the person who is claiming and/or asserting that
the transaction entered is the kind of benami
transaction. While initially the person aeerting
the same has established his contentions in the
Court of Law the burden of proof shifts on the
person on whom it has alleged that he has been
part of benami transactions. The rules of onus
probandi applies here.

13. Deficiencies
 Due to lack of proper machinery the provisions of the
Act could not be properly and/or strictly implemented.
 The scope of the Act was quite restricted for this
restricted scope the Act was unable to solve the
problems, render justice and security to the people who
were distress as a result of the benami transaction.
 The Act was also unable to acquire the properties which
were in hands of benamidar and therefore the
Government could not been able to use those lands in
favour and/or for the benefit of the people at large.
Though Section 5 of the Act had the clear provision for
acquisition of the benami properties.

14. Case laws
 Mithilesh Kumari & Anr. v. Prem Behari
Khare
In this case the Division Bench of the Supreme Court had
laid down that Section 4 (1) of the Act had
retrospective operation and it will apply to all the
pending cases, whether such cases are pending in the
trial court or the appellate court or the revision court.
Thus, as per this judgement, all the suits pending in the
cases all over India were barred after coming into force
of this Act. .

15.  R.RAJAGOPAL REDDY Vs. PADMINI
CHANDRASEKHARAN
In this case Hon’ble judge of Supreme Court held that the
Act cannot have retrospective operation to the pending
cases because when those cases were filed, there was a
substantive right in the plaintiff under the
existing laws which had sanction of more
than a century, under which consistently
such benami transactions were recognized and could
be enforced by courts of law. So, unless there is
expressly anything to suggest that Section 4(1) of the Act
is retrospective in operation, it could not be treated to be
retrospective at all.

16. Bhargavy P. Sumaathykutty v.
Janaki Sathyabhama, AIR 1995
Ker 42
In this case it was held that section 5 Benami Transaction
Act 1988, applies only to tripartite or benami
transactions and not to bipartite or sham transactions,
for if it had been so, the property covered by bipartite
transactions would also be liable to be acquired without
compensation or payment of any amount and the
Legislature too has not declared it as opposed to public
policy

17. Smt. Usha Bhar v Sanat Kumar
Bhar ([2004] 135 Taxman 526)
 In this case Calcutta High Court held that in a suit
claiming a property as benami, there should be cogent
and sufficient evidence to conclude that the apparent is
not the real. In order to ascertain whether a particular
sale is benami and the apparent purchaser is not the
real owner, the burden lies on the person asserting to
prove so. Such burden has to be strictly discharged
based on legal evidence of a definite nature. Such
evidence directly proves the fact of benami or
establishes circumstances unerringly and reasonably

18. Recommendations
Need to
amend
provisions
of section
3
There is need to
provide
mechanism and
procedure for
confiscation of
property held
benami
Nothing is contained in sub-
section (1) shall apply to a
benami transaction entered by
into by any person, being an
individual, in the name of his-
spouse, brother or sister, any
lineal ascendant or descendant.
Property held benami liable to
confiscation by Government
authority after serving the
notice by the authority and
satisfaction that the person
possessing the property under
benami transaction

19. THANK YOU