A communication issued by the Central Board of Direct Taxes, as Act No. 43 of 2016, dated 10 August 2016.
The text of an Act of Parliament, hosted on the department's site because the income-tax authorities administer the law it creates. It is not a communication of the Central Board of Direct Taxes at all. It is the Benami Transactions (Prohibition) Amendment Act, 2016, Act No. 43 of 2016, published by the Legislative Department of the Ministry of Law and Justice, which rewrites the Benami Transactions (Prohibition) Act, 1988 into a working enforcement statute.
This one does not fall neatly into the Board's usual classes — it is a letter, a memorandum, a consultation paper or something else the department has published in this collection. What it is, and what weight it carries, is set out below.
The amending Act supplies the machinery the 1988 Act never had. It defines a benami transaction to cover an arrangement where property is transferred to or held by one person while the consideration is provided by another and the property is held for that other's benefit, a transaction in a fictitious name, a case where the owner denies knowledge of his ownership, and a case where the provider of the consideration is not traceable. It forbids a benamidar from re-transferring the property to the beneficial owner or to anyone acting on his behalf. It makes property that is the subject matter of a benami transaction liable to confiscation by the Central Government. And it creates the offence, punishable with rigorous imprisonment of not less than one year and up to seven years, together with a fine that may extend to twenty-five per cent of the fair market value of the property.
The 1988 Act prohibited benami transactions but had no adjudicating authority, no confiscation procedure and no workable penalty, so it was effectively a dead letter for nearly thirty years. Benami holding remained the standard method of parking unaccounted wealth in land and in shares. The 2016 amendment was enacted to give the prohibition an enforcement structure, and to give the revenue administration a route to the property itself rather than only to the income.
This is primary legislation. It binds everyone, including the department and the courts, and takes effect from the dates the Central Government appoints. The contrast with the Board's own material is worth holding on to: an order, instruction or circular of the Board binds the department alone, the assessee may take a better view against it, and no court or Tribunal is obliged to follow it. Nothing of that kind applies to an Act.
Assented to on 10 August 2016 and published on 11 August 2016. The Act comes into force on such date or dates as the Central Government appoints by notification in the Official Gazette, and different dates may be appointed for different provisions.
Do not read this as a tax provision. The confiscation it authorises is independent of any assessment under the Income-tax Act, 1961, and proceedings under the two statutes run separately, so a client can face both. Commencement is by notification and was not uniform across provisions, which matters for transactions around 2016. Work from the principal Act as amended rather than from this amending Act alone; on its own it reads as a list of substitutions.
No person, being a benamidar shall re-transfer the benami property held by him to the beneficial owner or any other person acting on his behalf.
— the Central Board of Direct Taxes, communication Act No. 43 of 2016, 10 August 2016. Read it in the department’s own PDF.
What here is the Board’s and what is ours. The document is the Central Board of Direct Taxes’ own. Its number, its date and the words quoted above are reproduced from the Board’s own PDF, which is here. Everything else on this page is ours: the plain-English account of what the document is and what it does, the reading of which provision it turns on, the note on what to watch, and the choice of cases. Where our account and the document part, the document governs.
An order of the Board binds the department, not you and not a court. The Board writes to its own officers. An assessee may hold the department to an order or an instruction that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves. This is the most common mistake made with this material, and it is worth making twice: a direction of the Board is not a section of the Act.
We did not read all of it. The department’s file returned only part of this document to us, so what is written above is written from the part we could read. Open the PDF before you rely on it.
What we could not settle. This is an Act of Parliament, not a document of the Income-tax Act, 1961, so the sections list is empty; the numbering it uses is that of the Benami Transactions (Prohibition) Act, 1988. The fetch returned the opening provisions, the definition of a benami transaction, the confiscation and penal provisions, but not the chapters on the Adjudicating Authority, the Appellate Tribunal or the procedure for attachment. The identifier printed on the first page is a Gazette registry number in Hindi script, not an F. No.