Previous Year Question
With reference to the ‘Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)’, consider the following statements:
A property transaction is not treated as a benami transaction if the owner of the property is not aware of the transaction.
Properties held benami are liable for confiscation by the Government.
The Act provides for three authorities for investigations but does not provide for any appellate mechanism.
Which of the statements given above is/are correct?
1 only
2 only
1 and 3
2 and 3
Correct Answer: B
Detailed Solution
Statement 1 is incorrect. Section 2(9) of the Prohibition of Benami Property Transactions Act defines different categories of benami transactions. It includes a transaction in which the person named as the owner in the property documents is unaware of such ownership or denies knowledge of the ownership.
Therefore, the recorded owner’s lack of awareness does not automatically exclude the transaction from the definition of a benami transaction. In certain circumstances, such lack of knowledge itself may bring the transaction within the statutory definition.
Statement 2 is correct. Under Section 5 of the Act, property held benami is liable to confiscation by the Central Government. Ordinarily, no compensation is payable for such confiscation. However, the prescribed procedure of investigation, provisional attachment and adjudication must be completed before confiscation.
Statement 3 is incorrect. Section 18 of the Act specifies four principal authorities:
Initiating Officer
Approving Authority
Administrator
Adjudicating Authority
Therefore, the claim that the Act provides for only three investigating authorities is incorrect.
The Act also provides an appellate mechanism. An appeal against an order of the Adjudicating Authority may be made to the Appellate Tribunal. A further appeal on a question of law may be made to the High Court against a decision of the Appellate Tribunal. Statement 3 is therefore incorrect on both grounds.
The legislation was originally called the Benami Transactions (Prohibition) Act, 1988. The 2016 amendment renamed it the Prohibition of Benami Property Transactions Act, 1988 and introduced an elaborate framework for investigation, attachment, adjudication and confiscation.