No owner? No problem, tax officials can still seize assets under Benami law

Last update:January 14, 2025, 5:30 pm EST

“Benami” means “without name” or “without name”. The real beneficiary of such property is not the one in whose name it was acquired.

“Benami” means “without name” or “without name”.

The Income Tax Department can attach assets under the anti-benami act even if the actual owner of such property has not been identified as the act has a detailed provision to deal with untraceable or fictitious entities, the quasi-judicial body said.

The authority upholds the order to seize land assets

According to a report by a news agency PTI, i.eIn its judgment dated November 26, 2024, the Adjudicating Authority constituted under the Prohibition of Benami Property Transactions (PBPT) Act, 1988, thereby upheld the land attachment order, 2023 passed by the Lucknow unit Income tax department.

Origin of the case: alleged Benami transactions in Lucknow

The issue of alleged benami assets came to the fore after the department raided three Lucknow-based real estate groups that had “bought large plots of land in Kakori area (Lucknow district) by paying huge amounts of unaccounted cash”.

Initial occupation of five plots

The department’s Lucknow-based Benami Prohibition Unit (BPU) had issued an interim order in October 2023, attaching five plots of land in Kakori worth over Rs 3.47 crore and categorizing them as ‘benami assets’.

Parties mentioned in the case

This order was sent to the Authority for confirmation under the name of the ‘benamidar’ (in whose name the benami property stands) apart from two companies and two individuals who were named as ‘interested parties’ in the case.

The interim order did not name any beneficial owner.

Benami Transaction Definition and Context

Usually, when the IT department issues an order for attachment of assets under the PBPT Act, it mentions the name of ‘benamidar’ and ‘beneficial owner’.

“Benami” means “without name” or “without name”. The real beneficiary of such property is not the one in whose name it was acquired.

Partial confirmation of the attachment order

The Authority said it was partially confirming the order for attachment of IT infrastructure (property worth Rs 3.10 crore out of the total amount of Rs 3.47 crore) as “there was no clear evidence related to payment of the balance (of funds)” and maintained that Ravi Kumar, office worker in property a company called Excella was the ‘benamidar’ in this case.

Names removed from order

It ordered the names of two companies – Pintail Real Estate LLP and Excella Premioinfra LLP – to be struck off, except that of an individual, Shiv Kumar, from the IT seizure order, saying there was “no clear evidence” against them.

The Authority’s order also named Haresh Kumar Mishra as the “instigator” in the case and directed the taxpayer to “conduct investigation” into further assets that were reportedly purchased in the name of Ravi Kumar.

The Lucknow BPU of the tax department recently attached five plots situated in Mohanlalganj area of ​​the city, worth over Rs 5.68 crore, on the Authority’s instructions.

The defendants in the case argued that the attachment order should be set aside because it did not name any “beneficial owner” as required by the said law.

“The ambiguity could not have arisen if the Initiator had invoked the provisions of Art. 2 section 9 lit. D of the PBPT Act, because there is a specific provision regarding a transaction or agreement regarding real estate in which the person providing the remuneration (money) is impossible to trace,” the Office stated.

Explanation of Benami transactions and legal basis

It is clarified that this section defines a benami transaction as a transaction in which the person giving consideration for the purchase of the property is “unidentifiable or fictitious”.

The said attachment order, he said, could not be considered “null and void” solely on the ground that the IO had invoked Art. 2 section 9 lit. A) the PBPT Act instead of Art. 2 section 9 lit. D).

Supreme Court reference

The authority cited a 2009 Supreme Court decision which stated that “it is a well-settled principle of law that a reference to or omission of an erroneous provision does not render the provision invalid if the court and/or statutory body has the required jurisdiction.”

(With PTI inputs)