Taxmen wield new benami law for black money deposits
The income tax department has taken recourse to the new law on benami property to seek the attachment of properties of about 20 individuals and entities in Mumbai whose bank accounts were allegedly used by owners of small and medium firms to deposit unaccounted money following the demonetisation announcement on November 8. The tax department issued show-cause notices on January 27 to these individuals and entities for attachment of properties under the Benami Transactions (Prohibition) Amendment Act, which came into force on November 1, 2016, sources told. Under the Act, the tax agency can confiscate and prosecute depositors and those whose illegal money has been “adjusted” in the depositors’ accounts. Violation of rules of the Act attracts a heavy penalty and rigorous jail term of a maximum of seven years. Following the demonetisation of high-value notes, the tax department had issued advertisements and warned people against depositing their unaccounted old currency in others’ bank accounts. It warned that such an act would attract criminal charges under the newly enforced norms, applicable on both movable and immovable property. In a case, the tax authority attached bank accounts of a resident of Nawab Chawl, in south Mumbai, who had allegedly deposited over Rs 2.5 crore on behalf of eight firms for a hefty commission. Under the previous Benami Transactions (Prohibition) Act 1988, violations led to jail terms of up to three years, or a fine, or both. Under the amended Act, offenders face jail of up to seven years and a fine up to 25 per cent of the market value of properties. Besides, those who furnish false information on this issue would face jail terms ranging from six months to five years and a fine of up to 10 per cent of the market value of properties.
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