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Big Fishes in the Benami Net- How a Law is Tightening the Noose

benami properties

Tackling black money has been the biggest challenge for the Indian economy given the huge amounts of unaccounted money that has created a parallel system in India. Over the decades, the most feasible way of investing and laundering the black money was through purchase of properties. A property could be purchased on another person’s name but the money was paid by the corrupt person. This gave rise to the system of Benami properties.

The Modi government understood that its fight against black money cannot be successful unless all avenues of black money are checked. Real estate, gold, financial markets, NGOs and cash have been scrutinized through various measures like RERA, FCRA legislation, gold monetization, Double Taxation Avoidance Agreements and Demonetization. The logical successor to these slews of measures was a step to control flow of black money in Benami properties.

The menace was recognized in the decade of 1980s and the first ever law- Benami Transactions (Prohibition) Act- was passed in 1988. The law remained toothless as no rules were notified for acquisition of Benami property by the government agencies. Moreover, a compensation had to be paid in case the government attaches the property.

An amendment to the law was introduced in 2016 that removed the drawbacks of the earlier law. Now government is not liable to give any compensation once the property is confiscated. It also has made the punishment for holding benami property can go up to seven years.

There have been high profile cases wherein properties of the mighty have been attached. Could you ever imagine this happening under any previous governments? Modi government has made this a reality.

Sasikala loses benami property worth Rs 1500 crores

It is a prime example of zero tolerance to corruption policy of Narendra Modi government. Accused of using demonetized notes to purchase properties in the weeks after Demonetization, Sasikala’s multiple properties have been attached by the Income Tax Officials. This has been by far the biggest action by the authorities.

Mayawati in the dock

Mayawati, BSP chief, indirectly faced the heat of the Benami property act as her relatives and close aid were accused of having benami properties.

Mayawati’s own brother and his wife have been accused of owning Benami property in Noida. The plot is not a small one. It is a huge seven-acre plot in prime location, valued at Rs 400 crore. The income tax department claimed that Mayawati’s brother Anand Kumar and his wife are beneficial owners of the plot despite the plot not being in their name.

Mayawati’s former aid, Net Ram, was an IAS officer who served under Mayawati during her stint as chief minister of Uttar Pradesh. He was already under investigation for disproportionate assets. The income tax officials now attached 19 properties in big cities, both residential and commercial, worth Rs 230 crore.

Kamal Nath’s nephew lands in the soup

Businessman Ratul Puri has come under the lens of Income Tax officials. He is the nephew of Congress leader and Madhya Pradesh CM Kamal Nath. The accusation are two-

His company received a dubious FDI from a company in British Virgin Islands. The money was used to buy property in Delhi’s costliest area- Lutyens Zone. The officials attached a palatial bungalow on 27A, Abdul Kalam Road in Lutyens Delhi worth Rs 300 crores.

The tax department earlier similarly attached Rs 254 crores worth of ‘benami’ equity of Puri, which he is stated to have allegedly received from a suspect in the AgustaWestland VVIP chopper scam case, via shell companies

Congress leader Kuldeep Bishnoi not far behind

Kuldeep Bishnoi and his brother, sons of former Haryana CM Bhajan Lal, have been accused of round tripping. The income tax department raided 13 properties and found dubious links to companies in tax havens like British Virgin Islands.

A hotel worth Rs 150 crore allegedly linked to Bishnoi has been attached. It is alleged that a company registered in British Virgin Islands owns shares in the said hotel company but the beneficial owners are Bishnoi brothers. Foreign assets worth Rs 200 crore are also being probed.

How can officers be far behind?

Government officers have proven their mettle equally in the business of owning Benami properties, at par with political leaders.

A peculiar case came up in Madhya Pradesh where a retired government officer owned 25 Benami properties worth Rs 40 crore. What is surprising is that the properties were held in the name of even drivers, personal staff and domestic help!

Retired IAS officer MA Khan also landed in the dock. He is alleged to have purchased properties worth Rs 25 crore in the name of his family and relatives in Madhya Pradesh and Haryana. The Benami properties have been attached by the tax department

Retired IAS officer Arvind Joshi had 33 insurance policies attached as he is alleged to have invested more than Rs 3 crore in them. The policies existed in the name of his family members.

It should also be noted that Net Ram, the aid of Mayawati mentioned above, was also an IAS officer who is accused of owning Benami property.

The Overall Picture

The government as on 1st February 2019 claimed to have attached Benami properties worth Rs 6900 crore. Most of the cases mentioned above, including that of Sasikala were taken up after 1st February 2019. Thus, the value of Benami properties attached has surely increased substantially.

The action by tax officials show the seriousness of Modi government in fighting corruption. What must be noted is that previous government have passed the laws as back as 1988. But they didn’t have the political will to operationalize the law by framing rules. The will was brought in by Modi government and the result is front of everyone.