Benami transactions on Income Tax department’s radar

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With the financial year nearing closure, benami properties are back on the income tax department’s radar. The tax department has started raiding those properties bought under pseudo names with the help of data shared by government departments, The Economic Times reported.

A benami property is an asset that is bought by a person in another person’s name.

The report stated that the tax department has started issuing notices to those who have brought real estate assets in some other person’s name. Recently, a Mumbai-based small businessman received a notice from the IT department. The businessman whose salary is ₹60,000 per month had reportedly bought a property worth ₹3 crore, without any housing loan.

During FY 2019-20 (up to October 2019), show cause notices for provisional attachment of benami properties were issued in over 130 new cases and provisional attachment has been made in 115 cases. The value of properties under attachment is over Rs 2,240 crore, according to the finance ministry’s annual report for 2019-20.

The move comes after the government issued directives to trace Benami properties. According to the report, the IT department has found wealthy individuals owning farmlands bought by shell companies.

There are four categories of real estate transactions on the tax department’s radar.

-Properties that are bought in pseudo names.

-Properties purchased using illegal money.

-Individuals who hide properties while filing income tax returns.

-Transactions involving black money.

The date for passing of order or issuance of notice by the officials and various compliances under various direct taxes and Benami Law which are required to be passed/issued/made by December 31, 2020, has been extended to March 31, 2021.