Q. With reference to the ‘Prohibition of Benami Property Transactions Act, 1988 (PBPT Act), consider the following statements:

1. A property transaction is not treated as a benami transaction if the owner of the property is not aware of the transaction.
2. Properties held benami are liable for confiscation by the Government.
3. 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?

• 1only
• 2 only
• 1 and 3 only
• 2 and 3 only

Answer: (b) 2 only

Benami Property Transactions Act, 1988 (PBPT Act) :

• Benami Transactions (Prohibition) Act, 1988 (name changed to Prohibition of Benami Property Transactions Act, 1988 by section 3 of the 2016 amendment) is an Act of the Parliament of India that prohibits certain types of financial transactions.
• The act defines a ‘benami’ transaction as any transaction in which property is transferred to one person for consideration paid by another person.
• Such transactions were a feature of the Indian economy, usually relating to the purchase of property (real estate), and were thought to contribute to the Indian black money problem.
• A property transaction is treated as a Benami transaction even if the owner of the property is unaware of the transaction because ignorance of the law is never an acceptable defence for breaking the law in India.
• Benami’s properties are subject to confiscation by the government. They are also subject to confiscation by the government without compensation.
• The Adjudicating Authority and Appellate Tribunal have been established as an appeals mechanism.
• Persons involved in Benami transactions may face up to 7 years in prison and a fine.

The Act establishes four authorities who will be able to conduct inquiries regarding benami transactions: