Benami Transactions: Authorities initiate investigation of five sugar mills

Benami Zone II, Lahore has taken up the investigation of five sugar mills for the verification of Benami transactions.

As per details, purchasers with the largest quantities as declared by the mills in their sales tax returns were randomly summoned to ascertain their authenticity as buyers of sugar. The exercise unraveled the occurrence of Benami transactions at a large scale during the preliminary investigation. Keeping in view the HR constraints, logistical limitations and narrow timelines involved in the proceedings, detailed scrutiny was initiated in two sugar mills initially i.e. Alliance Sugar Mills and Hunza Sugar Mills.

As far as the rest of the sugar mills are concerned, the information will be gathered including information from the banks and proceedings will be started after concluding the already initiated cases.

FBR said that show-cause notices u/s 22 of Benami Transaction (Prohibition) Act 2017 have been served upon M/s Hunza Sugar Mills and M/s Alliance sugar mill whereby the mills with the actual buyers of sugar and sugar mills brokers have been alleged to have conducted benami transactions. A perusal of the sales tax returns of Alliance Sugar Mills and Hunza Sugar Mills showed that sugar worth Rs 19,125,774,948 and Rs 5,164,464,58 respectively, for TY 2017-2020, had been sold by mills to unregistered persons.

To check the authenticity of these buyers, Benami Zone II, Lahore issued summons to multiple purchasers who in their written statements denied knowledge of any such transaction. During the course of the investigation, it was extracted that the unregistered purchasers being shown in sales tax returns of the aforementioned sugar mills were ostensible owners including low paid workers or truck drivers, rather than the real owners, which to date remain unaware of their involvement in sugar purchase.

The provisions of the law stipulate that subject to the issuance of notice to show cause u/s 22, the Initiating Officer has to attach the Benami property within 90 days incase the Initiating Officer intends to file the reference in the case. The law additionally provides 60 days to the IO for the drafting of the case statement to further forward it to the Adjudicating Authority. In case the IO finds no aspect of Benami transaction during the course of investigation within 90 days of issuance of show cause notice, he is bound by law to drop the proceedings.

With the filing of reference, the Adjudicating Authority is under obligation to issue a notice to the beneficial owner, benamidar and any interested party within 30 days of receipt of reference requiring them to file their reply. In case benamidar/beneficial owner is involved in the commission of Benami transaction, the Adjudicating Authority would pass order holding the property referred in reference as Benami property and passing the order to that effect. The law binds Adjudicating Authority to decide reference within one year from the date of filing of reference. The Adjudicating Authority, after holding the property Benami, initiates proceedings for confiscation of Benami property.

Besides confiscation of Benami property, the law provides prosecution of benamidar, beneficial owner and abettor, etc. Subsequent to the trial, the law provides that the person involved in Benami transactions would be sentenced to imprisonment extending from one year to seven years and an additional payment of 25% of the fair market value of the property involved.