Enforcement of Benami Law

There has always been a great deal of resentment against benami transactions in the country for a variety of reasons. In a landmark decision, the Federal Board of Revenue (FBR) has now enforced the Benami Act under the Benami Transactions (Prohibition) Rules, 2019 to start the process of attaching Benami immovable properties and intercept transactions of such properties carried out in fictitious names. The law will be effective from 1st February, 2017 and under the rules, the FBR has been empowered to take action against Benamidars or the fictitious persons on whose names Benami properties have been held or transferred. The government has also announced hefty cash rewards for whistle-blowers in this regard. Talking to a newspaper, FBR Member Inland Revenue (IR) Policy, Hamid Sarwar, said that to start with, three approving authorities will be established in Islamabad, Lahore and Karachi with clear jurisdictions. Under the Act, the commissioner of income tax will exercise powers and perform the function of the authority and officers designated for the task will investigate the available data to identify benami assets. In the first phase, these officers will be provided data of property transactions and mapping of plazas. The officer, in the first instance, would issue a notice for attachment of the benami assets for a period of 90 days and during this period, the tax officer will investigate the case to make an FIR following identification of benami property or bank accounts, etc. The case will then be referred to the adjudicating authority.
It may be mentioned that although the practice of benami transactions was evil for a number of reasons, yet the relevant legislation was passed through an Act of Parliament as late as January, 2017 --- the Benami Transactions (Prohibition) Act, 2017 -- and was then put on the backburner owing to delay in the finalisation of necessary rules and vetting by law and Justice Division. Now, as the law has become operational, it has empowered the government to confiscate all properties and bank accounts registered with the fictitious person. In other words, all these bank accounts and properties which are kept in the names of others will be seized and then the relevant Tribunals will decide the process of sale of properties and the confiscated bank accounts. The justification of enacting the law is very clear. It will definitely allow the government to take strict action against those who got their moveable and immovable assets registered with fictitious persons in order to avoid taxes and conceal their wealth. The law is also meant to boost documentation of economy and create enough deterrence for those indulging in such illegal and unhealthy practices. The Act will also serve to reduce money laundering and smuggling in the country. Giving a role to whistle-blowers and reward them is a good idea to unearth hidden assets. However, while the objectives of the Benami Act are laudable, it must be stressed that it is not an easy job to ascertain white collar crimes, trace the benami transactions and convince the courts that the law has been broken without a shadow of doubt. Such a job is all the more difficult when the FBR is already overburdened and its staff are not famous for efficiency and honesty. In order to do the needed job, FBR may have to recruit persons who are educated, and well trained to ensure that the job is done well and the intended objective is, more or less, achieved. Besides, it would have been better to offer amnesty to those who had registered their assets in fictitious persons' names before the enactment of law was notified on 11th March, 2019. Such a lenient view would have encouraged the concerned individuals to declare their assets in full and without any fear before the time was up for voluntary declaration.