CBDT files review against SC's Benami ruling; terms it continuing criminal offence

The CBDT has filed a review petition before the Supreme Court against its August ruling that the anti-benami transactions law cannot be applied retrospectively by the Income-tax department, arguing that the possession of illicit assets by those charged should be considered a "continuing criminal offence", official sources said.

The petition was filed by the Central Board of Direct Taxes (CBDT) that frames policy for the tax department under the department of revenue of the Union finance ministry before the apex court's registry few days back.

The sources told PTI that the review petition was filed after the CBDT obtained the views of the field units of the Income-tax department, who had implemented the law since 2016 and after getting it legally vetted from government experts.

The petition is expected to be listed for hearing by the apex court soon, they said.

The Supreme Court had ruled in August that the Benami Transactions (Prohibition) Amendment Act of 2016 cannot be imposed from before the year of its enactment (2016) and said the tax authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the legislation.

Officials said the CBDT's argument in filing a review against the judgement is rooted in the argument that creation/transfer of assets through a 'benami' mechanism is a "continuing criminal offence" and the offenders who continue to enjoy the fruits of such illegally earned or created properties should not be allowed to escape the clutches of law.

Those who created benami assets before 2016 but continue to enjoy them cannot be allowed to go scot-free, the petition has said, according to the sources.

Continuing offence in legal parlance denotes to a thing that is not a single act that concludes as soon as it begins.

The CBDT has contended that the coercive power to confiscate assets, under the anti-benami law, was a power available to the tax department even when the law was first enacted in 1988 and it was kept intact in 2016 when the law was amended with a primary aim to "check the menace of black money" generated by offenders to enjoy illicit assets through proxies.

The Supreme Court bench headed by the then Chief Justice of India N V Ramana had said in its judgement delivered on August 23 that "Section 3 (criminal provision) read with Section 2(a) and Section 5 (confiscation proceedings) of the 1988 Act are overly broad, disproportionately harsh, and operate without adequate safeguards in place.' "Such provisions were stillborn law and never utilised in the first place. In this light, this Court finds that Sections 3 and 5 of the 1988 Act were unconstitutional from their inception," the bench had said.  The bench said that "in view of the fact that this Court has already held that the criminal provisions under the 1988 Act were arbitrary and incapable of application, the law through the 2016 amendment could not retroactively apply for confiscation of those transactions entered into between September 5, 1988, and October 25, 2016, as the same would tantamount to punitive punishment, in the absence of any other form of punishment."  The August verdict came on an appeal of the Centre challenging a Calcutta High Court judgement in which it was held that the amendment made in the 1988 Act in 2016 would be applicable with prospective effect.

The Centre had contended that the 2016 Act would be applicable retrospectively.

A back-of-the-envelope calculation by the I-T department has found that if the argument of 'continuing offence' under a serious criminal law like benami is restored by the apex court, about 50-60 per cent of the cases and attachment of assets made by the tax department since 2016 will hold, official sources said.

Those cases where the benami asset has been disposed off by the offender before 2016 could be let off without any major punitive action, they said.

Sources said the department is increasingly facing the situation where the accused and the Adjudicating Authority for Benami Transactions (a quasi judicial body set up under the law) releasing the attachment of assets in the wake of the SC judgement.

This (release of assets) can only be checked by approaching the top court with a review petition and hence it has been done after the CBDT "analysed" all aspects of the judgement over the last few months, the sources said.

The sources said, the I-T department till July had provisionally attached assets worth more than Rs 18,000 crore, issued show cause notices post investigation in over 3,200 cases and filed as many as 130 charge sheets or prosecution complaints under the provisions of the 2016 anti-benami law including those against some high-profile individuals, politicians, their family members and bureaucrats.

Benami means 'no name' or 'without name' and such properties are those in which the real beneficiary is not the one in whose name the property has been purchased.

Violators of the law, enacted in 1988 but implemented from November 2016 by the Modi government, attracted a rigorous imprisonment of up to seven years and fine up to 25 per cent of the fair market value of the property.

The Act allows for prosecution of the beneficial owner, the benamidar ((in whose name a benami property is standing), the abettor and the inducer to benami transactions. It also says that the assets held benami after final prosecution are liable for confiscation by the government without payment of compensation.

Violators of this law also stand to be prosecuted under the I-T Act of 1961.

The Income-tax department is the nodal national agency to enforce the Benami Act.