The Prohibition of Benami Property Transactions Rules, 2016  

The Prohibition  of Benami Property Transactions Act, 1988 (Click Here )

The Prohibition  of Benami Property Transactions Rules, 2016 

1. Short title and  commencement.—(1)  These  rules may  be  called  the Prohibition  of Benami Property Transactions Rules, 2016.

(2)    They shall come into force on the 1st day  of November, 2016.

Definitions.—(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Prohibition of Benami Property Transactions Act, 1988 (45 of 1988);

(b) “Chapter” means a Chapter of the Act;

(c) “Form” means a Form appended to these rules; and

(d) “Section” means a section of the Act.

(2) Words and  expressions used and  not defined in these rules but  defined in the  Act,  the  Indian  Trusts  Act,  1882 (2 of  1882), the  Indian  Succession  Act, 1925 ( 39 of 1925), the Indian Partnership Act, 1932 (9 of 1932), the Income-tax Act, 1961(43 of 1961), the  Depositories Act, 1996 (22 of 1996), the  Prevention of Money-Laundering Act,  2002 (15 of 2003), the  Limited Liability Partnership Act, 2008 (6 of 2009) and  the  Companies Act,  2013 (18 of 2013) or the  rules made under  those Acts, shall have  the same meanings respectively assigned to them  in those Acts and  rules.

3. Determination of  price  in certain  cases.—(1)  For  the  purposes  of  sub- clause(ii) of  clause (16) of  the  section 2 of  the  Act,  the  price shall be determined in the following manner, namely:—

(a) the price  of unquoted equity shares shall be the higher of,—

(I)   its cost of acquisition;

(II)  the  fair market value  of such equity  shares determined, on the date of transaction, by a merchant banker or an accountant as per the  Discounted Free Cash Flow method; and

(III) the  value,  on the  date of transaction, of such equity shares as determined in the following manner, namely:—

The fair market value  of unquoted equity shares = (A+B – L)× (PV)/(PE)

where,

A=  book  value  of  all  the  assets (other  than  bullion,  jewellery, precious stone, artistic work,  shares, securities and  immovable property) as reduced by,-

(i) any amount of income-tax paid, if any, less the amount of income-tax refund  claimed, if any, and

(ii)  any   amount  shown  as  asset  including  the   unamortised amount of deferred expenditure which does  not  represent  the value  of any asset;

B=  the  price  that  the   bullion,  jewellery,  precious stone, artistic work,   shares,   securities   and    immovable   property      would ordinarily   fetch on  sale  in  the  open market  on  the  date of transaction;

L=  book   value   of  liabilities,  but   not   including  the   following amounts, namely:—

(i)    the paid-up capital in respect of equity shares;

(ii)    the   amount  set  apart  for   payment  of   dividends   on preference shares and  equity shares;

(iii)   reserves and  surplus, by whatever name called, even  if the resulting  figure  is negative, other  than  those set apart towards depreciation;

(iv)   any amount representing provision for taxation, other  than amount of income-tax paid, if any, less the amount of income- tax  claimed as refund,  if any,  to  the  extent of the  excess over the    tax   payable   with    reference   to   the    book    profits   in accordance with the law applicable thereto;

(v)  any amount representing provisions made for meeting liabilities, other  than  ascertained liabilities;

(vi)   any  amount  representing contingent liabilities  other  than arrears   of    dividends   payable   in   respect   of    cumulative preference shares;

PE = total  amount of paid up equity share capital as shown in the balance-sheet;

PV=  the paid up  value of such equity shares;

4. Furnishing of  Information.—For  the  purpose  of sub-section  (2)   of section 21, the income-tax authority referred to in sub-section (1) of the section  285BA   of Income-tax  Act, 1961  (43  of   1961)   or  such  other authority  or  agency  which  is   prescribed  under  sub-section  (1)   of section   285BA   shall   electronically   transmit   a  copy  of  statement received by it under sub-section (1) of section 285BA of that Act to the Initiating Officer or such authority or agency authorised by the Initiating officer  on or before  fifteen days from the end of the month in which said statement is received.

5. Provisional attachment.—For  the  purposes  of  sub-section  (3)   of section  24, the Initiating  Officer  shall  provisionally  attach any property in  the manner  provided  in  the Second  Schedule  of Income-tax  Act, 1961(43  of 1961).

6. Confiscation of property under second proviso  to sub-section (1)  of section  27.— (1)  Where an order of  confiscation of  property under sub-section  (1)  of   section  27  has  been  made, the   Adjudicating Authority shall send a copy of the  order to the  Authorised Officer.

(2) Where an order referred to in sub-rule (1) has been received by the Authorised Officer in respect of  any immovable property, he shall,-

(i)   forthwith   issue   notice   to  the    authority   of    the    Central Government  or   a  State  Government,  as  case  may  be, having jurisdication for  the purposes of  registration of  such immovable  property,  intimating  about the confiscation  of the property;

(ii)  arrange to place copy of  the notice at some conspicuous part of  the immovable property for  the  benefit of  general public  mentioning  clearly  therein,  in  English  and in vernacular    language,    that   the     property   has  been confiscated   under   the  Act  and  vests   absolutely   in   the Central Government;

(iii) arrange  to make a proclamation  for  the confiscation  of immovable   property   at  some   place   on    or   near   such property by beat of drum or other customary mode.

(3)   Where an order referred to in sub-rule (1) has been received by the Authorised  Officer  in  respect  of  any movable  property, he shall,-

(i)   forthwith issue a notice to the  authority or person having the custody of  such movable property informing him  about the confiscation of such property; or

(ii)  sell  the   property,  if  the   property is  liable  to speedy  and natural decay or  the  expenses for  maintenance is  likely  to exceed  its   value,   with    the   leave   of    the   concerned Adjudicating Authority, and deposit the sale proceeds in the nearest Government Treasury or branch of the  State Bank  of India or  its subsidiaries or  in  any nationalised bank in  fixed deposit and retain the receipt thereof:

Provided  that where the  owner of  the  property furnishes the fixed deposit receipt of State Bank of India or its subsidiaries or a nationalised bank equivalent to the value of  property in the  name of  Administrator, the authorised officer may accept and retain such fixed deposit receipt as security:

Provided   further  that  where the   movable  property  is  a mode of conveyance of  any description,  the authorised  officer,  after  obtaining its  valuation  report  from  the  Motor Licensing  Authority  or  any other authority, as the  case may be, may accept and retain the  fixed deposit receipt of  State Bank of  India or its subsidiaries or a nationalised bank, equivalent  to the   value  of  the movable  property  as  security  in  the name of Administrator;

(iii) cause to deposit the  property consisting of cash, Government or other  securities  or  bullion  or  jewellery or  other valuables  in  a locker  in the name of  the  Administrator  or  in  the form of  fixed  deposit,  as  the case  may  be,  in  State  Bank  of   India  or   its  subsidiaries  or   in  any nationalised bank and retain the receipt thereof;

(iv) cause to get the  property in the form of  shares, debentures, units of    Mutual   Fund   or    instruments   to  be   transferred   in   favour   of Administrator;

(v)  issue  a direction  to the bank or  financial  institution,  as the case may be, to  transfer  and  credit  the  money to  the account  of   the Administrator, where the  property is in the form of money lying in a bank or a financial institution.

Explanation.–  For  the   purposes  of   this  rule,   an  “Authorised  Officer” means an Income Tax Officer who is authorised by the Adjudicating Authority in this behalf.

7. Receipt of confiscated property under sub-section (1) of section 28.—The Administrator shall, at the time  of receiving the  confiscated property, ensure proper  identification  of   such  property  with   reference  to   its  particulars mentioned in the order made under  sub-section (1) of section 27.

8. Management of confiscated property under sub-section (1) of section 28.—(1) Where the  property  confiscated  is  of  such  a  nature  that  its  removal from  the  place of attachment is impracticable or its removal involves expenditure  out   of   proportion  to   the   value   of   the   property,  the Administrator shall arrange for the proper maintenance and  custody of the property at the place of its attachment.

(2)     If the  property confiscated consists of cash, Government or other securities, bullion,  jewellery  or  other  valuables, the  Administrator shall cause to deposit them  for safe custody in the nearest Government Treasury or a branch of the  Reserve Bank of India or the State Bank of India or its subsidiaries or in any authorised bank.

(3)   The Administrator shall maintain a register containing the  details in Form No. 1 annexed to these  rules for recording entries in respect of   moveable  property,  such  as  cash,  Government  or   other securities, bullion, jewellery  or other valuables.

(4)    The Administrator shall obtain a  receipt from  the  Treasury or the bank,   as  the  case  may   be,  against  the  deposit  of  moveable properties stated in sub-rule (2).

(5)    The Administrator shall maintain a register containing the details in Form No. 2 annexed to these rules for recording entries in respect of property other  than  the properties referred to in sub-rule (2).

9. Disposal of confiscated property under sub-section  (3)  of section 28.— Where  the  Central  Government directs  that  the  property  vested  in it under    sub-section   (3)   of   section   27   be    disposed   of,   then,    the administrator shall arrange to  dispose of  the  property in  the  manner provided  in the    Second  Schedule  to  the  Income-tax  Act, 1961(43 of 1961).
10. Appeals  to   the    Appellate    Tribunal.—(1)    An    appeal    to  the Appellate Tribunal under sub-section (1)  of  section 46  of the Act shall be filed in Form No. 3 annexed to these rules.

(2) At the time of filing, every appeal shall be accompanied by a fee of ten thousand rupees.

(3)      The appeal shall set forth concisely and under distinct head the grounds  of objection  to the order  appealed  against  and such grounds shall be numbered consecutively; and shall specify the address of service at which notice or other processes of the Appellate Tribunal may be served on the appellant and the date on  which   the  order   appealed  against   was   served   on  the appellant.

(4)      Where the appeal is preferred after the expiry of the period of forty-five days referred to in sub-section (1) of section 46, it shall be accompanied by a petition, in  quadruplicate, duly verified and supported  by   the documents,  if  any, relied  upon by   the appellant,  showing  cause  as  to how the appellant  had been prevented from preferring the appeal within the period of forty- five days.

FORM 1

[See rule. 8(3)]

MANAGEMENT OF CONFISCATED PROPERTY REGISTER (MOVEABLE).

Order number:

Date  of receipt of properties:

Description of properties (quantity, amount, estimated value):

Name(s) and  address(es) of the benamidar and  beneficial owner,  if his identity is known:

Name  and  address  of  the  Treasury  or bank  where  the  properties are deposited for safe custody:

Date  and  time  of deposit of confiscated  properties in the  Treasury or bank:

Receipt number with date of the receipt obtained from the Treasury or bank:

Remarks of the Administrator:

(Signature of the Administrator)

Name  of the Administrator

Date:

(Seal)

                                                                  

 

FORM 2

[See rule. 8(5)]

MANAGEMENT OF CONFISCATED PROPERTY REGISTER (IMMOVEABLE)

Order Number:

Date  of receipt of properties: Description of properties:

(In case of  land:-  area,   survey number, plot  number, location and complete address.                                                                                                                            In case of  building: house number, location and complete address)

Name(s) and  address(es) of the benamidar and  beneficial owner,  if his identity is known:

Remarks of the Administrator:

(Signature of the Administrator)

Name  of the Administrator

Date:

(Seal)                                          

 

F O R M 3

[See rule10(1)]

 

From                                                                                                                                            

                      (Mention name and  address of the appellant here).

To

The Registrar,

Appellate Tribunal

(Address)

Sir,

The above-named appellant, begs to prefer  this appeal under  section 46 of the  Prohibition  of Benami  Property  Transactions Act,  1988 against order Number                       dated                passed by the Adjudicating Authority (address of Adjudicating Authority) under  the  said Act  on the following facts and  grounds.

FACTS

(Mention briefly the facts of the case here. Enclose copy of the order  passed by the  or Adjudicating Authority and  copies of other  relevant documents, if any.)

GROUNDS

(Mention here the grounds on which appeal is preferred).

PRAYER

In the light of what is stated above, the appellant prays for the following relief:-

 

RELIEF SOUGHT

(Specify the relief sought)

DECLARATION

The  fee  payable  for this appeal  as  mentioned in sub-rule  (2) of  rule 10 has been deposited  in the  form  of  demand draft  with  the  Registrar,  Appellate Tribunal, ……………………………………..(Address) vide receipt number                   dated                 .

(Signature of the Appellant)

(Name of the Appellant)

VERIFICATION

I……………………… the appellant, do hereby declare that  the facts stated above are true to the best of my information and  belief.

Verified  today the ……………………………… day  of ………………………

 

(Signature of the Appellant)

(Name of the Appellant)

List of documents:

 

Place:

Date: