UPSC Prelims 2017 Q20: Indian Economy – Fiscal Policy & Budget
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 ?
- (a) 1 only
- (b) 2 only
- (c) 1 and 3 only
- (d) 2 and 3 only
Answer: (b) 2 only
Explanation
Benami Transactions (Prohibition) law
The 1988 Act was overhauled by the Benami Transactions (Prohibition) Amendment Act, 2016.
| Statement | Verdict | Fact |
|---|---|---|
| 1. Not benami if the owner is unaware of the transaction | Incorrect | A transaction is still benami if the named owner denies knowledge of it; this is one of the listed types |
| 2. Benami properties can be confiscated | Correct | Benami property is liable to confiscation by the Government without compensation |
| 3. Three investigating authorities but no appeal mechanism | Incorrect | There are four authorities and an Appellate Tribunal, with further appeal to the High Court |
Authorities under the 2016 law:
| Authority | Role |
|---|---|
| Initiating Officer, Approving Authority, Administrator | Investigation and management of property |
| Adjudicating Authority | Decides cases |
| Appellate Tribunal | Hears appeals |
Answer: (b) 2 only.
Why each option is right or wrong
- (a) Incorrect. A property is still benami even if the named owner says they did not know.
- (b) CORRECT. Benami property is liable to confiscation by the Government.
- (c) Incorrect. Both 1 and 3 are false; there is also an Appellate Tribunal.
- (d) Incorrect. Statement 3 is false; the law provides an appellate mechanism.
Key point
Benami law (1988, amended 2016): benami property liable to confiscation; owner's lack of knowledge does not save it; Adjudicating Authority and Appellate Tribunal exist.
Remember
Benami: confiscation yes; appeal route yes.
Common mistakes
- Thinking ignorance of the owner makes a deal non-benami; it is a specific benami category.
- Missing the Appellate Tribunal created by the 2016 amendment.
- Counting the authorities wrongly; there are four, plus an appellate body.
Exam tip
Most anti-black-money laws include appeal routes. A claim of 'no appellate mechanism' is usually false.
Sources
- Prohibition of Benami Property Transactions Act, 1988 (as amended in 2016)
- Income Tax Department — Benami Property: FAQs