Post
demonetization, many persons and entities possessing millions and billions of
unaccounted/unsecured cash deposited such cash into banks through others with
the objective to escape from IT surveillance and safeguard themselves from
getting punished for violation of the laws.

However, government is in no mood and
intent to let so-called tax evaders go unnoticed, unpunished and unaccounted
for possessing illegitimate cash and persons acted as proxies and facilitated
tax evaders to survive the IT surveillance and escape from getting punished for
tax evasion.

With this in mind, the government has
issued strict directives to Income Tax (IT) Department to reject all revised IT
returns involving unsecured and unaccounted cash and amended the Benami Act
(Act) to invoke the said Act on tax evaders and people abetted tax evaders in
tax evasion to punish them with jail imprisonment.

In this background, income-tax
department is warning people to ‘Keep away from Benami transactions’ – the idea
is to restrict people from accommodating benami transactions or acting as a
proxy for others.

The punishment for indulging in benami
transactions is imprisoned for a period of 7 years.

In a circular on the subject, IT
department labelled possessing ‘black money’ as a ‘crime against humanity’ and
urged honest citizens to back-up the government labors to curtail the black
money and succor government in fetching tax evaders and punish them.

Key points issued in the circular to
educate everybody to stay away from benami transactions are as follows:

·       Consequences
of being involved in benami transactions is Benamidar (Person holding property
for the benefit of actual owner), beneficiary (who actually paid consideration)
and persons who abet and induce benami transactions will be prosecuted and if
proved guilty will be punished with imprisonment upto 7 years along with fine
upto 25 percent of fair market value of benami property.

·       For
furnishing false information to IT authorities, concerned person will be
prosecuted and may be imprisoned upto 5 years along with fine upto 10 percent
of fair market value of benami property.

·       Benami
property may be attached and sequestered by the government.

According to official records, the IT
department attached benami assets worth Rs. 1,833 crore across the country,
issued 517 notices and made 541 attachments, from November 2016 to October
2017.

It is evident from the statistics that
nobody will be spared for involving in benami transactions and tax evaders will
not be able to escape from the radar of IT department and without being
punished for tax evasion.

One should remember the fact that IT
department is fully armored with all tools to hunt down tax evaders mercilessly
and ruthlessly for violating the laws and should not take lightly the powers
conferred on IT department. Taxpayer’s who ignores IT department powers
have to pay a hefty price for such ignorance.

It is high time for tax payers to
sustain clean record of tax payments and preserve the status of owing no
liability to the government in making payments owed to the government or else
they have to face the prosecution proceedings and go to jail for tax evasion.

Research inputs by Paruchuri Baswanth
Mohan

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About the author :

Bhumesh Verma is a lawyer with over 2 decades of experience in advising domestic and international clients on corporate transactions (M&A, Venture Capital, Private Equity, Startups, corporate advisory, etc.) and features in “The A-List – India’s Top 100 Lawyers” by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters and is a guest faculty as well. He can be reached at [email protected].