Section 2 of PBPT Act : Section 2: Definitions

Explanation using Example

Imagine a situation where Mr. A purchases a house, but the property is registered in the name of Mr. B. Mr. A provides the funds for the purchase, and Mr. B holds the property without any real benefit to himself. The intention is for Mr. A to be the actual owner and enjoy the benefits, while Mr. B is just the front or 'benamidar.' This arrangement is a classic example of a benami transaction as defined by clause 8 in Section 2 of The Prohibition of Benami Property Transactions Act, 1988.

If the tax authorities suspect this to be a benami transaction, they can initiate action under the Act. An Initiating Officer (clause 22) may issue a notice to Mr. B to provide evidence disproving the benami nature. If the property is indeed found to be benami, it could result in attachment (clause 5), where the government prohibits the transfer or sale of the property. Subsequently, the case may be referred to the Adjudicating Authority (clause 1) to determine the matter. If Mr. A or Mr. B disagrees with the Adjudicating Authority's decision, they can appeal to the Appellate Tribunal (clause 3).