Section 26 of PBPT Act : Section 26: Adjudication Of Benami Property

Explanation using Example

Imagine a situation where Rohan, a businessman, purchases a property in the name of his domestic helper, Meena, without her knowledge. The property is actually paid for by Rohan using his funds, but the deed and records show Meena as the owner. This arrangement is made to evade taxes and hide Rohan's ownership. This is a classic example of a benami transaction.

Upon suspicion, the tax authorities initiate an investigation into the property's ownership. They refer the case to the Adjudicating Authority under the Prohibition of Benami Property Transactions Act. The Authority, following Section 26 of the Act, issues a notice to Meena (the benamidar), Rohan (the beneficial owner), the bank involved in the transaction, and any other claimant to the property, asking them to provide documents and evidence proving the true ownership of the property.

Meena, who is unaware of the situation, receives the notice and is given at least 30 days to respond. Rohan, realizing the gravity of the situation, may decide to appear before the Authority in person or appoint a legal practitioner to represent him.

After reviewing all the evidence, the Adjudicating Authority will give Rohan, Meena, and any other party a chance to be heard. Based on the findings, the Authority could either determine that the property is not benami and revoke the attachment order or confirm that it is a benami property and uphold the attachment order.

If the Authority finds evidence suggesting that another property, not previously under investigation, is also benami, it can provisionally attach that property as well.

The Authority must pass its order within one year from receiving the reference, excluding any periods when proceedings were stayed due to court orders. However, if the time limit is set to expire during a specified period (e.g., between July 1, 2021, and September 29, 2021), the deadline is extended to September 30, 2021.