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?

[UPSC Civil Services Exam – 2017 Prelims]

(a) 1only

(b) 2 only

(c) 1 and 3 only

(d) 2 and 3 only

Answer: (b)        

Explanation:

• Statement 1 is incorrect as a property transaction is not considered a Benami transaction if the owner of the property is unaware of it. The Indian legal framework follows the principle that ignorance of the law cannot be an excuse for violating the law.
• Statement 2 is correct, as properties held under Benami transactions are subject to confiscation by the government. Furthermore, such confiscation can occur without the payment of compensation.
• Contrary to statement 3, the provision of an appellate mechanism in the form of an Adjudicating Authority and Appellate Tribunal is not applicable to Benami transactions. Therefore, statement 3 is incorrect.
• Individuals involved in Benami transactions may face penalties including imprisonment of up to 7 years and fines.