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Q20 (IAS/2017) Polity & Governance › Governance, Policies & Social Justice › Economic governance laws Official Key

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 ?

Result
Your answer: —  ·  Correct: B
Explanation

The correct answer is option B (Statement 2 only).

The Prohibition of Benami Property Transactions Act, 1988 (as amended in 2016) seeks to curb black money and money laundering by prohibiting benami transactions irrespective of the method by which the benami property is acquired.[1]

**Statement 1 is incorrect** because the Act does not provide an exemption based on the owner's lack of awareness. A benami transaction includes arrangements where the person providing the consideration is not traceable or fictitious[2], and the definition is not contingent on the apparent owner's knowledge.

**Statement 2 is correct** as the amended law empowers income tax authorities to provisionally attach benami properties which can eventually be confiscated.[4]

**Statement 3 is incorrect** because while the Act provides for an Initiating Officer and Approving Authority for investigations[5], it also provides an appellate mechanism where any aggrieved person may prefer an appeal to the Appellate Tribunal within 45 days from the date of the order.[6]

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > PROHIBITION OF BENAMI TRANSACTIONS (AMENDMENT) ACT, 2016 > p. 89
  2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > 5.10 Indian Economy > p. 90
  3. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > 5.10 Indian Economy > p. 90
  4. [4] Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 39: After Nehru... > Disbanding Planning Commission and Setting up NITI Aayog > p. 783
  5. [5] https://www.indiabudget.gov.in/budget2019-20/doc/memo.pdf
  6. [6] https://www.indiabudget.gov.in/budget2023-24/doc/memo.pdf
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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. With reference to the 'Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)', consider the following statements : 1. A prope…
At a glance
Origin: Books + Current Affairs Fairness: Moderate fairness Books / CA: 5/10 · 2.5/10
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This question was a direct fallout of the 2016 Benami Amendment, which was headline news post-demonetization. While Statements 1 and 2 are standard current affairs, Statement 3 is a classic 'Administrative Law' trap. Strategy: When studying Acts, never skip the 'Institutional Architecture' (Who investigates? Who adjudicates? Where is the appeal?).

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Under the Prohibition of Benami Property Transactions Act, 1988, is a transaction excluded from being treated as benami merely because the apparent owner of the property was unaware of the transaction?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > PROHIBITION OF BENAMI TRANSACTIONS (AMENDMENT) ACT, 2016 > p. 89
Presence: 5/5
“• The Amendment Act seeks to amend the provisions of the Prohibition of Benami Property Transactions Act, 1988, to curb the issues of black money and money laundering in the country. • The amendment seeks to prohibit benami transactions irrespective of the method by which the benami property is acquired. Such benami transactions include transactions in respect of movable as well as immovable properties. • As per the amended Act, Benami transaction means: • 1”
Why this source?
  • States the Amendment seeks to prohibit benami transactions 'irrespective of the method by which the benami property is acquired' — indicating classification does not depend on acquisition method.
  • Implied scope covers varied circumstances, so apparent owner's lack of awareness (a manner of acquisition/possession) would not automatically exclude benami character.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > 5.10 Indian Economy > p. 90
Presence: 4/5
“• A transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious;• The amended law empowers the income tax authorities to provisionally attach benami properties which can eventually be confiscated.”
Why this source?
  • Defines benami situations by focus on consideration (e.g., provider untraceable or fictitious) rather than the apparent owner's subjective knowledge.
  • Emphasises objective indicia (source/traceability of consideration), supporting view that mere unawareness of apparent owner is not determinative.
Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 39: After Nehru... > Disbanding Planning Commission and Setting up NITI Aayog > p. 783
Presence: 3/5
“of 2016 tightened the law in the use of unaccounted, taxevaded money for what is known as 'benami' transactions through the purchase of property. Under the amended law, authorities were empowered to provisionally attach and eventually confiscate benami properties. Jail terms of between one and seven years and a fine are prescribed for offenders. The Real Estate (Regulation and Development) Act of 2016 was another policy initiative of the NDA government. As per the law, a regulator–the Real Estate Regulatory Authority (RERA)–was to be established in every state to oversee the sector and "protect the interest of consumers in the real estate sector" through an adjudicating mechanism and appellate tribunal.”
Why this source?
  • Notes the 2016 amendment tightened the law and empowered authorities to attach and confiscate benami properties.
  • Reflects legislative intent to treat benami transactions strictly, suggesting procedural facts like the apparent owner's ignorance would not negate benami treatment.
Statement analysis

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Statement analysis

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Statement analysis

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