Question 1

I bought a property in my wife's name using my own funds. Is that a benami transaction?

Accepted Answer

Not automatically. Section 2(9) of the Prohibition of Benami Property Transactions Act 1988 (as amended in 2016) exempts property purchased in a spouse's or children's name out of known, disclosed income — provided the property is held for their benefit. If you funded it from undisclosed income, or the property is actually held for your own benefit (not hers), the exception does not apply and the property is liable to attachment and confiscation under Section 5 PBPT Act without compensation to you.

Question 2

I received a notice from the Benami Prohibition Unit. What happens next and can I lose my property?

Accepted Answer

Under Sections 24–26 PBPT Act, the Initiating Officer can provisionally attach the property immediately on initiating inquiry — no court order is required at that stage. You have the right to be heard before the Adjudicating Authority under Section 26. If the Authority confirms the attachment, the property vests in the Central Government free of all encumbrances (Section 27). Criminal prosecution under Section 53 carries 1–7 years rigorous imprisonment plus fine of 25% of fair market value. Engaging a CA and lawyer at the notice stage is critical — the window to present evidence of legitimate consideration is narrow.

Question 3

I have undisclosed foreign assets. What is my exposure under the Black Money Act 2015 before I voluntarily disclose?

Accepted Answer

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 imposes tax at 30% on the FMV of the undisclosed foreign asset (Section 3) plus a penalty of 300% of the tax under Section 42 — total effective burden 120% of FMV. Prosecution under Section 50 carries 3–10 years imprisonment. Residents must report all foreign assets in Schedule FA of ITR every year under Section 139 ITA 1961 (Section 263 ITA 2025 for TY 2026-27 onwards). If you have unreported assets, a CA-assisted voluntary disclosure strategy should be evaluated before an AIS-driven notice arrives.

Question 4

What tax rate applies if the AO treats my unexplained cash deposits as income under Section 69A?

Accepted Answer

Under Section 69A ITA 1961, unexplained money, bullion, or jewellery is added to income. Section 115BBE ITA 1961 taxes this at a flat 60% regardless of the applicable slab, plus a 25% surcharge on the tax — making the effective rate 78% (exclusive of cess). Section 271AAC mandates an additional penalty of 10% of the tax, bringing total leakage to approximately 83–85% of the amount. No deduction, set-off, or carry-forward is permitted against income taxed under Section 115BBE. The same provisions apply to Sections 69, 69B, and 69C ITA 1961.

Question 5

My relative handed me ₹5 lakh in cash to repay a loan. Can that attract penalty even if the loan itself was legitimate?

Accepted Answer

Yes. Section 269T ITA 1961 prohibits repayment of any loan or deposit or advance of ₹20,000 or more in cash — penalty under Section 271E is 100% of the amount repaid in cash. Section 269SS separately prohibits accepting a loan or deposit above ₹20,000 in cash — penalty under Section 271D equals the full amount received. For a ₹5 lakh cash repayment, the penalty is ₹5 lakh on the payer (Section 271E) regardless of whether the original loan was documented and genuine. Both penalties apply even if the transaction was between close relatives.

Benami Black Money

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