Benami law applicable from February 1, 2017

The date of application of Benami law would be from February 1, 2017 (date of passage of Benami Transactions (Prohibition) Act 2017 by the Parliament) and tax authorities can prosecute cases of immovable and immovable properties and Benami transactions from the said date onwards.
Responding to a query at a press conference held at the FBR House here on Wednesday, Dr Hamid Ateeq Sarwar, FBR Member Inland Revenue Policy, said that prior to February 1, 2017, the new Benami law would not be applicable. Therefore, the Benami banking and property transactions, which took place from Feb 1, 2017 onwards, could be investigated and prosecuted for this purpose. The law would be applicable from the date of its passage from the Parliament. It would not be applicable retrospectively, ie, before February 1, 2017, he said.
He said that his interpretation of Benami law should not be considered as binding on the filed formations or courts.
He said that the Board-in-Council of the FBR has approved three commissioners Inland Revenue at Karachi, Lahore and Islamabad to deal with the Benami cases. These three jurisdictions have been specified at Karachi, Lahore and Islamabad for dealing with the cases.
When asked whether foreign assets held by Pakistanis abroad are covered under the Benami law, the FBR Member Inland Revenue Policy stated that there are certain limits/conditions on jurisdiction under international laws. The scope of the law has been extended to properties within the jurisdiction of Pakistan. The scope of the law within Pakistan is very clear. However, if the Benamidar and beneficial owner are out of the country and asset is also located outside Pakistan, the FBR cannot frame cases under Benami law. In such cases, it would be out of the territorial jurisdiction of Pakistan.
He said, "We will try to test cases where a resident Pakistani has purchased Benami property aboard and banking transactions also took place from Pakistan."
He said if a bank account has been closed after carrying out Benami transaction, the owner of the account should not think that he would not be covered under the Benami law. The case would also be framed in cases where the account has been closed after Benami transaction.
To a query on unlimited powers of tax officials under Benami law, he said that the concerned Deputy Commissioner Inland or Assistant Commissioner has to take approval of the Commissioner Inland Revenue before attachment of property/bank accounts.
When asked whether the FBR will take action against head of a political party where allegedly a joint investigation team (JIT) discovered Benami accounts in connection with laundering of billions of rupees, the FBR official said that generally speaking concerned tax official has to provide the nexus for making a case against any person. Tax official has to establish complete nexus of Benami account holder and beneficial ownership with the Benami property in question.
Once the officials under Benami law have been appointed, the FBR as a prosecution agency can request the JIT or Supreme Court of Pakistan for seeking records for Benami transactions.
Explaining the law, Dr Hamid Ateeq Sarwar said that the FBR is not the sole government department which is dealing with this law. The application of the law would be covered in three stages to be handled by three different departments. The FBR will act as a prosecution agency. The second part of the law would be dealt by adjudicating authority being established for adjudication of the Benami properties. Secretary Revenue Division shall forward to the federal government a panel of suitable officers who are qualified as per criteria provided and the federal government shall appoint from amongst the panel a chairperson and as many members. The third potation of the law would be dealt by the Federal Appellate Tribunal. Any aggrieved person or officer including the initiating officer aggrieved by an order of the adjudication authorities may file an appeal with the Federal Appellate Tribunal (FAT) against the order of the adjudication authorities pertaining to the Benami accounts and assets.
He said that Commissioner Inland Revenue, Deputy Commissioner Inland and Assistant Commissioner can exercise powers and perform functions for attachment of the Benami properties. The Board may by an order assign any Commissioner Inland Revenue to exercise the powers and perform the functions of Approving Authority under the provisions of the Benami Transactions (Prohibition) Act 2017 (Act) and these rules.
The Board may by an order assign any Deputy Commissioner Inland Revenue to exercise the powers and perform the functions of Initiating Officer under the provisions of the Act and these rules.
The Initiating Officer shall be empowered to provisionally attach any property in the manner provided in the Income Tax Rules, 2002. The Board may by an order assign any Assistant Commissioner Inland Revenue to exercise the powers and perform the functions of Administrator under the provisions of the Act and these rules, FBR Member Inland Revenue Policy said.
To a query, he said that properties held by family members, ie, wife and children are not covered under Benami law, provided that the evidence of source of investment is provided.
About the definition of Benami, he said that the Benami transaction means a transaction or arrangement where a property is transferred to, or is held by, a person and the consideration for such property has been provided, or paid by, another person.
Benami transaction also cover a transaction or arrangement in respect of a property carried out or made in a fictitious name; or a transaction or arrangement in respect of a property where the owner of the property is not aware of, or denies knowledge of, such ownership; or a transaction or arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious.