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The investigators of Benami Transaction (Prohibition) Zone-1 Islamabad have unearthed that Benamidar companies serve the purpose of holding Benami properties in the form of multi-billion assets for carrying out immediate or future business deals on payment of nominal face value of the paid-up share capital.

Benami Transaction (Prohibition) Zone-1 Islamabad has filed a reference against a corporate landlord for attachment of Benami properties and action against the involved two companies with the Adjudicating Authority Bench- Islamabad.

According to the reference filed by Muhammad Fiaz Ussain (Deputy Commissioner IR) Initiating Officer Benami Zone-I, Islamabad, with the Adjudicating Authority, Benami Transactions or holding of Benami properties have been prohibited on and after the promulgation of the Benami Transactions (Prohibition) Act, 2017.

However, a company provided and paid consideration to acquire and hold Benami properties in the name of another private limited company.

Whereas, the record provided by the SECP reveals that the company neither held any shares in the Benamidar company, nor has extended any loan to it. When the respondents were afforded opportunity during the proceedings to produce any such record of shares or loan arrangements, they could not produce any.

Evidently, the beneficial owner company has created and used Benami accounts of the Benamidar.

It has provided and paid consideration to the sellers of the properties and has created a smoke screen and layering of the Benamidar against the law enforcement agencies, the creditors, and the tax authorities.

Whereas, the tax record reveals that the Benamidar has not earned any business receipts since 2010. It has either filed nil returns or declared losses (due to depreciation) without any earnings.

It never disclosed the financial statements with the tax authorities. It certainly has no employee as it has not declared any salary expense. Neither does it pay for any management services, nor does it pay any rent for its so-called premises.

It only exists on paper and all the title documents of its properties are held by the beneficial owner company. Moreover, both the companies have always concealed their financial statements/audited accounts since 2009 from their regulator, the SECP.

They also have never complied with the repeated notices for filing of financial statements by the SECP officials. With the FBR, the beneficial owner company filed the tax returns only after the issuance of notices u/s 114(4) of the Income Tax Ordinance, 2001 to them.

And that too without statutory disclosure of financial statements. Only twice (tax years 2015 and 2016), the beneficial owner filed its audited accounts, where it concealed the ownership/link/investment of any kind in the very properties.

Benamidar, prima facie is a paper company with no employees of its own, and no independent business premises of its own. The beneficial owner uses the company as a back-door laundry, to wash its dirty money, minted through corrupt practices and evasion of tax.

According to the findings, this statement of the case, supported by compelling documentary evidence, speaks volume about the creation of dummy artificial juridical persons by big businesses for gaining illegal benefits.

Such kinds of Benamidars only exist on paper and provide layering for the dirty businesses of corruption and tax evasion. They serve the purpose of holding Benami properties in the form of huge assets, defeating statutory regulations.

Moreover, such Benami companies are susceptible to exchange hands surreptitiously along with their multi-billion assets in immediate or future business deals, only on payment of nominal face value of the paid up share capital.

The paid up capital of the company as registered with SECP is only Rs37,165,300; whereas the value of Benami assets held in its name is in billions of rupees. It is beyond any doubt that the prerequisites for Benami transactions and Benami properties respectively laid down in Section 2(1)(8)(A)(a) and (b); Section 2(1)(7); for Benamidar in Section 2(1)(9); and for beneficial owner in section 2(1)(11) of the Benami Transactions (Prohibition) Act, 2017, have been fulfilled in this case.

Thus, the statement of the case has been drawn up, and the matter is referred to the Adjudicating Authority, Bench-I Islamabad within the meaning of sub-section 5 of section 22 of the Benami Transactions (Prohibition) Act, 2017.

That on the appraisal of the facts discussed in this statement, the undersigned is of the considered opinion that it is just and proper to proceed further for adjudication of the Benami properties, Benamidar and the beneficial owner.

Hence, in view of foregoing facts, reasons and circumstances, it is prayed that this reference may be adjudicated in terms of Section 24 of the Benami Transactions (Prohibition) Act, 2017.

Copyright Business Recorder, 2020