New Delhi: The Supreme Court (SC) declared on Tuesday that the Benami law can only be enforced prospectively, and that section 3(2) of the Act is “unconstitutional.”
This decision about the Benami Transactions (Prohibition) Amendment Act, which went into force on November 1, 2016, has been anticipated by a number of firms.
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The top court ruled that the 2016 Act only has prospective effects and that all activities conducted prior to the modification are invalid.
Section 3 of the Act, which the court ruled was “unconstitutional,” states that anyone who engages in a benami transaction is penalised by imprisonment for a term of up to three years, a fine, or both.
The verdict was handed down by the Bench under the leadership of Chief Justice of India NV Ramana in response to a petition brought by the Centre to a ruling by the Calcutta High Court that the 2016 Amendment Act was prospective in nature.
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The new Act, which was applied retroactively, broadened the definition of transactions that were regarded as benami and imposed harsh penalties that subjected several businesses and people to scrutiny.
Thousands of notices for financial transactions and property deals from earlier legal eras have been issued by the tax authority.
