The Special Additional Facilitation and Enforcement Measures Authority (SAFEMA) held that deposits arising from void Income Declaration Scheme filings are treatable as benami properties.
The Special Additional Facilitation and Enforcement Measures Authority (SAFEMA) has ruled that undisclosed deposits revealed through the Income Declaration Scheme (IDS), later invalidated due to procedural defects, shall be treated as benami assets under the Prohibition of Benami Property Transactions Act (PBP Act).
In a case involving Rs 5.30 crore in fixed deposits, SAFEMA determined that the declarant failed to substantiate the source of income despite participating in the scheme. Since the declaration was rendered void for non-payment of tax and penalty, the authority concluded that ownership was masked and the assets held for the benefit of undisclosed persons.
Implications for Practitioners
This decision expands the scope of benami proceedings beyond real estate to financial assets. Tax and litigation practitioners must advise clients on the risks of incomplete or defective disclosures under amnesty schemes, particularly where follow-up assessments or enforcement actions may trigger PBP Act implications.
