SAFEMA: Void IDS Deposits May Be Benami Assets

SAFEMA Tribunal on Benami Character of Void IDS Deposits

The Special Appellate Tribunal for Foreign Exchange (SAFEMA) has held that deposits made under the Income Declaration Scheme (IDS), 2016, which were later declared void due to false declarations, may be treated as benami property under the Prohibition of Benami Property Transactions Act, 1988.

The Tribunal found that where declarants misrepresented sources of income and the declaration was invalidated by tax authorities, the proceeds lacked legitimate ownership linkage. This enabled initiation of benami proceedings for confiscation.

The ruling creates an intersection between tax amnesty failures and asset forfeiture regimes. Practitioners must advise clients that unsuccessful or fraudulent IDS disclosures may expose assets to parallel benami action, even after settlement of tax and penalty.