Void IDS Declarations May Trigger Benami Probe

Void IDS Filings May Be Treated as Benami: SAFEMA

The Special Appellate Forum for Enforcement of Money Acts (SAFEMA) has observed that deposits disclosed under the Income Declaration Scheme (IDS), 2016, may be treated as benami if the declaration is later declared void or rejected by tax authorities.

In a case involving ₹5.30 crore, the Tribunal upheld the confiscation of funds, ruling that where a declaration is invalid ab initio, the undisclosed income does not gain legitimacy and remains vulnerable to action under the Benami Transactions (Prohibition) Act, 1988.

This reinforces the need for due diligence in voluntary disclosure schemes. Practitioners must caution clients that compliance with filing formalities does not guarantee immunity if substantive conditions—such as payment of tax and penalty—are not fulfilled. Integration between tax and FEMA enforcement is becoming increasingly evident.