Chartered accountants in India can now face up to seven
years in jail if they are found to be guilty of instigating and abating benami transactions.
This notification comes under the new Benami Act 2016, which was introduced in November last
year.On November 1 last year, just before a week of
demonetization, the Government amended the 28-year-old Benami Act 1988 to introduce a
new act called ‘The Benami Transactions (Prohibition) Amendment Act, 2016. Under this
act, those who have found to have illegally ‘instigated’ or ‘’abated others in illegal cash
conversions or deposits to other accounts, will also face the fury of the law.
Talking about the new law, sources in the
finance ministry said that the law will be further enacted upon once the state elections are over.
A senior official of the Finance Ministry told DNA on condition of anonymity.
“Let the state elections be over. We have consolidated an action plan based on thousands of inputs from
phone calls to digital footprints. We will hit hard against those people who continue to
defy the fight against black money, especially during demonetization.”
Tax department officials said that so far they
have collected each and every detail of 18 lakh
suspect persons whose cash transactions do not
appear to be in line with the tax payer’s profile. The Department says that during its
probe it has also discovered so-called advisers who have played a crucial role in the dubious
transactions which number over one crore in total. This data, officials said, are based on
the first phase of operations conducted during November 9 to December 30, 2016, to discover
large cash deposits. Other operations are likely to be conducted soon.
Department sources also said that they have
proof of connivance among bankers, CAs, and jewellers to exchange old notes via dubious
companies or through other accounts which include the Pradhan Mantri Jan Dhan accounts. In
fact, sources say these people have often deposited cash in the accounts of their driver,
housemaid or relatives. Such people and any other persons involved like CAs will start
receiving calls and notices for alleged dodgy advice in the second week of March. Apart from these measures, the government has
already instituted action against CAs if they knowingly falsify or provide incorrect
information while rendering their professional service. The recent Budget has already proposed
Rs 10,000 penalty against CAs for wrong certification and reports.
If an accountant or a merchant banker furnishes
incorrect information in a report or certificate under any provisions of the Act or
the rules made thereafter, the Assessing Officer or the Commissioner (Appeals) may direct him to
pay a sum of ten thousand rupees for each such report or certificate by way of penalty.
The role of the chartered accountant has already
been called into question by the Controller and Auditor General (CAG) over the last few
years. However, the statutory regulator for chartered accountants — The Institute of
Chartered Accountants of India (ICAI) — have countered CAG’s claims. Sources say that CAG has
had not seen a single report of negligence against any Chartered Accountant by assessing
officers to the ICAI. At the same time, ICAI has also alerted its members to keep their
professional integrity intact. Speaking about the new law, former president of
ICAI Amarjit Chopra said, “Any professional either CAs or anybody if they
instigate Benami Transaction then they should be punished. But latest penalty provision against
CAs is not a fair practice because our Institute has a strong Disciplinary Mechanism and there is
no need for such provision.” ICAI members refused to officially comment on
the government’s latest move.
CAs on Government Radar
1. CAs could be jailed up to seven years if
proved to help in instigating for or abatement of any Benami transaction.
2. Budget 2017 has proposed—Rs 10,000 penalty
against CAs for wrong certification and reports.
What some CAs claim
"This Act will give unbridled powers to
Assessing Officers to threaten CAs even for no fault on their part. Invariably, in every case where
audited books are rejected, such penalty would be imposed. It may be used as a tool for many
unwanted purposes," said a senior CA official on condition of anonymity.
FAQs
What is a Benami
Transaction?
This is a kind of transaction where the assets
are not in the name of person who pays for the assets. Benami could be in cash, property or any
transaction, tangible or intangible, movable or immovable could fall under Benami
transaction. Gift are not a Benami transaction unless you have the proof and source of income.
Who is a Benamidar?
Benamidar is a person or a fictitious person, in
whose name the Benami assets has been transferred, in order to conceal the real owner.
Who is a Beneficiary?
A beneficiary is a person, whether his identity
is known or not, has invested the black money in the name of Benamidar.
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