ISLAMABAD: Benami Zone II, Lahore has launched an investigation in five sugar mills for verification of benami transactions after preliminary investigation revealed that such transactions occurred on a large scale.

A detailed scrutiny was initiated in two sugar mills initially - Alliance Sugar Mills and Hunza Sugar Mills - after both were served show cause notices under section 22 of the Benami Transaction (Prohibition) Act 2017, ‘benami’ basically being used to define a transaction in which the real beneficiary is not the one in whose name the property or asset in question is purchased.

As far as the rest of the mills are concerned, further information will be gathered from banks and proceedings will begin after conclusion of ongoing cases. Purchasers with the largest quantities were randomly summoned to ascertain their authenticity as buyers of sugar as millers had declared their names in their sales tax returns, according to an official announcement issued on Wednesday.

Perusal of sales tax returns of Alliance Sugar Mills and Hunza Sugar Mills showed that sugar worth Rs19.1 billion and Rs5.1bn, respectively, for the year 2017-2020, had been sold by the mills to unregistered persons. To check the authenticity of these buyers, some of them were summoned by the zone, who in their written statements denied knowledge of any benami transactions.

During the course of investigation, it was extracted that unregistered buyers being shown in sales tax returns of the two sugar mills were ostensible owners including low paid workers or truck drivers, rather than the real owners.

According to the law, subject to issuance of notice to show cause under section 22, the initiating officer (IO) has to attach the benami property within 90 days in case he intends to file reference in the case. The law additionally provides 60 days to the IO for drafting statement of the case so it can be forwarded to the adjucating authority.

In case the IO finds no trace of benami transaction during investigation within 90 days, he is bound by law to drop the proceedings.

With the filing of reference, the adjudicating authority is under obligation to issue notice to the beneficial owner, benamidar and any interested party within 30 days of receipt of reference requiring them to file their reply. In case a benami transaction has occurred, the authority then passes an order to that effect, however, the law binds the adjudicating authority to decide reference within one year from the date of filing of reference; only after declaring the property benami, the authority initiates proceedings for confiscation of it.

Besides confiscation of the property, the law provides prosecution of the benamidar, beneficial owner and abettor etc and following trial proceedings, persons involved in benami transactions can be sentenced to imprisonment extending from one year to seven years apart from payment of 25pc of the fair market value of the property involved.

Published in Dawn, October 29th, 2020