A Benami transaction refers to a financial arrangement in which a property is transferred to or held by one person, but the consideration (payment) for it is provided by another. The person in whose name the property is held is called the Benamidar, and the person who actually paid for it is the real owner or beneficial owner. In other words benami transactions, meaning transactions conducted in the name of someone other than the person who finances or benefits from them, have long plagued property and asset regulation in South Asian countries. In Pakistan, such transactions were often used to conceal assets, evade taxes, launder money, and defeat creditors. Prior to 2017, there was no legislation to curb the benami transactions. Otherwise the civil courts had jurisdiction to declare that the person who possesses property and gets it benefits is the entitled to hold and benefit from the property. The transaction was made in the name of someone else who neither hold original documents nor possessed the property in any manner whatsoever since transaction. Recognizing the social and economic harm posed by benami practices, the Government of Pakistan introduced a formal legal framework to curb such transactions through the Benami Transactions (Prohibition) Act, 2017 , hereinafter called as “the Act, 2017” This article discusses the concept, evolution, legal framework, and enforcement mechanism regarding benami transactions in Pakistan.
Keywords: Benami property, Benami Transaction, possession, Tax evasion, FBR, Money Laundering, financial crime.
Legal Definition of benami property is provided under Section 2(7), Benami Transactions Act, 2017
The Act, 2017 provides meaning of Benami Property that any property which is subject matter of Benami Transaction and also includes the proceeds from such property.
Meaning of Benami Transaction
The word "Benami" is derived from Persian (بے نامی ), meaning "without a name." A benami transaction is one where the property is held by one person, but the consideration is paid by another, with the intent that the real beneficiary remains hidden and covered whereas benamidar is the front man. The Benami Transaction is defined in Section 2 (8) of the Benami Transaction (Prohibition) Act, 2017 as:
Section 2 (8).
“Benami transaction means,-------------
(A) a transaction or arrangement--------
(a) where a property is transferred to, or held by, a person and the consideration for such property has been provided, or paid by, another person;
(b) the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration, except when the property is held by---------
(i) a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, agent or legal adviser and any other person as may be notified by the Federal Government for this purpose; or
(ii) (ii) any person being an individual in the name of his spouse or in the name of any child or in the name of his brother and sister or lineal ascendant or descendant and the individual appearing as joint owner in any document of such individual and the consideration for such property has been provided or paid out of known resources of income of the individual; or
(B) transaction or arrangement in respect of a property carried out or made in a fictitious name; or
(C) a transaction or arrangement in respect of a property where the owner of the property is not aware of, or denies knowledge of, such ownership; or
(D) a transaction or arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious;
From above definitions it may be concluded that a benami transaction is:
• A transaction or arrangement where a property is transferred to or held by one person, but has been provided or paid for by another person, and the property is held for the benefit of the person providing the consideration.
• It includes a transaction made in a fictitious name or where the owner is unaware or denies knowledge of the ownership.
• It does not include property held in fiduciary capacity, by legal heirs, or as part of a legitimate family arrangement.
Legal Framework in Pakistan
Benami Transactions (Prohibition) Act, 2017
Prior to 2017, there was no legislation in Pakistan to prohibit the Benami Transactions rather it was frequent transaction to evade the taxes and also to have a mask on the face of beneficiary. Later on the Government of Pakistan has promulgated the Act, 2017. This is the principal legislation governing benami transactions in Pakistan. It aims to:
• Prohibit benami transactions.
• Provide a mechanism for the confiscation of benami properties.
• Establish special authorities for investigation and adjudication.
The Benami Transactions (Prohibition) Act, 2017 was promulgated on 14th February, 2017 and came into force at once in whole of Pakistan .
Key Provisions of the Benami Transaction (prohibition) Act, 2017
Here some key provision of the Benami Transaction (Prohibition) Act, 2017 are given in brief.
• Section 2 provides key definitions of the words and terms used in the Act, 2017.
• Section 3-4: Prohibition of benami transactions. If any person entered into any benami transaction of holds any benami property on or after promulgation of the Act, 2017 shall be liable to be prosecuted and punished under the Act, 2017. The property shall be liable to be confiscated by Federal Government.
• Section 5: Prohibition on re-transfer of benami property to the beneficial owner.
• Section 6–7: The Federal Government shall by notification establish Adjudicating Authorities on certain terms and condition to qualify. The Federal Government shall also constitute benches of the Adjudicating Authority.
• Section 8 provides that the Code of Civil Procedure, 1908 is applied by the Authority as for as may be practicable to enforce the Act, 2017
• Section 16 provided Powers of the Authority for discovery and inspection, enforcing attendance of any person, production of books of accounts and other documents, issuing commissions, receiving evidence on affidavits and any other matter under the Civil Procedure Code, 1908.
• Section 22 is pertaining to issuance of a Show Cause Notice to any person who is, as per available material, a benamidar, as to why the property should not be treated as Benamid property . The Initiating Officer, if have reasons for continuing the provisional attachment of the property, shall within 60 days from date of attachment, make a reference to the Adjudicating Authority. As per this provision, provisional attachment shall not be a permanent or unlimited attachment. It is held in the case of Ehsan Ullah and another that mere issuance of a notice was not sufficient to initiate any proceedings against any person under the Benami Transaction (Prohibition) Act, 2017. Issuance of Show Cause Notice under section 22 of the Act, 2017 with complete details of the matter in issue was mandatory in view of Articles 10-A and 19-A of the Constitution of Islamic Republic of Pakistan, 1973 . The process of issuance of summons is not provided under the Act, 2017. In another case law Ms. Unaiza Ahmed and another , the Honourable Lahore High Court has held that where the Initiating Officer has complied with the provisions of section 22 of the Benami Transaction (Prohibition) Act, 2017 by issuance of proper showcause notice, then the reference was made to the Adjudicating Authority for further proceeding the case as per the Act, 2017. The writ petition was dismissed.
• Section 24 provides that on receipt of the reference from the Initiating Officer, the Adjudicating Authority shall issue notices to the persons related to benami transaction, Banks and other authorities so also to the person who has made a claim in the property. The notices shall also be sent to all joint holder of the property. Non service of notice upon any of the joint holder of the property is not invalid if notice is served upon any one of the joint holder of the property. The Adjudicating Authority can also attach any other property which appeared to be benami transaction during hearing of reference, as if the said property is also referred to the Adjudicating Authority. Note: there is more chance of misuse of such powers of the Adjudicating Authority.
• Section 25 provides protection to the federal government if there occur no order of confiscation at the final stage. The third party has no protection under this Act.
• Section 43 provides bar of jurisdiction upon Civil Courts to entertain suit or proceedings in respect of any matter which any authority or tribunal under the Act, 2017 is empowered to determine and adjudicate. It is held in the case of Sadiq Rasheed and another that where property was neither unattended nor title-less, then the dispute between parties claiming the property comes within jurisdiction of the Civil Court to adjudicate the matter after recording the evidence and decide the title rights as per law, hence provisions of section 43 of the Act, 2017 did not come in the way of Civil Court’s jurisdiction. In another case of Syed Zain Ul Abideen , the Honourable Sindh High Court has held that where the proper procedure is adopted by the Initiating Officer by issuing Show Cause Notice then it cannot be called in question, which is mandate of the law.
• Section 44 and 47 provides for Appeals. If any person is aggrieved by an order of the Adjudicating Authority an appeal shall lie to the Federal Appellate Tribunal. The limitation for filing of appeal is 45 days from receipt of the order of the Adjudicating Authority. Under section 47 an appeal shall lie against order of the Federal Appellate Tribunal within 60 days from the date of service of the decision or order of the Tribunal.
• Section 48 provides for establishment of special court. The federal government may by notification designate court of Sessions as special courts for the purpose of the Act, 2017. As per section 49 of the Act, 2017, the Code of Criminal Procedure, 1898 shall be applicable before the Special Courts.
• Section 50 provides right of appeal against orders passed by the Special Court.
• Section 57 provides that all offences are non cognizable.
• Section 62 provides for rewards to the credible information to detection of benami property or benami transaction.
The scheme of the Benami Transaction (Prohibition) Act, 2017
The details scheme of the Benami Transaction Act, 2017 is starting from the definition clause of the Act, 2017 where benami property and benami transaction are defined. The benami property is liable to be confiscated to Federal Government and the Benami transaction is to be impounded after due process. The authority to conduct the proceedings under the Act, 2017 are provided as Initiating Officer (Deputy Commissioner Inland Revenue), Adjudicating Authority (Chairman and two members appointed by the Federal Government under section 6, Administrator, Approving Authority ( Commission Inland Revenue as defined in the Income Tax Ordinance, 2001). After approval of the Approving Authority, the Initiating Officer conducts an inquiry under section 21 of the Act, 2017. He may issue Show Cause Notice under section 22 of the Act, 2017. The property/accounts etc shall remain suspended or attached for the period of 60 days but not more then 90 days in some cases. It would be in discretion of the IO whether to attach the property or otherwise not to attach. However the attachment shall remain for maximum of 90 days and the cut of date shall be from the date of Show Cause. The Initiating Authority shall then forward a reference to the Adjudicating Authority within 60 days as per section 22 (5) of the Act, 2017. After receiving reference, the Adjudicating Authority shall issue notices to the concerned persons and after considering reply/objections, evidence and hearing the fate of the reference shall be deiced. If reference is replied as affirmation as per provisions of section 24 of the Act, 2017, the further proceeding for confiscation shall be conducted as per provisions of section 25 the Act, 2017. The orders of the Adjudicating authority are appealable before the Federal Appellate Tribunal under section 28 and section 44 of the Act, 2017. The limitation of appeal is provided as 45 days from the date of communication of the order of the Adjudicating Authority. The order is executable as per provisions of the Code of Civil Procedure, 1908. The order/judgment of the Federal Appellate Tribunal is appealable under section 47 of the Act, 2017 before the Honourable High Court. in case of any offence under the Act, 2017, the trial courts are the court of Sessions Judge as per section 48. Section 43 of the Act 2017 is creating bar of jurisdiction of civil courts in the matter pertaining to the proceedings under the Act, 2017.
Income Tax Ordinance, 2001 (Section 111)
The FBR can probe unexplained income or assets under Section 111 of the Income Tax Ordinance, 2001 , often overlapping with benami investigations, especially when the assets are disproportionate to declared income. The Income Tax Ordinance, 2001 is aimed to impose, collect and regulate the enforcement of income tax and also regulate the income, expenditures and assets of individuals and entities. The Act, 2017 is to regulate the benami transactions and benami property where the property is liable to be confiscated and the benami transactions impounded. The Act 2017 is to regulate the real beneficiary of a property and its benamidar or proxy holders. The Ordinance 2001 is helpful for tracing of the benami property. It imposes taxes on the income and also imposes penalties. The Act, 2017 provides confiscation of property, impounding the documents, prosecution and convictions for offenders.
3. Anti-Money Laundering Act, 2010
Benami transactions are often linked with money laundering. Thus, the Financial Monitoring Unit (FMU) and FBR collaborate to trace suspicious transactions under AML laws. The AML Act, 2010 is to criminalize offenders involved in money laundering and proceeds of drugs, corruption, terrorism whereas the Act, 2017 is to identify and confiscate the benami properties. The FMU, FIA, NAB, ANF, Customs, Police are the investigating agencies under the AML Act, 2010 whereas in Benami Transaction (Prohibition) Act, 2017, the Federal Board of Revenue (Benami Zone) is the investigating agency which investigates through Initiating Officcer and Adjudicating Authority. In AML Act, 2010 the basic Tool of investigation is Suspicious Transaction Report and Currency Transaction Reports sought from FMU whereas the Act, 2017 provides attachment of the property and then inquiries and final order by the Adjudicating Authority on reference made by the Initiating Officer within 60 days of provisional attachment.
Implementation and Enforcement
The Federal Board of Revenue (FBR) is the designated authority under the 2017 Act. It operates through:
• Benami Zone Offices: Located in major cities such as Karachi, Lahore, and Islamabad.
• Initiating Officers: Who conduct preliminary inquiries and attach properties suspected to be benami.
• Adjudicating Authorities: To determine the legality of the transactions.
Confiscation of Property
If adjudicated to be benami, the property is confiscated by the Federal Government under Section 25 of the Act. The beneficial owner and the benamidar may also face prosecution. After order of confiscation the rights and title in such property shall vest absolutely in the Federal Government free of all encumbrances etc.
Judicial Perspective
While the Act, 2017 is relatively new, Pakistani courts have started interpreting it in light of constitutional and property rights. In various judgments, courts have emphasized the need to balance enforcement with the due process guaranteed under Articles 4 and 10-A of the Constitution. It is held in the case of Syed Tahwer Hussain Rizvi by the Lahore High court while dismissing a Revision Application, that practice of holding benami property had become a device for corrupt segment of the society as means of concealing money or property to evade payment of proper taxes and to hide ill-gotten money in the name of some other person, hence the Benami Transaction (Prohibition) Act, 2017 has been promulgated by the legislature for checking of corrupt practices.
In FBR v. Muhammad Iqbal (2021), the Islamabad High Court upheld the FBR's authority to initiate inquiries but stressed adherence to procedural fairness.
Challenges in Implementation
• Lack of awareness among the public about the consequences of benami transactions.
• Overlapping jurisdictions between tax, anti-corruption, and money laundering laws.
• Weak record-keeping systems, especially for rural and undocumented properties.
• Delays in adjudication due to a shortage of trained judicial and investigative personnel.
Recent Developments
• In 2020 and 2021, FBR intensified its campaign by issuing notices and attaching several benami properties, especially in metropolitan cities.
• Pakistan’s commitment to FATF (Financial Action Task Force) requirements also accelerated enforcement efforts against benami holdings.
• Proposals have been made for the digitization of property records and integration with NADRA to trace beneficial ownerships.
Conclusion and Recommendations
The Benami Transactions (Prohibition) Act, 2017 marks a significant step in formalizing Pakistan's commitment to transparency in asset ownership and combating financial crimes. However, the law’s success depends on robust enforcement, inter-agency coordination, and public awareness. The training of the law enforcement agency members and sensitization of the issue shall play pivotal role. The government must be serious in check and balance of the cases and strictly pursue the investigations minutely. There must also be substantive initiatives for the members of the law enforcement personnel so that they may work hard and may not indulge in vague practices.
Recommendations:
• Enhance capacity-building of FBR: It is necessary and need of the hour to enhance the capacity building of FBR and Judiciary for tracing and identifying the assets, properties generated by illicit means and are held benami to screen the original owners for tax evasion and to suppress the corruption. The Financial Forensic mechanism and facility must be made available by the Federal Government of Pakistan to ease the investigation and prosecution of the cases under the Benami Transaction (Prohibition) Act, 2017. There should be centralized record system of properties. The Real Estate fraud eradication mechanism is need of the hour. It is also recommendable that each Real Estate Agency must be duly registered with government and all the transaction held through any Real Estate Agency, should be conducted through proper banking channel to minimize the risk of evasion of taxes and fraud. The System of actual price and government prices must be abolished for uniformity of the taxation system. The government must systemize the procedure of registration of all property and it must be fool proof by GIS maping and a centralized property database is required. There must be dedicated technical units in FBR for Benami Units. There must be forensic accountants, IT experts, Legal Advisors and data analysts in each Regional Tax Officer (RTO) of FBR. The data integration and sharing system is required to be built. Each and every transaction must be links with NADRA, Land Revenue Record, Banking transactions and FMU as per AML Act, 2010 so that lesser manpower and more efficient working be done. Digital evidence is collection, tracking through software tool kits and real time monitoring of financial flow is also one of the most important factor to enhance the capacity building of the agency.
• Enhance capacity-building of judiciary: there must be continuing legal training, orientation and legal education to the member of judiciary. The appellate tribunals and special courts must also be given basic infrastructure and training to combat the Benami Transction case. Financial Crime Adjudication education is necessary of members of judiciary. Burden of proof in benami transaction case, the inter connected laws like Anti Mony Laundering Act, 2010, Income Tax Laws and regulations and other legal principles which enhance the capacity of the judicial officers to overcome issues, is also necessary. There must be special benches in the High Court level to deal with the case pertaing to or arising out of the Benami Transaction (Prohibition) Act, 2017. There must be support research staff in the courts regarding the implementation of Act, 2017 to facilitate the judges for just and quick decisions. The legal data base and precedent must be made available in a specialized manner for the researchers and ready references. Choosing the special clerks who are experts in financial cases. Case tracking system in the available Case Flow Management System (CFMS) must be dedicated to track the case files, dates, hearing schedules, orders etc. and connected cases, appeals. The data must be make available for sharing with concerned agencies for further investigations and progress in the case.
• Coordination, policy and overseeing: there should be an inter Agency Coordination Mechanism in which FBR, FMU, NAB, ANF, FIA, Land Revenue Authority and other agencies must work and share there experience to combat the menace. Joint Investigation Teams and Task Forces for high profile cases must also be made.
• Legislative steps: The government must frame rules immediately to carry out the effective measures under the Act, 2017. The procedural rules must be very clear and explicit. Rules must also provide clearer and vast and enhances procedural powers for collection of evidence from any institution immediately as an interim measure. There must be monitoring process of each investigation and case. Publication of annual reports. There must also be internation cooperation and Mutual Assistance Treaties and FATF recommendations for cross border investigations.
• Create public campaigns about the consequences of benami transactions.
• Integrate the law with other financial and anti-corruption frameworks.
References
1. Benami Transactions (Prohibition) Act, 2017
[Gazette of Pakistan, 2017]
2. Income Tax Ordinance, 2001
Section 111 – Unexplained income or assets
3. Anti-Money Laundering Act, 2010
Financial Monitoring Unit (FMU) provisions
4. FBR v. Muhammad Iqbal, 2021 PLD Islamabad High Court
5. FATF Mutual Evaluation Report – Pakistan, 2019
6. Constitution of Islamic Republic of Pakistan, 1973
Article 10-A – Right to fair trial
7. Case laws (as referred in foot notes)