February 24, 2024

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With vast tracts of land still available in Gujarat, alongside co-exists an equally big economy of organised money laundering. According to highly placed sources in the Income Tax Department, Benami property now tops the choice to “absorb” black money. Builders strike a deal with farmers to procure agricultural land. The poor farmer gets a commission. And the builder takes home a world of investment possibilities.
The Benami Transactions (Prohibition) Act, 1988, was introduced in an attempt to re-claim all property held under the Benami umbrella. The Act was amended in 2016. In Gujarat, a state with over six crore population, there are only two Benami Prevention Commissioners. One handles the Ahmedabad to Porbandar area and the other overseas Nadiad to Vapi. Gujarat receives over 1,000 leads for Benami transactions each year. However, in the past three years, only 55 cases have been registered under the Benami Property Act (BPA).
(For more on the ineffective working of the Benami cell in Gujarat: https://www.vibesofindia.com/benami-property-cell-of-income-tax-department-gujarat-is-defunct-heres-why/)
“Ahmedabad’s co-ordinates are fast changing. Earlier even SG Highway looked like an extended part of the city. Now, the city easily covers Sindhu Bhavan, Ghuma or South Bopal. These were primarily agricultural land but over the years, city builders struck a deal with farmers to procure the land by misusing the laws. Here, the farmer becomes an aggregator for the land. This violation comes under BPA,” explained an IRS officer at Aaykar Bhavan, Ahmedabad.
The officer added that such deals are illegal and criminal. “The offender can be jailed for up to seven years. We still have to get a robust department in place but our eyes are trained on lawbreakers.”
The Gujarat Agriculture and Tenancy Act, 1949, stipulates that an owner of cultivable land in Gujarat is one whose ancestors were farmers before 1949. That means, for those who can prove that their forefathers were farmers before the cut-off year, the entitlement to land ownership goes uncontested.
According to agriculture land laws in Gujarat, a non- agriculturist cannot buy agricultural land in the state. Previously, only those from the state of Gujarat were allowed to invest in agricultural land. At a later point in time, the Gujarat High Court permitted in favour of any farmer across the country buying land for cultivation in Gujarat.
The law in India upholds that fertile agricultural land can only be used for agricultural purposes and nothing else. To use it for a purpose other than that, ie. residential, commercial or industrial, the owner must seek approval from the authorities concerned and change the “land use.”
The Benami property cell gets leads through I-T raids. “Over 60% of our leads come from searches. Be it Chiripal Group or Shivalik Builders, most have amassed Benami properties but the department is still investigating their documents,” added the officials.
How do officials identify misuse of agricultural land?
“Usually income tax raids are the source. We conducted over 10 raids in Gujarat in 2022. Among the seized papers, most had owned agricultural land deeds. Hereon begins our trail. How does a builder own agricultural land? Tracking and preparing a trial is tough and so as of now, only 55 firms have been identified under the BPA,” explained the IRS officer. He elaborated that agricultural land laws are similar in Gujarat and Maharashtra and these two states also account for maximum misuse of laws.
Case In Point: Misuse of agricultural land by Shah Rukh Khan
In Maharashtra, actor Shah Rukh Khan’s Alibaug farmhouse has been attached under Section 24 of the Prohibition of Benami Property Transactions Act (PBPT). SRK was charged for misuse of land. His firm, Deja Vu Farms Pvt Ltd was incorporated on 29 December 2004 with interests in crops, gardening and horticulture. SRK gave an unsecured loan of Rs 8.5 crore to Deja Vu Farms for purchase of agricultural land for farming in Alibaug, but subsequently converted the land into a farmhouse for personal use. This constitutes a Benami transaction under Section 2 (9) of the Act. A pool and helipad are made on this plot. Deja vu Farms has no income to show from farming activity.
Benami Transactions: Old Act (1988)
Benami Transactions (Prohibition) Act, 1988 (Old Act) was introduced to prohibit such transactions and also to recover property held as Benami. The Old Act contained nine sections; however, the necessary rules, regulations and procedures for the implementation of the law were not framed. In particular, there is no regulation relating to the confiscation of property.
Benami Transactions: New Act (2016)
This Act came into force on November 1, 2016. The amended law contains 72 sections.
Converting Agricultural Land for Non-Agricultural Use
The revenue department of Gujarat received 56,566 applications in two years – 2019 and 2020 – for converting agricultural land into use for non-agricultural purposes. In all, the applications were made for converting 57.73 crore square metres of agricultural land. The government granted permission to convert 16.80 crore square metres of agricultural land in 2019 and 13.47 crore square metres in 2020.  
Interestingly, the state government earned a revenue of Rs 1,153.33 crore in 2019 and Rs 898.95 crore in 2020 by granting permission to convert agricultural land for non-agricultural use.
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