A tax office of the Federal Board of Revenue (FBR) has filed a reference against the chairman of a prominent Islamic bank, accusing him of engaging in benami transactions to obtain properties.
The Anti-Benami Initiative Zone-III in Karachi took this unprecedented step, marking the first case of its kind under the Benami Transactions (Prohibition) Act, 2017.
The FBR, in a press release issued on Monday, announced that it has submitted a reference before the Adjudicating Authority under Section 22 of the Benami Transactions (Prohibition) Act, 2017. The target of this legal action is the chairman of one of the leading Islamic banks in the country.
The case revolves around the purchase of 40 million shares of an Islamic commercial bank in the private sector, with a reported value of Rs. 380 million. The FBR’s Anti-Benami Initiative Zone-III uncovered an intricate web of benami transactions involving the acquisition of these shares.
According to the press release, the shares of the Islamic bank were initially purchased by a benamidar, or a person holding property on behalf of another, claiming to have taken a loan from an offshore company owned by the beneficial owner in 2014 and 2015. In a twist of events in 2020, these shares were transferred back to the beneficial owner without any apparent arms’ length transaction.
The FBR’s action highlights the significance of the Benami Transactions (Prohibition) Act, 2017, which aims to curb the practice of holding properties in the names of others to conceal the real ownership. The Act provides a legal framework for identifying and penalizing benami transactions, ensuring accountability and transparency in property transactions.
In response to the identified benami transactions, the FBR has taken decisive steps, attaching the shares of the Islamic bank valued at Rs. 380 million as per the provisions of the law. The reference filed before the Adjudicating Authority is the next step in the legal process. The Adjudicating Authority will review the evidence presented by the FBR and determine whether to confirm or reject the attachment of the shares. If confirmed, the shares will be confiscated by the federal government.
This case serves as a precedent, signaling the FBR’s commitment to investigating and prosecuting individuals engaged in benami transactions, even if they hold influential positions in financial institutions. The initiation of legal proceedings against the chairman of the Islamic bank underscores the government’s determination to uphold the rule of law and combat financial irregularities that undermine the integrity of the financial sector. As the case unfolds, it is likely to set benchmarks for future actions against benami transactions in the country.
