Section 23 of the Benami Act: Power to Conduct Inquiry or Investigation
Section 23 of the Prohibition of Benami Property Transactions Act, 1988 gives the Initiating Officer power, after obtaining prior approval of the Approving Authority, to conduct or cause an inquiry or investigation to be conducted in relation to matters relevant under the Act. The provision must also be read with its statutory Explanation concerning cases in which a notice under Section 24(1) has already been issued.
Current statutory name: The principal law is the Prohibition of Benami Property Transactions Act, 1988. The Benami Transactions (Prohibition) Amendment Act, 2016 substantially amended the 1988 Act and changed its short title with effect from 1 November 2016.
What does Section 23 provide?
Section 23 - Power of authority to conduct inquiry, etc.
The Initiating Officer, after obtaining prior approval of the Approving Authority, has power to conduct, or cause to be conducted, an inquiry or investigation concerning any person, place, property, assets, documents, books of account or other documents, and any other matter relevant under the Act.
Explanation: The provision does not apply, and is deemed never to have applied, where the Initiating Officer has issued a notice under Section 24(1).
The text above is a plain-language presentation of the current provision. For the authoritative statutory text, refer to the official India Code copy of the Act.
Conditions for exercise of power under Section 23
- The power belongs to the Initiating Officer. Section 2 of the Act defines the statutory authorities and related expressions used in the Benami law.
- Prior approval is mandatory. Before conducting or causing an inquiry or investigation under Section 23, the Initiating Officer must obtain prior approval of the Approving Authority.
- The inquiry may cover a wide range of subjects. The provision expressly refers to a person, place, property, assets, documents, books of account and other documents.
- The inquiry must relate to a relevant matter under the Act. The power is statutory and is linked to matters relevant to proceedings under the Benami law.
- Section 24 notice changes the position. By reason of the Explanation to Section 23, the Section 23 power does not apply once a notice under Section 24(1) has been issued.
Who is the Approving Authority?
Under Section 2 of the Act, the term Approving Authority refers to an Additional Commissioner or Joint Commissioner as defined in the Income-tax Act, 1961. The requirement of prior approval in Section 23 therefore operates as a statutory control before the Initiating Officer uses the inquiry or investigation power under this section.
How Section 23 relates to Section 24
Section 24 deals with notice and attachment of property involved in a benami transaction. The Explanation to Section 23, inserted by the Finance (No. 2) Act, 2019 and given effect from 1 November 2016, clarifies that Section 23 does not apply where the Initiating Officer has issued a notice under Section 24(1).
This distinction is important because Section 24 contains its own procedural framework after the Initiating Officer records reasons to believe that a person is a benamidar in respect of property. Once that statutory notice stage is reached, the inquiry and further action are governed by the provisions applicable to the Section 24 proceeding.
Practical meaning of Section 23
In practical terms, Section 23 is an information-gathering and investigative provision available to the Initiating Officer at the stage to which the section applies. It enables examination of relevant persons, places, property and records, but only after the prescribed prior approval. It should not be read as an unrestricted power detached from the scheme of the Act.
Legal note: This page is a general statutory guide. Whether a particular inquiry, notice, attachment or investigation is valid depends on the facts, the stage of proceedings, the statutory approvals obtained and the law applicable on the relevant date.
Related provisions
Readers examining Section 23 should also review Section 21 - Power to call for information, Section 22 - Power to impound documents, and Section 24 - Notice and attachment of property involved in benami transaction.