1997 (6) TMI 338 - AT - FEMA

Appeal mostly denied, except for Rs. 21,000 cash. Tribunal upholds forfeiture of properties. Legitimacy of funds crucial.

Mrs. Allimmal Versus Competent Authority

The appeal was largely rejected, with the exception of the modification regarding the cash amount of Rs. 21,000. The Tribunal upheld the forfeiture of ... - Issues Involved:1. Relevance and adequacy of reasons recorded by the Competent Authority.2. Nexus between the forfeited properties and the detenu.3. Requirement of notice under sub-section (2) of section 6 of SAFEMA.4. Jurisdiction and right of the Competent Authority to inquire into the source of funds.5. Validity of forfeiture of specific properties.Detailed Analysis:1. Relevance and Adequacy of Reasons Recorded by the Competent Authority:The appellant challenged the reasons recorded by the Competent Authority, arguing they were not germane and relevant for initiating proceedings under SAFEMA. The Tribunal, after careful perusal, concluded that the reasons recorded in respect of each property were indeed relevant for initiating the proceedings. The Tribunal emphasized that the adequacy of the reasons recorded by a Competent Authority cannot be questioned in any forum, and the legal position on this point is clear.2. Nexus Between the Forfeited Properties and the Detenu:The appellant argued that the Competent Authority failed to establish a nexus between the forfeited properties and the detenu, citing the Supreme Court judgment in Attorney-General for India v. Amratlal Prajivandas. However, the Tribunal clarified that the burden of proving that the properties do not belong to the detenu lies on the relatives or associates. The Tribunal reiterated that the Competent Authority's role is not to establish the nexus but to act upon the presumption that the properties are illegally acquired unless disproven by the appellant.3. Requirement of Notice Under Sub-section (2) of Section 6 of SAFEMA:The appellant contended that the absence of notice under sub-section (2) of section 6 of SAFEMA to the detenu rendered the proceedings void ab initio. The Tribunal clarified that such notice is required only when the property is held on behalf of another person to whom SAFEMA applies. Since the properties were in the appellant's name and she was duly served with a notice under sub-section (1), there was no need to serve a copy of the notice on the detenu.4. Jurisdiction and Right of the Competent Authority to Inquire into the Source of Funds:The appellant argued that the Competent Authority had no jurisdiction to inquire into the source of funds of the appellant's mother. The Tribunal upheld the Competent Authority's right to make such inquiries, stating that it is essential to determine the legitimacy of the funds used to acquire the properties.5. Validity of Forfeiture of Specific Properties:- 54 Cents of Agricultural Land at Eruvadi:The appellant claimed that the land was purchased with money given by her mother. The Competent Authority did not accept this claim due to lack of evidence regarding the source of the funds. The Tribunal upheld the forfeiture, noting that the detenu husband had admitted to an income of Rs. 22,000 during the relevant period.- Half Share in Wet Land at Eruvadi:The appellant claimed that the land was purchased with money given by her maternal uncle. The Competent Authority rejected this claim based on contradictory statements and lack of corroborating evidence. The Tribunal upheld the forfeiture, citing the overall facts and circumstances.- House at Pudukudi West Street, Eruvadi:The appellant claimed the property was purchased with income from agricultural lands. The Competent Authority held that the agricultural lands were illegally acquired, and thus any income from them was tainted. The Tribunal upheld the forfeiture, referencing section 3(1)(c)(iv) of SAFEMA.- Site at Main Road, Eruvadi:The appellant claimed the site was purchased with agricultural income. The Tribunal upheld the forfeiture, stating that income from illegally acquired agricultural lands is also tainted.- Half Share in House at Jayalakshmi Puram, Nungambakkam, Madras:The appellant claimed the property was purchased with a loan and agricultural income. The Competent Authority rejected this claim due to lack of corroborating evidence and contradictory statements. The Tribunal upheld the forfeiture, citing preponderance of probabilities.- Cash Amount of Rs. 21,000:The Competent Authority forfeited the cash amount, claiming it represented sale proceeds of a house purchased with the detenu's income. The Tribunal disagreed, stating that the Competent Authority cannot hold another property already disposed of before the notice and that it failed to prove the appellant had the cash balance on the notice date. The Tribunal ordered defreezing of the forfeiture of Rs. 21,000.Conclusion:The appeal was largely rejected, with the exception of the modification regarding the cash amount of Rs. 21,000. The Tribunal upheld the forfeiture of the other properties based on the reasons and evidence provided by the Competent Authority.