Lawful source of property acquisition defeats forfeiture when supported by income records and accepted tax assessment.

Lawful source of acquisition was established where the appellant supported purchase of two land parcels with agricultural income and documentary evidence of produce sales, and supported the house purchase with a bank credit and disclosure in an accepted income-tax return. In the absence of contrary material, the contemporaneous records and accepted tax assessment justified the explanation of legal funding. The forfeiture order could not be sustained on such evidence and was set aside.

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Issues: Whether the three items of property were acquired from legal and known sources so as to justify forfeiture under the Act.

Analysis: The appellant had substantial agricultural land and documentary support for income from the sale of its produce, which supported the acquisition of the two land parcels in 1972 and 1973. As to the house purchased in 1974, the appellant showed a bank credit of Rs. 80,000, and the purchase was also disclosed in the income-tax return for assessment year 1975-76 and accepted by the income-tax authorities. In the absence of contrary material, the accepted income-tax assessment and the surrounding circumstances supported the appellant's explanation of lawful funding.

Conclusion: The finding of unlawful source for the two land parcels could not be sustained, and the house purchase was also shown to have come from legal and known sources. The forfeiture order was therefore unjustified.

Final Conclusion: The appeal succeeded and the forfeiture order passed by the Competent Authority was set aside.

Ratio Decidendi: Where an appellant explains acquisition of property by reference to lawful income and the explanation is supported by contemporaneous material, including an accepted income-tax assessment, forfeiture cannot be sustained in the absence of contrary evidence.

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