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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether a property acquired before the alleged scheduled offence and mortgaged to a bank could be treated as proceeds of crime and attached under the Prevention of Money Laundering Act, 2002, and whether the bank's mortgage interest could be ignored for that purpose.
Analysis: The property in question had been acquired in 2005, whereas the alleged scheduled offence was stated to have occurred later. On the facts found, the property was not derived or obtained from criminal activity relating to a scheduled offence. The definition of proceeds of crime in Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 covers property derived or obtained from criminal activity, and also the value of such property, but that principle could apply only where the attachment is sought against property traceable to a scheduled crime or against a person who holds proceeds of crime. The property had already been mortgaged to the bank for valuable consideration, and the mortgagor was left only with the equity of redemption. The bank's interest, having arisen independently and prior to the attachment, could not be treated as proceeds of crime in the bank's hands.
Conclusion: The attachment of the factory premises was unsustainable and the challenge to the Tribunal's order failed.
Final Conclusion: The appeal was dismissed, and the setting aside of the provisional attachment and confirmation order was left undisturbed.
Ratio Decidendi: Property acquired before the alleged scheduled offence and already encumbered in favour of a bona fide mortgagee cannot be treated as proceeds of crime for attachment under the Prevention of Money Laundering Act, 2002.
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