Proceeds of Crime finding sustained where lawful source of property was not proved and attachment remained in force.

Properties linked to scheduled offences under the Arms Act were treated as proceeds of crime under the Prevention of Money Laundering Act, 2002 because the claimed lawful source of acquisition was not credibly established. The explanations based on prior savings, agricultural income and alleged sale proceeds were unsupported by reliable bank records or contemporaneous documents, and the gift deed in favour of the spouse was found doubtful on the surrounding circumstances and recorded statements. In the absence of proof of lawful funds, the attachment was sustained and the challenge to provisional attachment failed.

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Issues: Whether the properties attached under the Prevention of Money Laundering Act, 2002 were liable to be treated as proceeds of crime and whether the confirmation of provisional attachment was sustainable.

Analysis: The properties were linked to scheduled offences under the Arms Act and the enforcement investigation proceeded on the basis of the predicate crime. The explanation offered for acquisition of the immovable and movable assets was found unconvincing, as the claimed prior savings, agricultural income, and alleged sale proceeds were not supported by reliable bank records or contemporaneous documentary proof. The gift deed in favour of the spouse was also found doubtful because the stated circumstances and the recorded statements were inconsistent, supporting the inference that the transfer was only a facade. In the absence of credible proof of lawful source of funds, the assets were treated as having been acquired from illicit income connected with the scheduled offences and were therefore liable for attachment under the Act.

Conclusion: The confirmation of attachment was upheld and the challenge to the provisional attachment failed.

Final Conclusion: The attached properties were held to be connected with proceeds of crime, and the appeals were dismissed with status quo directed to continue during the criminal trial.

Ratio Decidendi: Where the surrounding circumstances and financial records do not establish a lawful source of acquisition, and the explanation for transfer or ownership is found to be a camouflage, the properties may be treated as proceeds of crime and subjected to attachment under the Prevention of Money Laundering Act, 2002.

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