2024 (9) TMI 66 - AT - Money Laundering

Appellate Tribunal upholds provisional attachment of bank accounts worth Rs. 2.4 lakh linked to VAT refund fraud proceeds

The Appellate Tribunal under SAFEMA dismissed an appeal challenging provisional attachment of bank accounts containing Rs. 1,25,000 and Rs. 1,15,000 ... Money Laundering - Provisional Attachment of property - proceeds of crime - impleaded of proprietor as the necessary party - HELD THAT:- The bank accounts of proprietorship concerns, namely, M/s Garg Wollen Mills and M/s B L Yarn in Axis Bank containing sum of Rs. 1,25,000/- and Rs. 1,15,000/- are rightly attached by respondent ED which are confirmed by Ld. Adjudicating Authority, in view of the fact that sum of Rs. 2,84,982/- were received by appellant Jagmohan Garg in his bank account through M/s JaldharaCotspin Pvt Ltd. As per the case of respondent ED, Ramesh Mehan, Prop. of proprietorship concern M/s Yourke International, committed the fraud of VAT refund to the tune of Rs. 74,36,067/-, on the basis of forged documents. Out of the said proceeds of crime, M/s Shreya International received the proceeds of crime to the extent of Rs. 70,50,000/-. Thereafter, out of the said share of proceeds of crime M/s Shreyas International transferred sum of Rs. 44,00,056/-,to M/s JaldharaCotspin Pvt Ltd. Ludhiana. Thereafter, the said company from the said share of proceeds of crime transferred sum of Rs. 2,84,982/- in the account of the present appellant and the remaining amount into the accounts of other defendants. The second contention of the Ld. Counsel for the respondent is also devoid of any merits as proprietorship concern is not a legal person in the eyes of law and hence, Jagmohan Garg being proprietor is rightly impleaded as the necessary party in the Original Complaint No. 922/2018. Therefore, the present appeal needs to be dismissed being devoid of any merits. The present appeal is hereby dismissed being devoid of any merits and thereby the impugned order dated 13.09.2018 confirming PAO No. 02/2018 is hereby upheld - Appeal Dismissed. Issues:Appeal against attachment of properties under Prevention of Money Laundering Act, 2002Detailed Analysis:1. Background and Allegations:The case involves an appeal under Section 26 of the Prevention of Money Laundering Act, 2002, against the confirmation of the attachment of properties, including bank accounts, by the Adjudicating Authority. The appellant, a proprietor of two concerns, was implicated in a case where fraudulent activities related to VAT refund were alleged. The appellant's bank accounts were attached based on the proceeds of crime received.2. Arguments of the Appellant:The appellant contended that the attached bank accounts were of his proprietorship concerns and no proceeds of crime were traced to those accounts. He argued that the confirmation of attachment ignored the true facts and his defense. The appellant emphasized that the accounts of his concerns should not have been attached solely based on his individual transactions.3. Arguments of the Respondent:The respondent argued that the appellant had received proceeds of crime in his individual bank account, and therefore, the attachment of the concern's accounts was justified. The respondent highlighted that legal action against a proprietorship concern should be directed at the proprietor, making the attachment valid without impleading the concerns as defendants.4. Tribunal's Decision:After considering the submissions, the Tribunal upheld the attachment of the bank accounts of the appellant's concerns. The Tribunal found that the appellant had received proceeds of crime in his individual account, justifying the attachment of the concern's accounts. It was noted that the concerns were rightly considered necessary parties in the adjudication process.5. Conclusion:The Tribunal dismissed the appeal, affirming the order confirming the attachment of the properties. The decision emphasized that the appellant's receipt of proceeds of crime warranted the attachment of the concern's accounts. The Tribunal clarified that the dismissal of the appeal would not impact any party's rights in criminal proceedings.Final Decision:The appeal was dismissed on August 6th, 2024, upholding the attachment of the bank accounts of the appellant's concerns. The Tribunal's decision reiterated the validity of the attachment based on the appellant's receipt of proceeds of crime.