2024 (10) TMI 153 - AT - Money Laundering

Tribunal upholds attachment order after appellant fails to explain cash deposits and land purchase sources

Maan Singh through Suryajala Devi Versus The Deputy Director Directorate of Enforcement, Lucknow

The Appellate Tribunal under SAFEMA dismissed an appeal challenging attachment order under Prevention of Money Laundering Act, 2002 regarding acquisition ... Money Laundering - disclosure of the source of income to acquire Anil Marriage Hall - challenge to attachment order under Prevention of Money Laundering Act, 2002 - HELD THAT:- It is despite an opportunity to the appellant to produce the CC loan limit on the receipt of the notice from the Adjudicating Authority but no documents was produced. In fact, notice under section 8 (1) of the Act of 2002 was given to disclose the source of income but despite an opportunity for it, no document was submitted. The bank statement has been filed along with the appeal. The source of it has not been disclosed. The amount of Rs. 41,49,807/- was deposited in the bank account in cash. No justification for deposit of the amount in cash could be given by the appellant and that too when it was not a small amount but was more than Rs. 41 lakhs. No transaction of M/s Amit Traders could be proved - the appellant could not give explanation to the admission made by the deceased appellant for embezzlement of Rs. 65 lakhs and further admission that the amount was used for the construction Anil Marriage Hall in Rajinder Nagar Colony, Fatehpur. The land was otherwise purchased partly in the name of deceased appellant’s wife on 01.08.2005 and remaining in the name of deceased appellant on 02.03.2006. The source of purchase of land has also not been disclosed. The Investigating Officer has analyzed the bank account of the deceased appellant and his family members to make a proper scrutiny but no source for transfer of amount inter-se was found except in the account number 2800 in District Cooperative Bank which was also not sufficient to substantiate the pleas and arguments raised by the counsel for the appellant. The allegation for embezzlement is not levied only on the deceased appellant but even others who said to have taken money out of the bogus cheques of the farmers and it was embezzled in connivance with each other. The charge sheet pursuant to the FIR has already been filed. There are no case to cause interference in the order passed by the Adjudicating Authority - appeal dismissed. Issues: Challenge to attachment order under Prevention of Money Laundering Act, 2002Detailed Analysis:1. Challenge to Attachment Order:The appeal under section 26 of the Prevention of Money Laundering Act, 2002 challenges the order dated 17.09.2021 passed by the Adjudicating Authority confirming the attachment order. The deceased appellant, a former bank employee, faced allegations of embezzlement of funds from the District Cooperative Bank. An FIR was registered, charge sheet filed, and investigation initiated. The appellant's statement and bank account transactions revealed substantial cash deposits totaling Rs. 41,49,807, allegedly embezzled funds. The appellant utilized around Rs. 65 lakhs for constructing Anil Marriage Hall, claiming it originated from his son's firm. However, he failed to provide concrete evidence supporting the source of income, leading to the attachment of Anil Marriage Hall.2. Appellant's Arguments:The appellant's counsel argued that the Investigating Officer prematurely closed the appellant's statement without allowing time to submit supporting documents. The appellant contended discrepancies in the embezzled amount, initially claimed at Rs. 35,60,068 but later raised to Rs. 41,29,367, and ultimately to Rs. 65 lakhs. The appellant asserted that the respondent manipulated his statement, as he only admitted to embezzling Rs. 15 lakhs, not Rs. 65 lakhs. Despite an opportunity to raise legal issues, the appellant's counsel focused solely on factual discrepancies.3. Respondent's Arguments and Tribunal's Findings:The respondent argued that the appellant failed to provide evidence supporting the source of income for constructing Anil Marriage Hall, despite multiple opportunities. The appellant did not produce documents such as bank statements or income tax returns to substantiate the claimed source of funds. The Tribunal noted the significant cash deposits in the appellant's bank account without a justifiable explanation. The appellant's admission of embezzling Rs. 65 lakhs and utilizing it for the marriage hall construction was not adequately supported with documented proof. The Tribunal found no grounds to interfere with the Adjudicating Authority's decision, dismissing the appeal.In conclusion, the Tribunal upheld the attachment order, emphasizing the lack of concrete evidence supporting the appellant's claimed sources of income and the substantial cash deposits unaccounted for in the bank account. The appellant's failure to provide necessary documentation and explanations led to the confirmation of the attachment order under the Prevention of Money Laundering Act, 2002.