2025 (11) TMI 1707 - AT - Money Laundering

Tribunal upholds PMLA attachment, Covid limitation exclusion valid, Section 50(2) statement admissible, investments unexplained pending trial

Sapna Sureka Versus The Deputy Director Directorate of Enforcement, Kolkata

The AT upheld the impugned order confirming provisional attachment under the Prevention of Money Laundering Act. It rejected the challenge based on expiry ... Money Laundering - proceeds of crime - Provisional Attachment Order - Impugned Order was passed after expiry of 180 days from the date of provisional attachment order - HELD THAT:- The issue remains regarding passing the order by the Adjudicating Authority after expiry of 180 days from the date of provisional attachment order. The issue aforesaid has already been deliberated by this Tribunal in many appeals where the period out of surge of covid-19 has been excluded in pursuance to the judgement of the Apex Court in suo-motu petition decided by its order dated 10.01.2022 [2022 (1) TMI 385 - SC ORDER]. The relevant paras of the judgement of this Tribunal referred in the case of M/s SKS Ispat & Power Ltd. v/s The Deputy Director Directorate of Enforcement, Mumbai [2025 (3) TMI 1549 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] where it was held that 'This is not a case to cause interference in the impugned order when the appellant has already been charge-sheeted and has not been discharged' - the Impugned Order was passed beyond the period provided under the Act. The issue now remains about the statement of the appellant recorded under Section 50(2) of the Act of 2002. The statement recorded under Section 50(2) are admissible in evidence and can be read. Minute examination of the statements reveals that, that certain investments in shape of insurance policy, small investment and credit in SB account were out of her personal savings, maturity amounts from the investment. It was not disclosed to be out of salary and otherwise the appellant has failed to show the details of the investment. Thus, amount in the bank account has been provisionally attached to the extent of proceeds in her hand. There are no error in the Impugned Order to cause interference however the provisional attachment of the amount would remain subject to final outcome of the trial and with the aforesaid the appeal is disposed of. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the order confirming provisional attachment of the appellant's bank account was vitiated for not being passed within 180 days as required under Section 5(3) of the Prevention of Money Laundering Act, 2002, in the backdrop of the COVID-19 limitation orders passed by the Supreme Court. 1.2 Whether the attached amount in the appellant's bank account was shown to be from legitimate sources so as to warrant release from attachment, and whether the Adjudicating Authority erred in relying upon the appellant's statement recorded under Section 50(2) of the Act. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of confirmation order vis-à-vis 180 days under Section 5(3) PMLA and exclusion of COVID-19 period Legal framework (as discussed) 2.1 Section 5(1) of the Act permits provisional attachment of property for a period not exceeding 180 days. Section 5(3) stipulates that every order of attachment shall cease to have effect after expiry of that period or on the date of an order under Section 8(3), whichever is earlier. 2.2 The Tribunal referred to the Supreme Court's suo motu orders extending and excluding limitation for the period from 15.03.2020 to 28.02.2022 for all judicial and quasi-judicial proceedings, including where statutes prescribe outer limits for completion/termination of proceedings, and to its own prior decision applying those orders to proceedings under the Act. 2.3 The Tribunal also relied extensively on a High Court decision which held that the period from 15.03.2020 to 28.02.2022 is to be excluded while computing the statutory 180 days under Section 5(3), treating it as a period for 'termination of proceedings' within the meaning of the Supreme Court's limitation orders, and expressly disagreed with contrary High Court views. Interpretation and reasoning 2.4 The Tribunal treated the 180-day ceiling in Section 5(1) read with Section 5(3) as a 'maximum period' for continuation of provisional attachment and, following the Supreme Court's directions and the relied-upon High Court judgment, held that such maximum or outer-limit periods also attract exclusion of the COVID-19 duration. 2.5 The Tribunal accepted that the Supreme Court's limitation orders are binding upon all courts and tribunals and should not be narrowly construed. It endorsed the reasoning that those orders extend not only to initiation of proceedings but also to time limits prescribed for termination of proceedings, including the 180-day life of provisional attachment. 2.6 The Tribunal adopted the view that decisions relying on S. Kasi to deny applicability of the limitation orders to Section 5(3) proceedings are not to be followed, as that line of reasoning is confined to matters of personal liberty and criminal investigation timelines, not to property attachment under the Act. Conclusions 2.7 Excluding the COVID-19 period (15.03.2020 to 28.02.2022) from computation, the Tribunal held that the confirmation order was passed within the permissible period and did not lapse under Section 5(3). The challenge to the confirmation on the ground of expiry of 180 days was rejected. Issue 2: Justification of attachment and reliance on statement under Section 50(2) PMLA Legal framework (as discussed) 2.8 The Tribunal considered Section 50(2) of the Act, which empowers authorities to record statements, and held that statements so recorded are admissible in evidence and can be read against the person making them. Interpretation and reasoning 2.9 The appellant relied on income tax returns (ITRs) to show that the credit balance of Rs. 12,44,159/- in the attached bank account was derived from independent income (salary and investments). The Tribunal noted that the ITRs produced were only for Assessment Year 2012-13 and prior years, i.e., prior to the period of commission of the predicate offence, and that no ITRs for the subsequent relevant period were placed on record. 2.10 The Tribunal observed that the appellant did not produce her bank statements, despite the attachment being of the bank account itself, and proceeded on the admitted position that the ITRs alone were relied upon to justify the source of the funds. 2.11 On examining the appellant's statement under Section 50(2), the Tribunal found that she had described herself as a housewife and stated that purchase of immovable property and her investments were financed by her husband, who looked after all her investments. The statement did not disclose any contemporaneous engagement in salaried employment corresponding to the period in issue. 2.12 The Tribunal held that, given (a) the absence of bank statements, (b) the temporal mismatch and insufficiency of the ITRs, and (c) the appellant's own admission that the funds for property and investments came from her husband, the statement under Section 50(2) became a relevant and reliable basis to treat the attached amount as 'proceeds' in her hands linked to the accused husband. 2.13 The Tribunal rejected the contention that the Adjudicating Authority could not have relied upon the Section 50(2) statement or that such reliance was 'merely' on that statement, noting that the statement is admissible evidence and, in the factual context of non-production of primary financial records, carried significant weight. Conclusions 2.14 The Tribunal upheld the finding that the attached amount of Rs. 12,44,159/- represented proceeds of crime in the appellant's hands and that the appellant failed to satisfactorily establish legitimate, independent sources for the said amount. 2.15 No infirmity was found in the Adjudicating Authority's order confirming the provisional attachment. The appeal was dismissed, with a direction that the attached amount be kept in a fixed deposit, subject to the final outcome of the trial, while permitting the appellant to operate the bank account otherwise.