2026 (3) TMI 917 - AT - Money Laundering

Provisional attachment under Prevention of Money Laundering Act upheld where documentary records and unexplained bank transfers establish proceeds of crime.

Whether confirmation under Section 26 PMLA of provisional attachment should be set aside was considered; appellate analysis relied on institutional ... Provisional attachment - Proceeds of crime - forgery and backdating - illegally obtained property - seizure of marksheets/certificates issuing registers from the institution and documentary information from the University Grants Commission - Onus to disclose source of assets on notice under section 8(1) - Admissibility of additional evidence at appellate stage. Provisional attachment under the Prevention of Money Laundering Act - HELD THAT:- The Tribunal upheld the Adjudicating Authority's confirmation of the provisional attachment because the investigation and seized records, together with information from the UGC and related material, established that the appellants and associated entities were involved in issuing large numbers of forged degrees and had received proceeds of crime. The appellants were served notice under section 8(1) and failed to satisfactorily disclose sources for acquisition of the attached movable and immovable properties; the Tribunal accepted the respondents' finding that funds were diverted to accounts of the accused and family members and that the appellants remained recipients of proceeds of crime. The Tribunal therefore found no reason to interfere with attachment on the ground that properties allegedly were personal and unconnected with the offence (paras 11-16). [Paras 11, 12, 13, 15, 16] The confirmation of the provisional attachment was sustained as the appellants failed to discharge the onus to show legitimate sources for the attached properties. Provisional attachment under the Prevention of Money Laundering Act - HELD THAT:- The Tribunal rejected the contention that lack of recovery of physical forged degrees vitiated the attachment. It held that seizures (including mark sheets/certificates issuing registers) and corroborative records from the UGC and other agencies sufficiently established issuance of forged degrees and the consequent proceeds of crime; therefore non-recovery of individual degree certificates did not negate the basis for attachment (para 17). [Paras 17] Non-recovery of specific forged degree certificates did not render the provisional attachment and its confirmation invalid. Admissibility of additional evidence at appellate stage - HELD THAT:- The Tribunal held that documents constituting new evidence cannot be introduced by way of rejoinder without following the procedure for taking additional evidence at the appellate stage and obtaining the Tribunal's permission with reasons. The bank statements filed in rejoinder were not properly admitted and could not be allowed to undermine the attachment; moreover, even if the lesser amount asserted in those statements were accepted, the provisional attachment remained within that quantum and thus the appellants' argument failed on substantive grounds as well (para 18). [Paras 18] Bank statements filed in the rejoinder were not admissible without an application and permission to adduce additional evidence; the contention based on them was rejected. Final Conclusion: The appeals were dismissed. The Tribunal sustained confirmation of the provisional attachment, holding that seizure and corroborative records established proceeds of crime, the appellants failed to disclose legitimate sources for the attached properties, and newly tendered documents in rejoinder were not admissible without proper application at the appellate stage. Issues: Whether the Adjudicating Authority's confirmation under Section 26 of the Prevention of Money Laundering Act, 2002 of provisional attachment of properties alleged to be proceeds of crime should be set aside.Analysis: Evidence recorded in the investigation included seizure of marksheets/certificates issuing registers from the institution and documentary information from the University Grants Commission indicating issuance and backdating of large numbers of degrees, manipulation of admissions and faculty lists, and bank transactions reflecting receipt and transfer of funds. Investigative findings quantified alleged proceeds of crime and showed transfers from institutional accounts to accounts of the accused and their relatives. Notices under the adjudicatory provisions called for disclosure of sources of acquisition of assets, and the persons on whom attachment was effected failed to satisfactorily disclose sources. Attempts to rely on bank statements filed in rejoinder were not admitted as fresh evidence because no application for additional evidence at the appellate stage was made and no permission was granted; in any event, the provisional attachment related to properties of value less than or equal to the amounts reflected even in those statements. The combination of seized records, external confirmations and unexplained receipt/transfers supported continued classification of the impugned assets as proceeds of crime for purposes of provisional attachment confirmation.Conclusion: The confirmation of the provisional attachment under Section 26 of the Prevention of Money Laundering Act, 2002 is upheld and the appeals are dismissed in favour of the respondent.