https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=772574 https://www.taxtmi.com/caselaws?id=772574 Money Laundering - attachment of properties - operation of large scale Hawala racket in online international cricket betting through U.K. based website - fulfilment of conditions precedent for attachment under Section 5(1) of the PMLA or not - HELD THAT:- PMLA, 2002, lays down elaborate provisions with regard to the properties and documents seized under the Act. Further, the said provisions are couched in mandatory language, as indicated by the use of the word "shall" and it is not left to the authorities acting under the provisions of the Act to choose a different course of action as per their desire. They may, no doubt, decide not to retain the property which has been seized and return the same to the person from whom such property was seized even before the expiration of 180 days. However, if they decide that the property needs to be retained, the same would have to be in accordance with the provisions of the Act. There is nothing on record in the present case to indicate that the respondent Directorate, having seized the properties under Section 17(1), took any of the other mandatory steps as laid down in the Act, including forwarding of reasons and material to the AA immediately after the search, filing an of OA before the AA within 30 days thereafter, recording any reason to believe that the property is required to be retained for the purposes of adjudication, forwarding a copy of Retention Order, along with the material in possession to the AA, etc. - Insofar as seeking permission of the Ld. AA to retain the property beyond the initial period 180 days is concerned, the same has admittedly not been done by the respondent Directorate. Instead, they proceeded to attach the property already seized and lying in their custody under Section 5 and, thereafter, follow the procedure laid down by the Act in respect of attached properties rather than the one in respect of seized properties. In the present case, admittedly, the provisions of the Second Proviso have not been invoked. As is evident from the plain language of the above provision, in order to invoke the powers under Section 5(1), first and foremost, the twin requirements mentioned in (a) and (b) have to be met, namely, the Director or other officer authorised by the Director for the purposes of the section, has to have reason to believe, which are also required to be recorded in writing, on the basis of material in his possession, that, (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter. A perusal of the definition of "person" u/s 2(s) indicates that the respondent Directorate would not fall within the ambit of "person" for the purposes of the Act. Therefore, the first requirement of the provision that the property in is the possession of any "person" was not met in the present case. Insofar as the second requirement in concerned, namely, that such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, the property being already in the custody of the respondent directorate, there was no such likelihood whatsoever. Therefore, as neither of the conditions prescribed u/s 5 was fulfilled, the respondents could not have invoked the said provision to attach the property which was already under seizure. The respondents were required to follow the due procedure and obtain the orders of the Ld. AA under Section 8 for extension of retention of the seized property, whereafter, the retention of the seized property would have continued during investigation for a period not 365 days and further during the pendency of the prosecution complaint filed by them before the Special Court. The attachment of property under Section 5 fails and cannot be sustained in the eyes of law. Furthermore, it is already held that once property is seized under Section 17, the only proper course of action in law is to seek its retention and not to attach the very same property under a different provision of the Act. Conclusion - The attachment order under Section 5 of the PMLA is illegal and unsustainable because the ED failed to follow the mandatory procedure for retention of seized property under Sections 17(4) and 20. The conditions for attachment under Section 5 were not fulfilled as the property was already in ED's possession, negating the requirement that a person must be in possession and that there must be a risk of concealment or transfer. The impugned order is set aside - Appeal allowed. Case-Laws Money Laundering Mon, 07 Apr 2025 00:00:00 +0530