TaxTMI 
TaxTMI 
2014 (3) TMI 210
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.... stating that it is an ancestral property and therefore not liable to be forfeited. 4. The petitioner in W.P.No.16343 of 2000 was also served with a notice under Section 6(1) on the same day mentioning 24 cents of land with a building as liable for forfeiture. The said two notices dated 18.2.1986 sent to the husband K.P.Abdul Majeed and his wife P.K.Umaiba were pending adjudication before the competent authority. While so, on 29.11.1990 three separate notices under Section 6(1) were issued on all the petitioners. In respect of the petitioner in W.P.No.16343 of 2000 five more properties were sought to be forfeited. In respect of the petitioner in W.P.No. 16341 of 2000 two properties said to be jointly owned by her along with her husband were sought to be forfeited. In respect of the other petitioner viz., A.P.Abdul Majeed 13 more properties were sough to be forfeited. Out of the three notices issued on 29.11.1990, two were titled as supplementary notices except the one sent on the petitioner in W.P.No. 16341 of 2000. 5. On 20.6.1996, the competent authority passed a common order forfeiting certain properties and leaving certain properties from the proceedings. Aggrieved agains....
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....(1) notices as regards the wives is not valid as the notices have not expressly stated that the money for the acquisition of the properties by them have flown from the detenu viz., K.P.Abdul Majeed. A valid notice under Section 6(1) is a condition precedent for initiation of proceedings. Therefore, the competent authority has no jurisdiction to enter into the merits of the case. 7.1. The reasons recorded in writing for the issue of notice under Section 6(1) does not satisfy the requirement of law. It merely says that husband has been indulging in smuggling activities and therefore the investment has emanated from illegal source. This reasoning is wholly insufficient. The value of the property and the known source of income and earning cannot be the subject matter of speculation and there must be concrete material. It must be further shown that the relatives viz. the wives herein have no independent income and that the money has come from the detenu to purchase the property. The non-applicable words in the notice under Section 6(1) have not been deleted. This shows non-application of mind. 7.2 The orders passed by the authorities have violated the principles of natural justice....
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....the petitioner had mentioned only one property by saying that the source of investment is not known and as the husband of the petitioner herein was indulging in smuggling activities and that it had to be considered that the funds for the investment had emanated from illegal sources. Such reasons are wholly invalid and it amounts to holding a rowing enquiries which are not permitted in law. Even in respect of notice dated 29.11.1990 issued to the petitioner herein, it was not mentioned that the funds for acquisition had flown from the detenu. 9. With regard to the writ petition in W.P.No. 16341 of 2000 the learned Senior Counsel further submitted as follows:- Section 6(1) notice mentioned two properties by stating that the source of such investment was not known and the husband of the petitioner herein had been indulging in smuggling activities and therefore it has to be considered that the investment had emanated from illegal source. Such reasoning is invalid. It is not alleged that the properties are the benami properties of the detenu. 10. In respect of W.P.No. 16342 of 2000, the learned Senior Counsel further submitted as follows:- The petitioner was a detenu under t....
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.... 1994 (5) SCC 54 (Attorney General for India Vs. Amratlal Prajivandas). In the present case all the properties are in the joint name of the detenu and his wives. Kesar Devi case reported in 2003 (7) SCC 427 is in conformation with Attorney General case. The decisions relied on by the petitioners reported in 2003 (7) SCC 436 ( Fatima MOhd. Amin Vs. Union of India); 2007 (2) SCC 510 (P.P. Abdulla and Another vs. Competent Authority and Others); are not applicable to the present case as they are distinguishable on facts. 11.3 The first notice was issued on 18.2.1986 to K.P. Abdul Majeed and his wife Umaiba and no notice was issued to the other wife Rukhiya as she was not married at that time. The reply submitted by the petitioners to the first notice was accepted and the properties thereunder were released. The second notices were issued on 21.11.1990 to all the petitioners. The properties mentioned in the second notice were different from first notice and they were admittedly purchased, after issuance of first notice, between 1986 to 1989. In the second notice issued to Abdul Majeed and Umaiba it was mentioned as supplementary notice. But no such mention was made in the notice iss....
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....er COFEPOSA. The petitioners are well aware of that. The grounds of detention clearly referred about the supply of copy of the statement to the detenu. He made voluntary statement before the customs authorities and the same remained unretracted. Since copies were already given to him under COFEPOSA proceedings, there is no need to give one more copy to him. The petitioner did not make any request to the competent authority seeking for supply of such copy. Therefore, it is not a case of refusal. The principles of natural justice have been complied with in every stage of the proceedings and due opportunities were given to the petitioners . The competent authority relied on two passports produced by the detenue/ petitioner to come to such conclusion. The confession statements have been referred to by the competent authority only after making his conclusion on foreign money transaction. Thus, even without referring to the confession statement, the competent authority had already arrived at the conclusion. Therefore, it cannot be said that the authority has relied on the statement of the detenu to come to such conclusion. The petitioner has to show the nature of the prejudice caused to ....
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.... "every person" who has been convicted under the Customs Act of an offence in relation to goods of a value exceeding one lakh rupees ; or convicted under the Foreign Exchange Regulation Act for an offence involving the amount exceeding one lakh rupees and "every person" in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, provided that such detention order has not been revoked or set aside by a Court of competent jurisdiction. "every person" who is a relative of a person referred to in clause (a) or clause (b) of Section 2(2); "every associate" of a person referred to in clause (a) or clause (b) of Section 2 (2); any holder of any property which was previously held by a person referred to in clause (a) or clause (b). 14.2. Explanation 2 to Section 2 defines the term"relative". Explanation 3 defines the term "associate". 14.3. Section 3 (1)(c) defines the term "the illegally acquired property" as follows:- "(i) any property acquired by such person, whether before or after the commencement of this Act, wholly or partly out of or by means of any income, earnings or assets derived or....
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.... (hereinafter referred to as the person affected) calling upon him within such time as may be specified in the notice, which shall not be ordinarily less than thirty days, to indicate the sources of his income, earnings, or assets, out of which or by means of which he has acquired such property, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties, as the case may be, should not be declared to be illegally acquired properties and forfeited to the Central Government under this Act. (2) Where a notice under sub-section (1) to any person specifies any property as being held on behalf of such person by any other person, a copy of the notice shall also be served upon such other person. 14.5. Section 7 deals with forfeiture of property by the competent authority . Section 8 deals with burden of proof which is extracted hereunder:- "8. Burden of proof :- In any proceedings under this Act, the burden of proving that any property specified in the notice served under Section 6 is not illegally acquired property shall be on the person affected. " 14.6. Section 12 deals with Constitution of Appellate Tri....
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....to a conclusion that the properties under the said notice are illegally acquired properties. Such conclusion is warranted only after hearing the person to whom Section 6(1) notice is issued. But what is necessary is that the competent authority must have reason to believe that all or any of such properties are illegally acquired properties, for the purpose of issuing notice under Section 6(1). 18. In this case Section 6(1) notices were issued on two occasions, firstly on 18.2.1986 on the detenu who is the petitioner in W.P.No. 16342 of 2000 and the first wife who is the petitioner in W.P.No. 16343 of 2000. However, the fact remains that the properties mentioned in the Schedule therein were subsequently dropped by the competent authority while passing the composite order on 20.6.1996. Thus insofar as the properties referred to under 18.2.1996 notices are concerned, the petitioners in W.P.Nos. 16343 and 16342 of 2000 have no grievance. 19. Again, section 6(1) notice was issued to all the three petitioners on 29.11.1990. Insofar as the petitioners Abdul Majeed and Umaiba are concerned, Section 6(1) notice was termed as supplementary. However insofar as the other wife viz., Rukhi....
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....om the chapter applies would mean only such property which was acquired wholly or partly out of or by means of any income attributable to the contravention of any provision of the Act or for a consideration wholly or partly traceable to any property referred to in sub-clause (i) or the income or earning from property. 27. It is, therefore, evident that the property which is sought to be forfeited must be the one which has a direct nexus with the income etc. derived by way of contravention of any of the provisions of the Act or any property acquired therefrom. What is meant by identification of such property having regard to the definition of `identifying' is, that the property was derived from or used in the illicit traffic. 28. The property having regard to the said definition would include any of the properties described therein and deeds of instruments evidencing interest therein derived from or used in the illicit traffic. 29. In the aforementioned context, the word "person" also assumes importance which leads to determining the nature, source, disposition, movement, title or ownership of the property. Direction to forfeiture of a property is in two parts. Firstly, it ....
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....only comply with the principles of natural justice, he is also required to apply his mind on the materials brought before him. It is also necessary that a finding that all or any of the properties in question were illegally acquired properties is recorded ." 24. Further, while dealing with the statutory elements viz., recording of reasons, the Apex Court observed at paragraphs 38 to 41 as follows:- "38. It is, however, beyond any doubt or dispute that a proper application of mind on the part of the competent authority is imperative before a show cause notice is issued. 39. Section 68-H of the Act provides for two statutory requirements on the part of the authority viz: (i) he has to form an opinion in regard to his `reason to believe'; and (ii) he must record reasons therefor. 40. Both the statutory elements, namely, `reason to believe' and `recording of reasons' must be premised on the materials produced before him. Such materials must have been gathered during the investigation carried out in terms of Section 68-E or otherwise. Indisputably therefore, he must have some materials before him. If no such material had been placed before him, he cannot initiate a proceedin....
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.... However, on further enquiries, it is seen that Shri Kundirikkal Parambil Abdul Majeed has acquired , in addition to the properties already covered by notice under Section 6(1) dated 18.2.1986, the following properties in his own name or jointly with his relatives:- (i) 48 Cents of garden land in R.S.21-9-183/185pt. in Panniyankara Amsom Desom purchased as per document No. 2306/86 dt. 25.8.86for Rs. 38,400/- _ Own Name (ii) 48 cents of garden land in R.S.21-9-183/184/185 in Panniyankara Amsom Desom purchased as per document No. 2768/86 dt. 13.6.86 for - do- Rs. 43,200/- (iii) 35 cents of Garden land inR.S.21-26-699 in Paniyankara Amsom Desom purchased as per - do- document No.1486/86 dt. 27-5-86 for Rs.35,000/- (iv) 793/8 cents of garden land in R.S.59-1 in Jointly held Panniyankara Amsom Desom purchased as by the AP with per document No. 562/89 dt. 23-2-89 for his wife Smt. Rs.97,500/- Umaiba. (v) Business assets lodging house- Everest Lodge Kallai, purchased as per document No.2884/89 dt. 27-10-88 (Rs.1,70,000) document No.3183 dt. 5.12.88 (Rs.3,40,000), document No.15/89 - Own dt. 2.1.89 (Rs.2,55,000), including cost of stamp Name paper etc., (vi) 19.80 cents o....
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....by issue of notice under section 6(1) of the Act. However, on further enquiries, it is seen that the affected person Smt.P.K.Umaiba has acquired, in addition to the properties already covered by notice under Section 6(1) dated 18.2.1986, the following properties in her own name or jointly with her husband :- (i) 34 cents of land with Godown at Nagaram - Own name Amsom, Kozhikodeu, purchased as per document No. 365/89 dated 22.2.89 for Rs.1,60,000/-. (ii) 793/8 cents of garden land in R.S.59-1 in - Jointly held Panniyankara Amsom Desom purchased as per by the AP with document No. 562/89 dt. 23.2.898 her Husband Shri. for Rs.97,500/-. K.P.Abdul Majeed (iii) 19.80 cents of land in R.S.No. 5.2. in Vengeri -do- Amsom, Calicut, purchased, as per document No. 2642/87 dt. 16.10.87 for Rs.47,520. (iv) 13.05 cents of land in R.S.5.2 in Vengeri -do-Amsom Calicut, purchased as per document No.2677 dt. 21.10.87 for Rs.48,285/- (v) Residential building under construction -do-in the above plots (amount so far spent upto 31.3.80 Rs.2,25,000). In view of the fact that Shri Kundirikkal Parambil Abdul Madjeed, her husband, has been indulging in smuggling activities, the ....
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....jointly with his wives. In fact except items 11 to 13, which are jointly held by him with his brother, all other items are standing either in his own name or with his wives viz., the other two writ petitioners. It is also not in dispute that those properties were purchased between 1986 to 1989 i.e. after the period of detention. Thus, the competent authority having found that those properties were acquired after the period of detention in the name of the detenu or jointly with his wives and his brother, has issued the notice under Section 6(1) by recording the reasons as stated supra. 32. Insofar as the writ petitioner viz., P.K.Umaiba is concerned, the competent authority has stated in the reasons that she is the wife of detenu and therefore a relative within the meaning of SAFEMA and on further enquiries it was noticed that the affected person viz., the petitioner has acquired the properties mentioned in the said notice either in her own name or jointly with her husband. Further, the competent authority stated that as the husband was indulging in smuggling activities the acquisition of the above properties is to be considered having arisen out of illegal sources of income. Sim....
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....ferent from no reasons recorded. Whether reasons stated in the notice would satisfy the requirement is the question not for this Court to go into it, as the same is the subjective satisfaction of the competent authority. 36. In any event the petitioners have not challenged Section 6(1) notice immediately on receipt of the same. On the other hand, accepting the said notice they appeared before the competent authority and filed their objections. Hence the petitioners, even otherwise are estopped from questioning the said notice on the grounds set out in these writ petitions. 37. It is to be seen further that much water has flown after issuance of 6(1) notice. The petitioners appeared before the competent authority and after due opportunity of hearing, a composite order came to be passed wherein the competent authority has found that the petitioners have not proved their sources of income for acquiring the properties. These factual developments cannot be ignored by this Court by considering the submissions of the petitioners with regard to Section 6(1) notice alone. 38. It is also to be noted that the validity of the 6(1) notice was never challenged by the petitioners either ....
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....erson falling under clause (a) or clause (b) of Section 2(2) of SAFEMA may have acquired properties of their own, may be by illegal means but there is no reason why those properties be forfeited under SAFEMA just because they are related to or are associates of the detenu or convict, as the case may be. It is pointed out that the definition of 'relative' in Explanation (2) and of ,associates' in Explanation (3) are so wide as to bring in a person even distantly related or associated with the convict/detenu, within the net of SAFEMA, and once he comes within the net, all his illegally acquired properties can be forfeited under the Act. In our opinion, the said contention is based upon a misconception.." 40. The learned counsel for the respondents further relied on the decision of the Division Bench of this Court reported in CDJ 2011 MHC 3203 (DB) = 2011 (3) CTC 345 (The Competent Authority Vs. Hameed Abdul Kader and Another) wherein at paragraphs 43, 45, 52 and 53 it has been observed as follows:- "43. The Competent Authority in its show cause notice, very clearly stated that the property was purchased with the unexplained money. The relationship of the second respondent with ....
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....titioners. 42. I have carefully gone through the order passed by the competent authority dated 20.6.1996. I am unable to accept the contention of the petitioners that there is a violation of principles of natural justice. A perusal of the order would show that the petitioners were given sufficient opportunity by the competent authority before passing the composite order. A common reply was filed by the petitioners on 30.3.1996 followed by personal hearings on several dates. During the course of the proceedings, the petitioners filed written replies on 24.12.88, 18.1.89, 18.3.91, 21.3.91, 19.4.95 and 25.5.95. Through those replies, the petitioners had explained the sources of acquisition of the properties under notice. Thus, after hearing the petitioners and perusing their written objections, the competent authority passed the composite order. He has also recorded that during the course of the proceedings, copies of several documents such as purchase deeds, passport of the detenu , SSLC Certificate, NRE Account, details of cheques issued, pass book of share and loan account of the petitioners have been filed. Thus, it is clear that the petitioners have been given full opportunity....
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....efore, in my considered view, reference to the the said statement by itself is not the basis for the competent authority to arrive at a conclusion. Therefore, non-furnishing of the said statement does not vitiate the proceedings. Moreover, the petitioners have not pleaded the prejudice caused by non-furnishing of such statement. In this aspect, the decision of the apex Court reported in AIR 1996 SC 1669 (State of Bank of Patiala Vs. S.K.Sharma) will have relevance wherein the Apex Court has found that non-supply of documents relied on by the respondent therein will not amount to violation of principles of natural justice, where there is substantial compliance of natural justice and no prejudice is caused on account of non-supply. It is found by the competent authority that wives have no independent sources of income and they have acquired the properties only through the illegal income derived by the husband/detenu. By perusing the passports filed by the husband, the competent authority has come to the conclusion that during the relevant period the detenu was not employed in Dubai but he was available only in India and that the remittances during that period have been made not from ....
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....984 onwards and therefore he could not have been remitting money to himself from Dubai from May 1986 to May 1992 and that the money could not have come from his earnings through legal meaans in Dubai. The Tribunal also pointed out that there was no evidence at all in this case as to how such money had flown from Dubai to India, even though the detenu was in India and also was in Jail from June 1984 to 1985. By pointing out all these factual aspects, the Tribunal rejected the appeals filed by the petitioners. Mere proof of remittance of money through Bank is not sufficient to hold such remittance is from legal means. A person who claim that a source is through legal means, he has to establish it . At this juncture, it is useful to refer to the decision in reported in 2007 (6) SCC 21 (Commissioner of Income Tax Vs. P.Mohanakala) wherein the Apex observed thus:- 26. "... The findings of fact arrived at by the authorities below are based on proper appreciation of the facts and the material available on record and surrounding circumstances. The doubtful nature of the transaction and the manner in which the sums were found credited in the books of accounts maintained by the assessee h....