AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 1570
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.... notes have been acquired illegally through unauthorized channel accumulated the same with mala-fide intention. 3. It was revealed that Paras Mal Lodha along with his associates, namely Shri Rohit Tondon besides others were involved in a deep rooted conspiracy and was indulged in converting the old demonetized currency into new currency on commission basis which constitutes offences of money laundering. It is the case of respondent that the new currency notes which were entrusted to banks and Govt. officials and was supposed to be delivered to public/bank account holders appears to have been misappropriated by Paras Mal Lodha, Rohit Tondon besides others for their monetary gains thereby cheated the public at large and had also caused monetary loss to the Govt. of India. 4. The case of the respondent is that the named accused person besides others are involved in the activity of monetizing the demonetized currency on commission. 5. The following lockers were searched in the presence of appellant and other witnesses where certain valuable were found and are under further examination. The details of searches are as follows: a. Locker No. 475, being maintained in Indian Ove....
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....th Indian Overseas Bank, 22-Ballygung Park Road, Kolkata in the name of Smt. B.D. Lodha and Smt.Kusum Nahata. The above bank locker was searched on 17.04.2017 in my presence. The letter of authority in my favour by Smt. Kusum Nahata (my sister) is already on record. As already explained during the course of search, the said locker was searched by the Income Tax Department on 23.08.2016 and finding every item contained in the locker as duly explained, the contents were released by them and the restrain order was revoked on the same day. 11. The contents of the valuation report prepared by Income Tax Department on 23.08.2016 match with the valuation report prepared on 17.04.2017, as per details below:- Item No. of valuation Item No. of valuation Report of ED Report of ITD 1 1 2 2 3 3 4 4 5 5 6 (A, B, C, D) 6 7 7 12. Similarly, the sister of appellant Smt. Kusum Nahata vide her letter dated 25.03.2017 addressed to the Applicant inter alia stated:- Sub:- Locker No. 475 in the name of Mrs. Kusam Nahata Maintained with Indian Overseas Bank, Ballygung Park Road, Kolkata. The operation....
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....cord. During the course of search, the said locker was searched by the Income Tax Department on 23.08.2016 and finding every item contained in the locker as duly explained, the contents were released by them and the restrain order was revoked on the same day. 18. Admittedly during the investigation two lockers no. 475 and 652 in Indian Overseas Bank Ballygung Park Road, Kolkata in the name of Smt. Kusum Nahata and late Smt. B. D. Lodha were searched on 17.04.2017 and contents of both these lockers in the form of gold/stone studded jewellery and gold coin totally valued at Rs. 28,58,533 and Rs. 6,42,178 were seized. 19. Counsel for the Respondent does not dispute the factual position that IT Department has released the said jewellery much prior to the date of demonization. 20. It was the contention of the respondent that the valuables seized during the search of lockers may be required to be attached under section 5(1) of PMLA and therefore these jewellery articles are required. 21. Counsel for the respondent has also referred the rejoinder filed by the Respondent No. 2 wherein was it has been stated that the valuables of the said Locker are under scrutiny and the same n....
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....e Income Tax Department. 26. There is no denial by the respondent that the Locker No. 652 of the Appellant the said locker was searched on 17.04.2017 in her presence and that it was explained during the course of search that the said locker was searched by the Income Tax Department on 23.08.2016 and finding every item contained in the locker as duly explained, the contents were released by them and the restraint order was revoked on the same day. 27. It is not denied by the Respondent that items mentioned at Sl. No.1 to 7 of the valuation report prepared on 17.04.2017 match with the items at Sl. No. 1 to 7 of the valuation report of the Income Tax Department and that as regards the only remaining item No. 8 of valuation report dated 17.04.2017 as per Appellants, its value is below Rs. 5,000/- and not Rs. 15,925/- shown incorrectly as the base of the said item is plastic. 28. The main purpose of conducting the searches, as mentioned in the reason to believe, no material or any seizure of incriminating documents or any demonetized currency. The search of the said lockers conducted was not in conformity with the provisions of law relating "reasons to believe" for conducting s....
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....e recently, in Aslam Mohd Merchant v. Competent Authority (2008) 14 SCC 186, the entire legal position has been explained elaborately by the Supreme Court as under: 28. 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. 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. 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 proceeding. He cannot issue a show cause notice on his own ipse dixit. A roving enquiry is not contemplated under the said Act as properties sought to be forfeited must have a direct nexus with the properties illegally acquired. 29. It i....
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....rd reasons in support of its conclusions. c. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. f. Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. g. Reasons facilitate the process of judicial review by superior Courts. h. The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice. i. Judicial or even quasi-judicial opinions these days can be as different as the judges ....
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.... be merely a pretence. It was further held by the Supreme Court that it is open to the Court to examine whether the reasons for the believe have a rational connection or an element bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the Section. 33. The Supreme Court, in the case of Mohammad Aslam Merchant v. Competent Authority, [(2008) 14 SCC 186], while dealing with similar requirements under Section 68H of the Narcotics Drugs and Psychotropic Substances Act, has held that both the statutory elements, namely, "reason to believe" and "recording of reasons" must be premised on the materials produced before him and that such materials must have been gathered during the investigation carried out in terms of Section 68-E or otherwise. It was further held that indisputably, therefore, he must have some materials before him and that if no such material had been placed before him, he cannot initiate a proceeding. 34. The Hon'ble High Court of Andhra Pradesh, in the case of K. Munivelu v. The Government of India and Ors. [AIR1972AP318], while dealing with the terms "Reason to Believe" and "suspects", with respect to Section 3 (2) of Ess....