TaxTMI 
TaxTMI 
2019 (4) TMI 249
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....ices, which include one hard drive, one mobile phone and one black and white box file having 216 loose sheets, which were seized as per the Application "... in order to find any incriminating documents/digital evidence/cash necessary for further investigation and attachment of proceeds of crime...." and because the same were "... relevant to investigation..." and "...shall be required to be confronted with the concerned persons during PMLA investigation...". 4. The show-cause notice dated 31.07.2018 issued by the Adjudicating Authority calls upon the Respondent to show the source of income, earning or assets out of which the properties seized have been acquired. It is submitted by the appellant that seized properties are legitimately acquired and are not proceeds of crime and as such do not necessitate retention by the Respondent. 5. The entire basis for the seizure of the goods from the premises of the Appellant is contained in paragraph 13 of the Application which refers to an internal e-mail of people under investigation in the FIR which states that payments by cheque be made to the two travel agents mentioned in the email of the appellant. The only document relied upon in....
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....concern was provided to the Respondent. v) Further the Respondent posed questions to Mr. R.K. Sharma, Manager (HR) of the Appellant Company, in relation to the following persons:- * Mr. Gagan Dhawan * Mr. Ajay Panchal * Mr. Sunil Yadav * Mr. Sandesara * Mr. Nitin Sandesara * Mr. Chetan Sandesara vi) Mr. R.K. Sharma duly responded to the questions put to him and stated that the Appellant being a travel and tours company had booked air ticket of Mr. Gagan Dhawan and other persons, some of which was subsequently cancelled and reissued. Mr. R.K. Sharma also clarified that Mr. Gagan Dhawan had travelled once on the tickets booked. Mr. R.K. Sharma was asked to appear again on 13.06.2018 at 11:00 A.M. along with the records relating to the aforesaid persons. That Shri R.K. Sharma thereafter attended the office of the Enforcement Directorate on 13.06.2018 and submitted all the records available with the Appellant where the names Gagan Dhawan and Sunil Yadav figured. vii) The respondent then further directed Sh. R.K. Sharma, the authorised representative of the Appellant, to produce all the records on ....
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....ned at (e) above where the search was concluded at 11:00 PM on 14.06.2018 and for search conducted at 193, Mohan Singh Market, INA no panchanama was created. xi) During the course of the search and seizure, Mr. Gurcharan Singh, who is a lawyer by a profession and the patriarch of the family that controls the Appellant Company but does not hold any designation, position, directorship or shareholding in the Appellant Company was questioned at length about the Appellant Company. xii) Nothing was seized from the premises at (e) above whereas the officers of the Respondent took with them various documents and items as set-out in the Seizure memo were seized from the remaining premises. Additionally, seven (7) had disks of the CCTV cameras installed at the premises searched as well as five (5) blank hard discs were wrongfully seized by the Respondent without mentioning the same on Seizure memo. It is pertinent to mention that no back-up of the hard-disks of the CCTV Cameras and of the mobile phone of Mr. Gurucharan Singh was provided although the Appellant purchased and provided the official five (5) blank hard disks for this purpose. It is submitted by the appellant th....
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....on of any property related to crime] then, subject to the rules made in this behalf, he may authorize any officer subordinate to him to - (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available; (c) seize any record or property found as a result of such search; (d) place marks of identification on such record or [property, if required or] make or cause to be made extracts or copies therefrom; (e) make a note or an inventory of such record or property; (f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act: [Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974), or a c....
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....d of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-Section (1) or for continuation of the order of freezing served under sub-Section (1A), before the Adjudicating Authority.]. 8. Section 18 of PMLA, 2002 reads as under: "18. Search of persons. - (1) If an authority, authorised in this behalf by the Central Government by general or special order, has reason to believe (the reason for such belief to be recorded in writing) that any person has secreted about his person or in anything under his possession, ownership or control, any record or proceeds of crime which may be useful for or relevant to any proceedings under this Act, he may search that person and seize such record or property which may be useful for or relevant to any proceedings under this Act: [Provided that no search of any person shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence menti....
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....izing any record or property under sub-section (1) shall, within a period of thirty days from such seizure, file an application requesting for retention of such record or property, before the Adjudicating Authority. 9. Sub-section (1), (2) and (3) of Section 20 read as under:- 20. Retention of property.- (1) Where any property has been seized under section 17 or section 18 or frozen under sub-Section (1A) of Section 17 and the officer authorised by the Director in this behalf has, on the basis of material in his possession, reason to believe (the reason for such belief to be recorded by him in writing) that such property is required to be retained for the purposes of adjudication under section 8, such property may, if seized be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such property was seized or frozen, as the case may be. (2) The officer authorized by the Director shall, immediately after he has passed an order for retention or continuation of freezing of the property for purposes of adjudication under section 8, forward a copy of the order along with the materia....
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....e release of any such record for a period of ninety days from the date of (receipt of] such order, if he is of the opinion that such record is relevant for the appeal proceedings under this Act. ] 11. It is settled law that a particular thing is to be done in a particular manner, it must be done in that way and none other. Reliance in this regard is also placed on a judgements of Hon'ble Supreme Court in the cases of Dipak Babaria and another vs. State of Gujarat 2014 (3) SCC 502 and J. Jayalalitha & Anr vs State of Karnataka & Ors 2014 (2) SCC 401. 12. Sub-section (1) of Section 17 provides that the authorised officer has to record the reason to believe in writing. In the such reason to believe, he has also to record the basis of information which is in his possession before conducting the search and seizure. 13. It stipulates that if person concerned has committed any act which constitutes money-laundering, or is in possession of any proceeds of crime involved in money-laundering, or is in possession of any records relating to money-laundering, then any authorised officer can enter and search any building, place, vessel, vehicle or aircraft where that such records or pro....
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....l immediately forward a copy of the reason so recorded along with the material in his possession to the Adjudicating Authority in a sealed cover. 15. The authorised officer is to follow the following steps after search and seizure or frozen of any property, any action taken under Section 17(2) or 17(1A) - i) the first one is that in case the authority seizes any record or material under sub-section (1) or sub-section (1A) of Section-17, the authorized officer shall within a period of thirty days from the date of seizure or frozen can file the application requesting for retention of such property. ii) Secondly, sub-section (1) of Section 20 mandates that where any property has been seized under Section 17 or Section 18 or frozen under sub-section (1A) of Section17, the officer authorised on the basis of material in his possession has chosen to retain the property for the purposes of adjudication under Section 8, he has to pass as to record the reason to believe in writing for continuation of the same for a period not exceeding one hundred and eighty days from the day the such property was seized or frozen as the case may be. The officer authorised immediately af....
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....ent case, the statutory obligations laid down in section 20 (1), 20(2), 20 (4) and 21(4) of PMLA have not been complied with. An attempt has been made to retain the records without recording any 'reason to believe'. In this regard, reliance is placed upon the following judgment: (i) B. Rama Raju v. Union of India and other [2011 SCC OnLine AP 152] "76. Section 20 enjoins that where a property has been seized under Section 17 or 18 and the authorized Officer, on the basis of material in his possession, has a reason to believe (the reason to be recorded in writing) that such property is required to be retained for the purposes of adjudication under Section 8, such property may be retained for a period not exceeding three months, from the end of the month in which the property was seized. This provision also enjoins that the authorized Officer, after passing an order for retention of the property for the purposes of adjudication under Section 8, shall forward a copy of the order along with the material in his possession to the adjudicating authority whereupon the adjudicating authority is required to keep such order and material for the prescribed period; further on ....