TaxTMI 
TaxTMI 
2019 (4) TMI 1087
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....ainst the Appellant No. 1. All appellants submit that the income and assets of Appellant Nos. 2 & 3 have been incorrectly attributed to Appellant No.1, income of the Appellant No.1 has been suppressed and several other errors have been made in computation of income, assets and expenditure of the appellants. The Respondent being independent agency without proper investigation under this Act has erroneously concluded that the Appellant No.1 has acquired disproportionate assets to the tune of Rs. 2,28,89,632.56 whereas income of Rs. 2,20,28,015/- has been suppressed. 3. The following properties owned by the appellants have been provisionally attached by the respondent vide the Provisional Attachment Order and by the impugned order, the confirmation order was passed:- S. No. Details of the asset/ property Amount involved i. Bank Account No. 01810120022494, in the name of Appellant Nos. 2 & 3, @ Kotak Mahindra Bank, Sector-18, Noida Rs. 5,66,604.74/- Note: Frozen by the CBI ii. Bank Account No. 00431000084976, in the name of Appellant Nos. 1 & 2, @ HDFC Bank, Saket, New Delhi Rs.14,59,940.54 Note: Frozen by the CBI iii. Prope....
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....eriod. ii) Appellant No. 1 and his family members acquired assets to the tune of Rs. 3,65,32,218.49/-, during check period. iii) The Appellant No. 1 and his family members earned an income of Rs. 2,37,61,629.79/-, during check period. iv) The Appellant No. 1 and his family members incurred a total expenditure of Rs. 1,87,70,713.74/- during the check period. d) It is submitted that the CBI incorrectly inflated the assets and expenditure of Appellant No. 1, and wrongly concluded that Appellant No. 1 accumulated disproportionate assets to the tune of Rs. 2,28,89,632.56/- in conspiracy with Appellant No.3 (his son) Mr. Sumant Narang and one K. S. Dhaliwal. The CBI also wrongly concluded that Appellant No.2 - wife of the Appellant No 1 - abetted him in the commission of the offences. e) The CBI charged the Appellants for having committed the offences punishable under Sections 13(2) r/w 13(1)(e) of the Prevention of Corruption Act, 1988 and under Section 120-B r/w Sections 465, 471 of the IPC 1860. f) On the basis of the Final Report filed by the CBI, the Respondent registered case being ECIR No. SHSZO/01/2015 dated 22.05.2015 against....
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....(hereinafter "Complaint"), the Adjudicating Authority issued Notice to Show Cause dated 13.04.2016 (hereinafter "Show Cause Notice") to the Appellants without satisfying itself that there is "reason to believe that any person has committed an offence under section 3 or is in possession of proceeds of crime". 7. The Appellants filed a Joint Reply dated 16.06.2016 to the Show Cause Notice, along with supporting documents, before the Adjudicating Authority on 16.06.2016, clearly demonstrating inter alia that the Provisional Attachment Order was bad in law since the Complainant had failed to satisfy the mandatory preconditions under Section 5 (1) of the PMLA.The allegations made in the Charge sheet against the Appellants were demonstrably false even as per the documents filed by the CBI in its Charge sheet and therefore, there was no „reason to believe that‟ the Appellants were in possession of „proceeds of crime‟; and the Appellants acquired the Bank Balances and House property attached from legitimate sources of income.The Appellants also further filed additional documents to substantiate the submissions made in the Joint Reply, which were taken on record b....
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....plinth area method which is a rough estimate method, whereas, the independent surveyor commissioned by the Defendants has adopted item rate method which is more accurate.Furthermore, the CBI has incorrectly assumed that all the work was complete by January 2012, whereas work on the building, including major woodwork, plumbing etc. was completed in late 2013. 19. It is further pertinent to mention that the Defendants incurred a substantial expenditure of nearly Rs. 23,00,000/-on the cost of construction after the check period, which has not been accounted for by the CBI in its Charge Sheet, and thus has also been ignored by the Complainant due to the lack of any independent inquiry conducted by the latter. 20. It is, therefore, submitted that an amount of Rs. 70,17,047/- ought to have been reduced from the cost of construction as expenditure incurred by the Defendants during the check period. The report so prepared by the Independent Government appointed Surveyor commissioned by the Defendants has been annexed along with the letter dated 09.11.2016 filed hereto. Double/wrong accounting of assets and expenditure 21. Rs.5,00,000/- paid to RK Enterprises, ....
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.....e. the residential property of the Defendants, is as under: a. Total value: Acquired for Rs. 86,94,000/- b. Date of sale/purchase: Acquired on 16.07.2008 c. Acquirer/Seller: Acquired jointly by Defendant Nos.1 & 2 d. Fund Flow (with names) i. Sale of C-1545, Gurgaon, generated Rs. 50,00,000/- which was invested towards purchase of the present property. ii. Remainder of Rs. 36,99,050/- financed by Defendant No.2inter alia through the following gifts, self-acquired funds, and loans: 1. Rs. 50,000 gifted by Smt. Raj Malik (mother of Defendant No.2) 2. Rs. 1,50,000 by Defendant No.3 3. Rs. 1,50,000 by Defendant No.1 4. Loans taken and returned: a. Saideep Enterprises i. 13.06.2008: Rs. 6,00,000/- ii. 10.07.2008: Rs. 2,00,000/- b. Mr. G.K. Sharma i. 12.07.2008: Rs. 5,00,000/- ii. 15.07.2008: Rs. 5,00,000/- c. Mr. Umesh Jain i. 11.06.2008: Rs. 2,00,000/- ii. 08.07.2008: Rs. 2,00,000/- d. Umesh Jain (HUF) i. 08.07.2008: Rs. 2,00,000/- ii. 24.05.2008: Rs. 2,00,000/- e. Mr. M.S. Tanwar ....
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....partial manner and is required to assist this Hon'ble Authority in discharging its obligations under the PMLA. As such, the Complainant has a fiduciary as well as a statutory duty to place on record all relevant facts, which would enable this Hon'ble Authority to determine whether or not recourse to attachment was even justified. It is submitted that the records in the instant case would categorically demonstrate that the Complainant has selectively placed material on record while leaving out relevant material, which, would have negated the entire basis for proceeding to attach the properties in question. The instant Complaint is liable to be rejected for this reason alone and strong exception of this conduct ought to be taken by this Hon'ble Authority. 9. It is also stated in the reply that the charge sheet filed by the CBI is replete with errors and deficiencies, and the alleged disproportionate assets computed by the CBI is erroneous and ought to be ignored for the following reasons: A. Income to the tune of Rs.73,72,491/- has not been considered; B. Loans received from family and friends to the tune of Rs.45,99,500/- has not been considered; C. Cos....
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....ation to the tune of Rs. 25,00,000/-. The said amount has not been considered by the Complainant-though the same was received by the Defendant No.3 during the check period. The said transaction has been alleged to be a false/sham transaction, ignoring the fact that the said matter was compromised between the Defendant No.3 and the vendee, whereby the said amount has been returned with interest vide cheques by way of compromise deed dated 10.10.2013. A copy of the compromise deed dated 10.10.2013 is also filed as Annexure D-4. It is submitted that the CBI, and thus the Complainant, has not considered a sum of Rs. 10,27,711/- being dividends received by the Defendant No.1 during the check period. 11. It is argued by learned counsel for the appellants that the charge-sheet filed by CBI has many errors and deficiencies about the assets computed by CBI. As far as this para is concerned, this Tribunal is not empowered to go through the said errors, if committed by the CBI. However, the respondent is the agency which has to investigate the matter independently. It is also the duty of the Adjudicating Authority to consider the reply filed by the concerned parties....
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....rstand the judgement of the Hon‟ble Supreme Court,, while interpreting the expression „reason to believe‟ in an another stature, holding that there must be grounds mentioned for formation of „reason to believe‟ in a given case, and the legality of these grounds must then be tested by assessing whether they have any nexus with the formation of such beliefs; by disregarded the judgement of the Hon‟ble Supreme Court India in Aslam Mohammed Merchant vs. Competent Authority, [(2008) 14 SCC 186] where while setting aside attachment proceedings for failure to record reasons to believe in a Show-Cause Notice, it was held that when the "proceedings themselves were not initiated validly, the competent authority did not derive any jurisdiction to enter into the merit of the matter". The said decision was rendered in the context of NDPS Act, provisions of which are substantially in parimateria with PMLA on the point of provisional attachment; 15. The Adjudicating Authority appears to have not even perused the Joint Reply filed by the Appellants to the Show Cause Notice which is evident from its wholly incorrect finding in the Impugned Order that "Counsel ....
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....em for keeping in these accounts and if the process of estimation/determining the assets, income, expenditure etc used by CBI is reliable then the money held in these two accounts in the name of defendants can only be tainted money and that makes these two movable assets proceeds of crime. In my view the process adopted by CBI prima facie appears to be reliable and on the basis of these calculations they have put up the case in the court also. Hence the matter becomes sub-judice also. Counsel for defendant has submitted reply where he has mentioned that certain incomes have been left out, loans received from family and friends are also not considered, construction cost is inflated and even expenses incurred after check period have been included. Besides this some other points have also been brought to the notice which reduce the amount of disproportionate assets but prime facily it appears that some of these are after thoughts and have been mainly suggested for reducing disproportionate assets. All these points were not brought to the notice of investigation agencies in the beginning. At this stage, it does not appear appropriate to differ with the estimates prepa....
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....t, 1988 and under Section 120-B r/w Sections 465, 471 of the IPC 1860, however in the conclusion last para of the impugned order, it is concluded by the Adjudicating Authority that the appellants have committed the schedule offence. The said conclusion is on the face of is without any basis as thee vidence in the schedule offence is yet be concluded,such declaration made by the Adjudicating Authority is an abuse of the process of court. How can any authority comes to the conclusion in advance. The final judgement is yet to be delivered by the Special Court after evidence as to whether the accused has committed the schedule offence or not.In other cases, also similar observations are made against the person who are not even name in the FIR or any charge-sheet is filed under this Act. The Authority under this Act is duty bound to deal with the reply and materials on record within the meaning of Section 8(2) of the Act and decide the same on merit rather to simply adopt the CBI report and to give sweeping findings that the person concerned has committed the schedule offence when such matter is still pending before Special Court. 20. The Adjudicating Authority in the Impugned Ord....