TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 430
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....Mr Joby P. Varghese, Advocate. Ms. Arti Singh, Ms. Pooja Singh and Mr. Aakashdeep Singh, Advocates., Mr. Harin Raval, Senior Advocate with Mr. Sanjay Kapur, Ms. Megha Karnwal and Mr. Harshal Narayan, Advocates. Mr. Premtosh Mishra and Mr. Mayank Tripathi, Advocates. Mr. Madhav Khurana and Mr. V. Pasayat, Advocates. Ms. Khyati Bhardwaj, Advocate., Mr Rajesh Kumar Gautam, Ms Sakshi Gaur and Mr Sorabh Dahiya, Advocates. Mr Gyanendra Kumar, Ms Shikha Tandon and Ms Sayesha Bhattacharya, Advocates. Mr Vipin Jai, Advocate., Mr B.P. Singh and Mr Chandan Jha, Advocates., Mr Sanjay Kapur, Ms Megha Karnwal and Mr Harshal Narayan, Advocates., Mr Mohit Mathur, Senior Advocate with Mr Lalit Chauhan and Mr Aditya Sharma, Advocates. Mr Dayan Krishnan, Senior Advocate with Saifur R. Faridi, Ms Manvi Priya and Ms Smarika Singh, Advocates. JUDGMENT VIBHU BAKHRU, J 1. The Financial Intelligence Unit-IND, Department of Revenue, Ministry of Finance, Government of India (hereafter 'FIU') has filed the present appeals - fourteen in number - under Section 42 of the Prevention of Money-Laundering Act, 2002 (hereafter 'the Act') impugning a common judgment dated 28.06.2017 (hereafter 'the impugned order')....
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....approaching employees of various banks representing themselves to be customers who required to open accounts to deposit black money belonging to "a Minister" and for laundering the same. The sting operation was designed to expose the role of banks in money laundering. 6. The conversations between the reporters acting as prospective customers and officials of various banks were recorded and were reported on the media portal, Cobrapost. The said conversations, essentially, indicated that officials of the banks had expressed willingness to accept deposits of black money in accounts to be opened by the reporters posing as prospective customers. Some of the conversations indicated that the employees of banks had discussed the methodology for laundering the black money by investing the same in insurance schemes. Some of the conversations also indicated that the bank officials had agreed to facilitate hiring of lockers for storing currency. These conversations were placed in the public domain. The respondent banks do not dispute that the said conversations did take place. However, they contend that the conversations placed on the website are not complete and have been edited and extracte....
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....iries from certain bank officials. It contended that the said conversations do not constitute suspicious transactions as contemplated under Clause (g) of Rule 2 of the Rules read with Clause (h) of the said Rules. 13. Axis Bank was granted a hearing on 25.03.2014. During the course of hearing, Axis Bank was provided transcripts of the conversations recorded in the sting operations. Thereafter, by a letter dated 28.05.2014, the FIU permitted Axis Bank to file additional submissions with respect to the contents of the transcripts that were provided during the course of the hearing on 25.03.2014. Axis Bank responded and sent a letter dated 10.06.2014, inter alia, stating that it had also prepared transcripts of the conversations from the videos which were recorded during the sting operations. It stated that the transcripts were generally aligned. However, some key conversations as reported in the transcript, provided by the FIU, were not reflected in the videos of the sting operation. 14. Thereafter, the FIU passed an order dated 23.03.2015, holding Axis Bank guilty of not complying with the provisions of Section 12 of the Act read with Rules 2, 3, 5 and 7 of the Rules and imposing ....
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....hat the dates on which the sting operation was conducted were not on record. He stated that inquiries would have to be made from Cobrapost to ascertain the dates on which the sting operation was conducted and the conversations recorded. 19. In view of the above, it is apparent that FIU's contention that provisions of Section 13(2) of the Act, as in force prior to amendment on 15.02.2013, are applicable, is bereft of any factual foundation. The said contention is premised on the basis that the sting operation had been conducted prior to 15.02.2013 and, therefore, the respondent banks had violated the provisions of the Act, prior to Section 13(2) of the Act being amended. Consequently, the respondent banks are required to be visited with penalty as provided under Section 13(2) of the Act as in force prior to 15.02.2013. However, since there is no material on record to establish that the sting operation had been conducted prior to 15.02.2013, the aforesaid contention is unfounded. 20. It is also relevant to note that some of the respondent banks had expressly asserted that the sting operation was conducted after 15.02.2013. It is noticed that Axis Bank Ltd. had asserted that the sti....
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....t is necessary to do so, he may direct the concerned reporting entity to get its records, as may be specified, audited by an accountant from amongst a panel of accountants, maintained by the Central Government for this purpose. (1B) The expenses of, and incidental to, any audit under subsection (1A)shall be borne by the Central Government. (2) If the Director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations under this Chapter, then, without prejudice to any other action that may be taken under any other provisions of this Act, he may- (a) issue a warning in writing; or (b) direct such reporting entity or its designated director on the Board or any of its employees, to comply with specific instructions; or (c) direct such reporting entity or its designated director on the Board or any of its employees, to send reports at such interval as may be prescribed on the measures it is taking; or (d) by an order, impose a monetary penalty on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than ten tho....
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....igors of the law. The relevant extract of the said decision is set out below:- "22. It is only retroactive criminal legislation that is prohibited under Article 20(1). The prohibition contained in Article 20(1) is that no person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence prohibits nor shall he be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. It is quite clear that insofar as the Central Amendment Act creates new offences or enhances punishment for a particular type of offence no person can be convicted by such ex post facto law nor can the enhanced punishment prescribed by the amendment be applicable. But insofar as the Central Amendment Act reduces the punishment for an offence punishable under Section 16(1)(a) of the Act, there is no reason why the accused should not have the benefit of such reduced punishment. The rule of beneficial construction requires that even ex post facto law of such a type should be applied to mitigate the rigour of the law. The principle is based both on sound reason....
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....emi Chand v. State of Rajasthan: Crl. A. No. 214 of 2016 decided on 10.03.2016. 29. Mr Aggarwala sought to distinguish the aforesaid decisions by contending that the decisions were rendered in the context of laws relating to criminal offences. He submitted that in the present cases, the respondent banks have suffered a civil liability and, therefore, the said decisions are inapplicable. 30. This Court finds no merit in the aforesaid contention. Even if it is assumed that the liability imposed on the respondent banks is a civil liability, no distinction can be drawn on the aforesaid ground so as to deprive the respondents of the rule of beneficial construction. It is also relevant to refer to the decision of the Supreme Court in Commissioner of Tax (Central)-I, New Delhi v. Vatika Township Private Limited: (2015) 1 SCC 1. In the said case, the Supreme Court had authoritatively held that if a legislation confers the benefit on some persons without inflicting a corresponding detriment on some other person or where it appears that the intention of legislature is to confer such benefit, the rule of purposive construction would be applicable and the said legislation would be construed ....
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....in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by outweighing factors." 31. The object of amending Section 13(2) of the Act is clearly to enable the Director, FIU to issue such orders as may be warranted. Under the unamended provision, the Director had no discretion except to levy a fine in cases where failure to comply with the provisions of Section 12 of the Act was established. He, however, had the discretion to determine the quantum of fine within the limits as presc....