AI Drafter 
TaxTMI 
TaxTMI 
2000 (10) TMI 986
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....ection 2(1)(c) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 ('SAFEMA'), a notice under section 6(1) of the SAFEMA Act was issued by the Competent Authority, Mumbai dated 31-7-1986 to the appellant, calling upon him to show cause why 4 properties, namely, (1) Flat No. 1 in Mahendra Apartment at Mumbai; (2) Credit balance in Dena Bank; (3) Shares of various public companies; and (4) National Savings Certificates of the face value of Rs. 12,500 should not be forfeited as illegally acquired properties. 2. In reply to the show-cause notice, the appellant stated that he purchased the flat by obtaining loans from Housing Development Finance Corpn. (HDFC), and Allana Oil Mills (the employer) by sale of sh....
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....ve been utilised for the purchase of the flat. 6. The flat was purchased by the appellant under an agreement dated 27-7-1981 for Rs. 56,236. According to the Valuation Report, the property was valued at Rs. 94,000 as on the date of purchase. As per the appellant, the payment was made by obtaining loans from his employer and by obtaining a loan from HDFC. The Competent Authority held that loan obtained from HDFC was in the year 1983, whereas, the payments made for the purchase of the flat were all in the year 1981 and hence, the appellant could not have purchased the flat with the loan obtained from the HDFC. We are in agreement with the said finding, as the appellant made payments for the flat in the year 1981, whereas the loan obtained ....
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.... the contention of the learned counsel that the appellant had enough savings from his meagre salary received by him for purchase of the shares of various public companies and for making investment in the flat. Apart from the amount of Rs. 22,000, obtained by way of loan from the employer and the amount of Rs. 11,200 realised by sale of shares, amounting in all to Rs. 33,200, the appellant did not have any other amount for being invested in the purchase of the flat. 10. The learned counsel for the appellant has taken us through the various documents to show that the value of the flat is only Rs. 56,236 as on the date of purchase and was not Rs. 94,000, as estimated by the Valuation Report, as there was an embargo on payment of higher cons....
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....it was acquired by the appellant. 12. In view of the rival contentions of the parties with regard to the fine that the appellant should be called upon to pay fine in lieu of forfeiture, section 9 is set out as under : "Fine in lieu of forfeiture.-(1) Where the competent authority makes a declaration that any property stands forfeited to the Central Government under section 7 and it is a case where the source of only a part, being less than one-half, of the income, earnings or assets with which such property was acquired has not been proved to the satisfaction of the competent authority, it shall make an order giving an option to the person affected to pay, in lieu of forfeiture, a fine equal to one and one-fifth times the value ....
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....asset should be the determining factor. 13. In order to appreciate the contention of the Deputy Director that the market value should be taken into consideration, it is useful to set out a similar provision made in section 68K of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS) which also lays down the cases in which fine in lieu of forfeiture may be imposed. Section 68K is set out as under : "Fine in lieu of forfeiture.-(1) Where the competent authority makes a declaration that any property stands forfeited to the Central Government under section 68-I and it is a case where the source of only a part of the illegally acquired property has not been proved to the satisfaction of the competent authority, it shall mak....