TaxTMI 
TaxTMI 
2019 (8) TMI 1912
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....omic Offences Unit of Bihar Police at Patna on 13.12.2016. The Appellant herein is not named in the FIRs. 4. Directorate of Enforcement has registered an ECIR dated 26.12.2016 the (Period of deposit and transfer of money probed in September, 2016 to 21.12.2016). The Deputy Director, Directorate of Enforcement, Patna by e-mail dated 17.02.2017 directed the banker of the Appellant to impose debit freeze. It is stated by the appellant that it was done without complying with any provisions of section 17 of PMLA which are mandatory being a special Act. 5. On 3rd March, 2017 the application made by Deputy Director, Directorate of Enforcement before the Adjudicating Authority for continuation of order of freeze of the accounts of 47 persons including the Appellant, figuring at Sl.No.41, (by filing of an application u/s. 17(4) of PMLA for continuation of freeze order) with a prayer to locate the proceeds of crime and for further investigations. 6. The Adjudicating Authority on 17.07.2017, passed order and rejected the application u/s. 17(4) on the ground that pre-conditions for invoking Section 17 of PMLA have not been complied with, but gives liberty to file another applicatio....
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....ntification 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 5 offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973, (2 of 1974) or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who m....
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....y 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 157 of the Code of Criminal Procedure, 1973, (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose. (2) The authority, who has been authorised under sub....
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....hority. 19. Power to arrest.-(l) If the Director, Deputy Director, Assistant Director, or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material m his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. (2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (I), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed. (3) Every person arrested under sub-section (1) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the....
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....8B or sub-section (2A) of section 60, the Director or any officer authorised by him in this behalf may withhold the release of any such property for a period of ninety days from the date of such order, if he is of the opinion that such property is relevant for the appeal proceedings under this Act. 21. Retention of records.-(1)Where any records have been seized, under section 17 or section 18 or frozen under sub-section (IA) of section 17 and the Investigating Officer or any other officer authorised by the Director in this behalf has reason to believe that any of such records are required to be retained for any inquiry under this Act, such records 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 records were seized or frozen, as the case may be. (2) The person, from whom records seized or frozen, shall be entitled to obtain copies of records. (3) On the expiry of the period specified under sub-section (1), the records shall be returned to the person from whom such records were seized or whose records were ordered to be frozen unless the Adjudicating Au....
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....V from sections 16 to 24 related to the powers of the investigating officer under PMLA to conduct survey, search, seizure, retain and all of these steps culminate into "attachment", which may ultimately lead to "confiscation". (v) While survey u/s. 16 does not empower the PMLA officers to seize the property but u/s. 17 the authorized officer, Director to Deputy Director, can authorize search of the premises, if he has "reasons to believe" on the basis of material in writing for any person has: (i) committed any act which constitutes money laundering as defined u/s. 3 (ii) is in "possession" of any "proceed of crime" involved in money laundering; (iii) is in possession of any "record" relating to money laundering; (iv) after 15.12.2013 by amendment it is incorporated, is in possession of any property "related" to crime. 13. If the officer has such material in regard to above contingencies of section 17, he can authorize any subordinate officer to enter such premises for search, seizure of any property and record, make note of inventory including examination on oath of any person who is found to be in possession of, control of any recor....
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....to scheduled offence but is to empower him to seize any property related to crime which can be handed-over later to the Competent Authority related to such crime. 18. The chapter for attachment is clause-III of PMLA which comes into play under section 5 only when a final report u/s. 173 CrPC known as "Police Report" is filed before the Magistrate or a complaint has been filed before the Magistrate or Court for taking cognizance of the scheduled offence or a similar report in respect of the scheduled offence outside India. 19. Section 5(1) applies when investigations have been completed in the scheduled offence and there is material in the final report or complaint that any proceed of crime has generated which is in the possession of any person and if such person is likely to conceal, transfer or deals with in any manner with the proceed of crime, which are likely to frustrate the proceedings under the Act for confiscation of such proceed of crime. 20. Section 5(1) does not use the word money laundering but talks of possession of proceed of crime by the person, as revealed at the end of investigation in the police report or complaint which empowers the concerned officer com....
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....thorize any officer subordinate to him to examine on oath any person who is found in possession or control any record of property relevant for investigation. This power to record statement u/s. 17(1) (f) is different and distinct from power u/s. 50(2) of PMLA which empowers the officer to summon any person whose attendance is considered necessary either to give evidence or to produce any records during the course of any investigations or proceedings under the Act. Thus investigations cannot be initiated by summons under section 50(2) of PMLA. 25. Record is defined u/s. 2(w). The record to include books of account or records maintained in a computer or such prescribed form. The word prescribed form takes us to PMLA Maintenance of Record Rules, 2015, which means that during the course of investigations bankers can be asked to produce the record for the purpose of investigations u/s. 13 as stipulated in section 50. Therefore, the Enforcement Directorate has no powers to examine a person by summoning and recording his statement which may be incriminating without search and seizure as prescribed u/s. 154 CrPC, 157 or 173 CrPC. 26. Section 18 relates to power of search of a person.....
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....pplication. 31. The adjudication has no jurisdiction to confirm the retention after the expiry of 180 days. 32. As far as merit of the case is concerned, the Appellant Company is in manufacture of printed flexible packaging material and printed laminated paper-rolls at Gurugram, Haryana and supplies goods after complying statutory requirements of Central Excise, VAT, Central Sales Tax and for each consignment of goods, several statutory records are generated with several different authorities. The appellant submits that all these facts and documents were submitted to Respondent at Patna and also before the Adjudicating Authority. 33. The Attaching Officer made a statement that all intermediary firms were fake and non-existent because summons issued to these firms are returned undelivered on account of insufficient address. The Appellant refuted these submissions stating that transactions are through bank accounts governed by KYC norms as per PMLA (Maintenance of records) Rules, 2005 and it could not be asserted that these companies are fake, though have a bank account. The Appellant made this specific contention in appeal on facts and grounds (M, N, H, I, J of the appeal) ....
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....n that all transactions of Appellant are prior to 8.11.2016 which in response was not refuted in counter in reply to corresponding paragraphs of appeal. Para 27 in PAO, the Attaching Officer asserted that bank accounts of Appellant and others were freezed "to preserve property suspected to be involved in money laundering as evidence" which is contrary to the scheme of statute. In page 54, Para (xiii) of PAO it was asserted that Sandeep Goyal, Director of Appellant Company was summoned several times for investigations but he did not appear which as per Respondent showed deliberate attempt to frustrate the proceedings, however, the Respondents suppressed the material and documents sent by Appellant. 39. The Appellant is not involved in any scheduled offence. He is not charge sheeted. The freeze of bank account was made on 17.02.2017 which he claimed to be doing again on 20.09.2017 and name of the Appellant is figuring at Sl.No.39. Now, recently the Respondent, ED has filed a complaint u/s. 3 of PMLA at Patna, Bihar after expiry of statutory period. 40. In the absence of any search u/s. 17 of PMLA, the bank accounts could not have been freezed and no extension or retention co....