TaxTMI 
TaxTMI 
2023 (6) TMI 1436
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....Money Laundering Act, 2002, (PMLA) conducted on 31-1-2023 and 1-2-2023. 2. The appellants have pleaded that they are entitled to obtain copies of the seized records u/s 21(2) of PMLA. They have further pleaded that copies of the seized records were not even provided along with the Show Cause Notice issued on 2-3-2023 by the Registrar of Adjudicating Authority, PMLA. They pleaded that in spite of their application dated 6-4-2023 to the Adjudicating Authority to direct the respondent to supply copies of the seized records, hearing thereupon on 9-5-2023 before the Adjudicating Authority and written submissions filed by them before the Adjudicating Authority on 12-5-2023, the impugned order dated 26-5-2023 passed by the Ld. Adjudicating Authority rejected their request for supply of seized record and issued directions to them to file reply by 30-6-2023 to the Show Cause Notice dated 2-3-2023. 3. The respondents in their replies dated 8-6-2023 have taken the position that while the copies of the seized records shall be provided to the appellants u/s 21(2) of PMLA there is no such requirement as to provide the copies at this stage in view of there being no time line prescribed unde....
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.... pleadings in the appeal, the reply of the respondent, the order of the Ld. Adjudicating Authority and the arguments made during the hearing. The moot questions which need to be answered are following:- A. Whether the provisions of Section 21(2) of PMLA gives any scope for flexibility as to the timeline for giving copies of the seized records to the person from whom such records are seized? B. Whether refusal to provide copies of the seized records before filing of reply to the Show Cause Notice issued by the Office of the Ld. Adjudicating Authority u/s 8(1) of PMLA causes prejudice to the appellants herein ? 6. The provision of section 21(2) of PMLA as it stands today is: "21(2) - The person, from whom records seized or frozen, shall be entitled to obtain copies of records." It is clear that Section 21(2) of PMLA vests right to the person to obtain copies of records seized from him. It is not disputed by the respondent that the appellants are entitled to obtain copies of records and therefore, the right does vests with the appellants u/s 21(2) of PMLA. The appellants have pleaded that the said right is unconditional and unqualified. They stated tha....
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....f the Adjudicating Authority is necessary, any failure to get such permission would cause the seized records to be returned. It can therefore, be inferred from the unamended provision of sub-section 21(2) that copies of the seized records which had been retained under then sub-section 21(1) had to be given to the person from whom such records had been seized before moving for permission of the Adjudicating Authority for retention for period beyond that prescribed under then unamended sub-section 21(1). 8. The amendments in sub-sections 21(1) and 21(2) of PMLA imply that even though the period for which the Investigating Officer can retain the seized records on the basis of his own reasons to believe has been increased to 180 days from the date of seizure, the provision for being entitled to obtain copies of such seized records which have been retained by the Investigating Officer, is no longer there. The appellant has pleaded that the removal of link to sub-section 21(1) of sub-section 21(2) after the amendment has made the right to obtain copies of the seized records absolute. They have further pleaded that placement of sub-section 21(2) between sub-sections 21(1) and 21(3) sho....
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....rom whom the record has been seized. 10. In this regard, the second question "Whether refusal to provide copies of the seized records before filing of reply to the Show Cause Notice issued by the Office of the Ld. Adjudicating Authority u/s 8(1) of PMLA causes prejudice to the appellants herein ?" Becomes necessary to be examined and answered. 11. The provisions of search and seizure in section 17(1) is as below:- "17(1) - Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii) is in possession of any records relating to money-laundering, [or] [(iv) is in possession of any property related to crime} then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to- (a) enter and search any building, place, vessel, vehicle or airc....
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....nded over at the location of seizure. The Adjudicating Authority has made specific finding that the requirements of sub-sections 17(2) and 17(4) have been complied with by the respondent and reasons to believe, copy of the Panchnama, copy of the Original Application and its Annexures have been supplied to the appellants. On perusal of the Annexures of the Original Application it is noticed that Annexure-A comprises of details of main persons/entities spread over 3 pages against whom search warrants were issued, Annexure-B comprises of reasons to believe as required under section 17(1) spread over 29 pages and Annexure-C which brings out for every search warrant the details of persons against whom search warrants were issued, brief description of recovery during search and relevance & reasons for retaining such recovery, spread over 8 pages. The Adjudicating Authority has also observed that for the Show Cause Notice dated 2-3-2023 issued u/s 8(1) by his Office a copy of the reasons to believe for doing so has also been supplied to the appellants. 13. The appellants have been aggrieved for not having received the copies of the seized records and have pleaded that prejudice is caus....
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.... aforementioned Rules states that the Adjudicating Authority shall retain copy of the reasons and the material relating to search and seizure either for a period of ten years or for shorter period if the proceedings under section 8 of the Act have been commenced then till the disposal of such proceedings or till the disposal of the appeals before the higher judicial fora. On the other hand, the seized records can only be retained for the maximum of 365 days for the cases which are under investigation or for longer period i.e. till the pendency of the proceedings relating to money laundering offence before the Court. Furthermore, if such seized records are sent within 30 days of the seizure to the Adjudicating Authority under sub-section 17(4) along with the Original Application, the provisions of retention for 180 days by the Investigating Officer on his own reasons to believe under sub-section 21(1) becomes redundant and also takes away the time required by him for conducting investigation. Therefore, it again follows that the seized records are not included in the word "material" as referred to under the provisions of the Act and Rules thereunder. 15. The Ld. Counsel for the a....
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....seized records have not been served there is contravention of the principles of natural justice which govern the procedures to be followed by the Adjudicating Authority. 17. It is observed that section 8(1) only mentions the issuing of a notice where the property has been attached or seized. The provisions of section 8(1) do not refer to seized records. The definition of property under section 2(v) of the Act includes deeds and instruments evidencing title/interest in such property or assets. Records have not been included in the definition of property. Since in the present case no property is attached or seized as yet there cannot be any question as to the inclusion of any deed or instrument in the seized records. The Adjudicating Authority has mentioned in his order dated 26-5-2023 that with the Show Cause Notice dated 2-3-2023 a copy of the reasons recorded under section 8(1) has been supplied to the appellants. 18. Provisions of section 8(2) relate to decision by the Adjudicating Authority after consideration of the reply to the notice, and after hearing the aggrieved person and taking into account all relevant materials placed before him. He is required to make a finding....
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....the adjudication proceedings. 21. The appellants have cited Tarun Tyagi v. CBI [2013] 4 SCC 490 to contend that the principles of natural justice have been violated. However, the cited judgment too, requires providing for documents relied upon by the Prosecution to the Defence at the time of supply of the charge-sheet. In the present case the Show Cause Notice dated 02-3-2023 has been issued for deciding the question of retention of seized records beyond 180 days and not for decision on confirmation of attachment or seizure or freezing of property as explained earlier. In the instant case the Ld. Adjudicating Authority has categorically brought out that copies of the seized records are not upon which he is going to rely for decision making. In view of this the judgment as cited by the appellant in Indian Commodities Exchange Ltd. v. Neptune Overseas Ltd. [2020] 121 taxmann.com 365/[2021] 167 SCL 177 (SC)/(2020) 20 SCC 106 is also not applicable to the facts and the legal provisions of the present case. It is to be reiterated that no property of the appellants has yet been attached or seized or frozen and the present proceedings before the Adjudicating Authority does not involve ....