TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 1761
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....ng of agricultural land at Hirani (Budni) and at Ram Nagar (Budni) on Shahganj Road, measuring in all 10.59 Acres are in the name of Sh. Simmant Kohli and one property comprising of Flat at Patel Nagar, F-4, First Floor, Sahil Homes, Plot No. 40, B Sector measuring 610 Sq. Feet is in the name of Smt. Harsh Kohli. Since the Appeals of Sh. Simmant Kohli and Smt. Harsh Kohli are being disposed of, it is proposed to deal with the aforementioned 5 properties in this Order. 2. Ld. Counsel for the Appellants submits that the Appellants Smt. Harsh Kohli and Sh. Simmant Kohli had been in employment for sufficiently long period so as to have substantial, independent and lawful sources of earning. The Appellants have been filing Income Tax Returns (ITRs). 3. Ld. Counsel further argued that the Appellant Smt. Harsh Kohli had served in M.P. Hastashilp Evam Hathkargha Vikas Nigam Limited on contract basis and later started her own business. The Appellant was proprietor of M/s Jute Cottage Craft, firm engaged in the business of manufacture and sale of handicrafts for almost 10 years. She is also running a publication and is proprietor of Newspaper 'India Circulation'. She is also a partner in M....
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....rt since June, 2001 and was earning Rs. 5000/- per month which increased to Rs. 30,000/- per month from April, 2012. He was engaged in multifarious businesses including Real Estate, Liquor Trading and Tours and Travels. He too like his mother was partner in M/s Jay Kay Wines. Ld. Counsel stated that the attached agricultural land viz., Khasra No. 72 and Khasra 73/3 at Hirani (Budni) Shahganj Road were purchased by him for Rs. 12,52,100/- with expenditure of Rs. 1,26,500/- for payment of stamp duty and registration charges. The Appellant had purchased the agricultural land viz. Khasra 217/3, 218, 219/3 and 217/4, 218, 219/4, 217/5 and 218, 219/5 at Ram Nagar (Budni) Shahganj Road for Rs. 6,00,000/- with expenditure of Rs. 72,200/- for payment of stamp duty and registration charges. He pleaded that Sh. S.P. Kohli had no authority to either deal with the properties owned by the Appellant or give any statement about him and his transactions. 5. Ld. Counsel for the Appellants alleged that there were no reasons which were recorded in writing for the formation of belief by the Authority which issued the PAO. Ld. counsel for the Appellants submitted that the Ld. Adjudicating Authority fai....
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....nts therefore pleaded to allow the Appeals. 10. Ld. Counsel for the Respondent stated that as per the findings made by Lokayukta Police and given in the Charge-sheet as well as from the findings of the Income Tax (IT) authorities, the investment in JK Resorts & Jay Kay Wines (liquor business) were out of illegal income of Shri Arvind Joshi and are therefore 'proceeds of crime.' Accordingly, any money derived from out of the same also constitutes 'proceeds of crime.' Relevant extracts from book of account BS-1, in the handwriting of Shri SP Kohli, seized from the residence of Shri Arvind Joshi reveal that the investments in the wine/liquor business were out of the illegal income of Shri Arvind Joshi. The charge-sheet filed by the Lokayukta Police concluded that the investment in liquor business in the name of JK Wines was from illegal sources. 11. Ld. Counsel for the Respondent submits that the IT Returns of the Appellants from the Financial year 2003-04 were filed after the search operation by the IT authorities during the year 2011. It has been observed that prior to the search operation by the IT Dept., the Appellants had filed returns declaring minimum income. ....
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....erated in List-I in the Seventh Schedule (in the Constitution referred as the "Union List"). The Madhya Pradesh Vishesh Nyayalaya Abhiyan, 2011 was passed by the State Legislative Assembly having its Territorial Jurisdiction in whole of Madhya Pradesh only. The provisions of Section 25 (Overriding effect) of this Act will have the applicability over the other State Laws and not on the Central law like PMLA. 13. Ld. Counsel for the Respondent stated that all the procedural aspects have been duly followed by the Ld. Adjudicating Authority and reasonable opportunities have been provided to the Appellants to prove that the source of funds utilized for acquiring the said property were legal. However, the Appellants have failed to provide the legal source of income. Ld. Adjudicating Authority has provided reasonable time to the Appellants during the adjudication proceedings and has heard both the sides, before passing the Impugned Order. 14. Ld. Counsel for the Respondent submitted that the books of account were recovered from the residence of Joshi couple which were maintained by Shri S.P. Kohli. Statement dated 16.09.2010 of Shri S.P. Kohli recorded by the IT Department revealed that....
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....the investigations have revealed that the statements made by Sh. Kohli before the IT Department were in the nature of explanation of the entries made in his own hand writing in the documents seized from the residence of Sh. Arvind Joshi. The investigations have revealed that cash flow statements that were prepared were fabricated and false. Certain enquires made with the banks confirm the statement of Sh. Kohli tendered before the IT authorities. 16. Ld. Counsel for the Respondent stated that the Appellant Smt. Harsh Kohli had purchased the Impugned Property i.e., the Flat from Smt. Abha Ghani, sister of Sh. Arvind Joshi. Ld. Counsel contended that the property was constructed by Sh. S.P. Kohli and then changed hands before being bought by Smt. Abha Ghani who again sold it to Smt. Harsh Kohli which was nothing but attempt to launder proceeds of crime. Ld. Counsel also stated that neither Sh. S.P. Kohli nor Smt. Harsh Kohli ever revealed during the investigation and adjudication proceedings that the Impugned Property was jointly owned with Sh. Sahil Kohli. Sh. Sahil Kohli expired in the year 2020. Ld. Counsel further stated that at the belated stage of filing the written synopsis i....
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....ohli, out of proceeds of crime generated by the Joshi Couple. 19. It appears from the investigation that the books of accounts or diaries were recovered by the Income Tax Department, from the residence of Joshi couple. Many of these were hand-written and maintained by Sh. S.P. Kohli. In his statement dated 16.09.2010 before the Income Tax (IT) authorities, Sh. Kohli stated that he used to get money from Sh. Arvind Joshi for purchase of agricultural land in the name of M/s Ethos Exports Pvt. Ltd. He used to receive cash at the residence of Sh. Arvind Joshi. He also held power of attorney for Smt. Abha and Smt. Vibha sisters of Sh. Arvind Joshi. Similarly, Sh. Simmant Kohli held power of attorney for the two sisters. Sh. S.P. Kohli stated that except for few properties of Kohli family, as specified in the statement, the remaining properties that are in the name of his family members belonged to Sh. Arvind Joshi and were purchased from the cash given by Sh. Arvind Joshi. The statement of Sh. Kohli is corroborated by the hand-written books of accounts. However, Sh. S.P. Kohli in his statement under Section 50 of the PMLA tendered on 01.11.2011 changed his version to state that the pro....
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....n that the proceeds of crime generated by the Joshi Couple were invested in the firm. The Appellant Sh. Simmant Kohli could not explain that starting from his income of Rs. 40,880/- in the year 2001-02 how he could generate assets worth Rs. 1,26,72,762/- by the year 2009-10. The Appellant Sh. Simmant Kohli has not been able to explain the sources of fund for the purchase of the impugned four properties. His explanation has been that he filed the IT Returns without having actually demonstrated to the source of fund for purchasing each of the four attached properties. 21. The argument of the Appellants is that Sh. S.P. Kohli had retracted from the statements tendered to the Income Tax Department. The Appellants have contended that the statement under PMLA is correct. I find that the statements before the Income Tax Authorities were taken over three days with gap of two days of intervening weekend holidays. Moreover, the statements have been tendered as explanation to the recoveries of the books of accounts from the premises of Joshi Couple. Sh. S.P. Kohli has recorded many of the entries in his own hand writing. His retractions have been filed with authorities who were not competent....
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....nt was not extorted. It thus boils down that the authority or any court intending to act upon the inculpatory statement as a voluntary one should apply its mind to the retraction and reject the same in writing. It is only on this principle of law, this Court in several decisions has ruled that even in passing a detention order on the basis of an inculpatory statement of a detenu who has violated the provisions of the FERA or the Customs Act, etc. the detaining authority should consider the subsequent retraction and record its opinion before accepting the inculpatory statement lest the order will be vitiated." 23. The Appellants have also argued that since the proceedings were in progress under the provisions of Madhya Pradesh Vishesh Nyayalaya Abhiyan, 2011 no attachment could have been done under PMLA. It is undisputed that when the PAO No. 03/2014-15 dated 19.09.2014 provisionally attached the properties there was no attachment under the provisions of Madhya Pradesh Vishesh Nyayalaya Abhiyan, 2011. The Charge-sheet No. 43/2014 was filed by Lokayukta Police on 03.02.2014. The requirement under Section 5(1) of PMLA that the Charge-sheet should have been filed before the issuance o....
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....ith the issuing authority for passing the said PAO. In the Impugned Order, it has been specifically recorded as part of the response from the Respondent Directorate that based on their investigation with the Sub-Registrar of properties certain properties had already been disposed of during the course of enquiry being conducted by the Respondent Directorate. Furthermore, that two properties in the name of Ms. Abha Ghani had been disposed of in the year 2010 under power of attorney of the Appellant Sh. Simmant Kohli. The Respondent Directorate has maintained that the attachments were done not only on the basis of the statement of Sh. S.P. Kohli alone but various other evidences were also taken into account. I therefore find that there were reasons to believe available with the issuing authority to pass the said PAO. I further observe that on the plain reading of Section 5 of PMLA, the only procedural observance to be followed before the issuance of Provisional Attachment order is that, Deputy Director should have recorded in writing the "Reasons to Believe" on the basis of the material in his possession. The language of Section 5(1) of PMLA does not provide for procedural requirement....
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....te. As far as the present case on hand is concerned, de hors the above legal finding, this Court finds that the Authority has given reasons in terms of the scheme of Section 5 and to what extent such reasons could ultimately end up in confirmation or not, is for the Adjudicating Authority to decide after a detailed enquiry to be conducted under Section 8 of PMLA. Therefore, on merits, this Court finds that submission that the Authority has not recorded reasons is contrary to records and the same is liable to be rejected. iii) The language used in Section 8(1) of PMLA is different from what it is used in Section 5(1) of PMLA. Both the expressions are different and distinct and the Adjudicating Authority is not required under Section 8(1) to record reasons as in the case of the Authority exercising under Section 5(1) of PMLA which means that the Adjudicating Authority, on the basis of the complaint filed by the initial authority under Sub Section 5 of Section 5 of PMLA, can proceed with the adjudication process on the basis of subjective satisfaction. In any event, the Adjudicating Authority has to follow procedure provided under Section 8 as well as the procedure contemplated unde....
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.... contention does not merit acceptance even otherwise. Article 20 of the Constitution enacts an injunction only in respect of ex-post facto laws resulting in conviction for offences or imposition of penalties greater than which might have been inflicted under the law enforceable at the time of commission of the offence. No provision of the Constitution has been brought to our notice which prohibits a legislative measure which targets for attachment and confiscation of proceeds of crime. On the text and authority of our Constitution while it may perhaps gainfully be contended that conviction for the offence of money-laundering cannot be recorded if the said offence is committed prior to the enforcement of Section 3 of the Act, such a contention cannot be advanced to target proceedings for attachment and confiscation, as these fall outside the 18 pale of the prohibitions of the Constitution, in particular Article 20(1)". It is observed that in the present case, the PAO was issued on 19.09.2014 after the amendment in PMLA to include the provisions of the Prevention of Corruption Act, 1988 in the Schedule to the PMLA in 2009 and 2013. The relevant date is not the date of actual commiss....
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....29. Ld. Counsel for the Appellant Smt. Harsh Kohli has argued that the SCN under Section 8(1) of PMLA was not issued to Late Sh. Sahil Kohli even though the Impugned Property viz., Flat at Patel Nagar, F-4, First Floor, Sahil Homes, Plot No. 40, B Sector measuring 610 Sq. Feet was registered in the joint names of the Appellant and her son Late Sh. Sahil Kohli on 12th August, 2008, much before the proceedings under the Income Tax Act were initiated. In this regard, a copy of the Registered Sale Deed has also been submitted. In this regard, he pointed out that the second proviso of Section 8(1) of PMLA required that SCN should have been issued to Late Sh. Sahil Kohli. Section 8(1) of PMLA is reproduced below: "(1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an 1[offence under section 3 or is in possession of proceeds of crime], it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by me....