TaxTMI 
TaxTMI 
2025 (6) TMI 522
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.... Mehta having carpet area 2689.75 Sq. Ft. 17,76,50,000/- 2. Immovable properties/residential flats situated at 901, Beaumonde, Prabhadevi, Mumbai-25, registered in the name of Shri Vishal J. Mehta having carpet area 2689.75 Sq. Ft. 17,76,50,000/- Total 35,53,00,000/- 2. As per the facts of the case, Central Bureau of Investigation, Bank Securities & Frauds Cell, Mumbai registered a case vide RC-BSM2014 E0004 dated 26.03.2014 on the basis of written complaint filed by Ashok Bansal, AGM, PNB against Jatin Rajnikant Mehta, Shri Ramesh Indulal Parikh, Shri Ravichandran Ramsami, Shri Harish Ratilal Mehta, Shri Pranav Ramesh Dalal, Vinod Kumar Rajendra Jain, Shri Bahilalbhai Kantilal Patel, Shri Hari Mohan Namdev, Shri Haytham Salman Ali Abu Obaidah, M/s Winsome Diamonds and Jewellery Ltd. (WDJL) and M/s Forever Precious Jewellery Diamond Ltd. (FPJDL) for commission of offence under Section 120B IPC read with 420 IPC and substantive offence thereunder: CBI BS &FC, Mumbai also registered several other FIR's for acts of criminal conspiracy for committing fraud with various banks on the basis of complaint filed by respective banks namely Oriental Bank of Co....
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.... Jatin R. Mehta and his wife Mrs. Sonia J. Mehta with the help of their key employees started to import raw gold from bullion banks and from private entities to factories situated at SEZ, Chennai and Cochin, converted them into coins and pendants and sold them in open market in order to siphon off gold in the garb of export to UAE based buyers. The complete cycle of import of gold and realization of sale proceeds was taking hardly 5-6 days, whereas they availed credit facilities upto 270 days in order to round trip the funds and show high turnover. On the basis of high turnover, they managed to avail enhanced working capital, induced the bank to part with the fund and siphoned off the money in the guise of loss in derivative trading by the buyers abroad and the proceeds were routed through bank accounts of various foreign companies and were ultimately routed into the accounts of various companies owned and controlled by Mrs. Sonia Mehta and Shri Suraj Mehta. As a result of criminal conspiracy and cheating by M/s WDJL, M/s. FPJDL and their Directors, Promoter Sh. Jatin, Mehta, Smt. Sonia Mehta, Shri Suraj J. Mehta, Mr. Haytham Salman Ali Abu Obaidah of UAE and unknown Public servant....
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....n Ali Abu Obaidah in the guise of exports proceeds. According to CBI Charge Sheet, the POC was further layered through various overseas companies and ultimately converged in Bank Accounts of M/s Al Noora Jewellery FZE, UAE, Alma Diamonds, Hongkong and others entities owned by Mrs. Sonia Mehta, wife of Shri Jatin R. Mehta and Shri Suraj Mehta, son of Shri Jatin R. Mehta. Therefore, on the basis of the material collected during the course of investigation and placed on record, it was imperative that the immovable properties as mentioned in the schedule, provisionally attached, considering the same in terms of 'value thereof', under Section 2(1)(u) read with Section 5(1) of the PMLA, 2002. (B) Brief facts regarding attachment of properties at Bharat Diamond Bourse, Bandra Kurla complex, a Mumbai registered in the name of M/s SRV Polished Diamonds Pvt. Ltd and M/s SJR Commodities and Consultancies Pvt. Ltd. Investigation has revealed that Shri Jatin R. Mehta was also having several group companies and the share holding pattern was as such that Jatin Mehta, his family members and other group companies are the shareholders in every Group Company. One of the Group Companies ....
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....2012 was as under: Sr. No. Name of Shareholder No. of Shares 1. Jatin R. Mehta 2037 2. Diadern Investment & Finance Pvt. Ltd. 2300 3. SJR Commodities & Consultancies Pvt. Ltd. 13 4. Jatin R. Mehta (HUF) 14600 5. Bombay Diamonds Company Pvt. Ltd. 100 6. Kohinoor Diamonds Pvt. Ltd. 24050 7. Firstrate Diamonds Pvt. Ltd. 6900 Total 50000 Subsequently, 01.04.2013 share holding pattern was changed as under investigation has revealed that in the during 2012-13, Mrs. Sonia Mehta, Shri Suraj Mehta and Shri Vishal Mehta were the shareholders in M/s SRV Polished Diamond Company Pvt. Ltd., but subsequently they transferred their shares in the name of their group companies. Share holdings of M/s SRV Polished Diamonds Pvt. Ltd. from 01.04.2013 to 31.03.2015 was as under: - Sr. No. Name of Shareholders No. of Shares 1. Jatin R. Mehta (HUF) 14600 2. L.S. Bhansali 50 3. Suraj Jewellery India Pvt. Ltd. 50 4. Professional Diamonds Pvt. Ltd. 24050 5. Suraj Diamond Industries Pvt. Ltd. 2050 6. Euro Auto Pvt. Ltd. (99% share held by Shri Jatin R. Mehta) ....
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.... IIA Technologies PTE LTD 4/28/2015 SRV POLISHED DIAMOND COMPANY PVT. LTD 30849.61 PDC INTERNATIONAL FZE 5/19/2015 SRV POLISHED DIAMOND COMPANY PVT. LT 35173.38 PDC LTD 7/28/2015 SRV POLISHED DIAMOND COMPANY PVT LT 146571.20 PDC LTD 8/31/2015 SRV POLISHED COMPANY PVT LT 188889.79 PDC LTD 8/31/2015 SRV POLISHED COMPANY PVT LT 35622.61 PDC INTERNATIONAL FZE 8/31/2015 SRV POLISHED COMPANY PVT LT 79934.86 PDC INTERNATIONAL FZE TOTAL 762041.45 During the course of investigation, it was revealed that following immovable properties situated at Bharat Diamond Bourse, BandraKurla Complex, Mumbai, are presently owned by M/s SRV Polished Jewellers Pvt. Ltd. (a) Office No. CE 5051, bearing 2458 shares under C/0577 share certificate and C- 324, C-325, C-326, C-417 to C-422, car parking space bearing shares 900 under share certificate No. P/0431 to P/0439, which was transferred vide Deed of Transfer No. 4/4010/2014 dated 11.06.2014 by M/s Su-Raj Diamond Industries Ltd. to M/s SRV Polished Diamonds Co. Pvt. Ltd. ....
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....dities and Consultancies Pvt. Ltd., Shri Prashant Kelkar vide his e-mail dated 10.09.2018 provided details of shareholding patters since 2010 in respect of M/s SJR Commodities and Consultancies Pvt. Ltd., which is also one of the group companies of Shri Jatin R. Mehta. From the said e-mail it appears that the share holding pattern of M/s SJR Commodities and Consultancies Pvt. Ltd., as on 01.04.2012 was as under: S. No. Name of Shareholder No. of Shares 1. Jatin R. Mehta (HUF) 3934 2. Gunvanti Rajnikant Mehta 7510 3. Kohinoor Diamonds Pvt. Ltd. 11000 4. Bombay Diamonds Co. Pvt. Ltd. 06 5. Forever Diamonds Pvt. Ltd. 1000 6. Firstrate Diamonds Pvt. Ltd. 1050 TOTAL 24500 Subsequently, 01.04.2013 share holding pattern was changed as under and further continued: Sr. No. Name of Shareholder No. of Shares 1. Jatin R. Mehta (HUF) 11444 2. Suraj Diamond Dealers Pvt. Ltd. 1000 3. Suraj Jewellery India Pvt. Ltd. 11000 4. Euro Auto Pvt. Ltd. (99% share held by Sh. Jatin R. Mehta) 06 5. SRV Polished Diamond Companies Pvt. Ltd. 1050 TOTAL 24500 ....
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....he name of M/s SJR Commodities & Consultancies Pvt. Ltd. which are group companies of Shri Jatin R. Mehta, have been provisionally attached, invoking section 2(1)(u) of PMLA, 2002. In the aforesaid case it appears that the proceeds of crime totaling to US $1,261,379,563 have been exported out of India in form of gold and diamond studded jewelry, by Jatin Mehta & his family members. As no remittance is received against the said exports, thus, the entire proceeds of crime in this case lie outside India. The said amounts have been siphoned off to foreign shores by Shri Jatin Mehta & his family members in conspiracy with Sh. Haytham Salman Ali Abu Obaidah in the guise of exports proceeds. According to CBI Charge Sheet, the POC was further layered through various overseas companies and ultimately converged in Bank Accounts of M/s Al Noora Jewellery FZE, UAE, Alma Diamonds, Hong kong and others entities owned by Mrs. Sonia Mehta, wife of Shri Jatin R. Mehta and Shri Suraj Mehta, son of Shri Jatin R. Mehta. Analysis of share holding pattern of the above discussed companies as well as the property transactions/ transfer of flats by Mrs. Sonia Mehta shows that the change in shareholding ....
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....ication of mind. He stressed that the respondent had not brought on record any tangible material and/or any direct link/nexus to establish that the impugned properties were part of proceeds of crime. It was further submitted that the respondent had not brought on record any tangible material and recorded any reasons to belief that a) The appellant is in possession of proceeds of crime, and b) Such proceeds are likely to be concealed, transferred or dealt with any manner which may result in frustrating any proceedings under the Act. It was further submitted that the payment has been made out of own funds/ money/ earning of the appellant. The appellant placed on record various documents in support of genuine purchase and remittance in respect thereto. a) Submission with regard to pre-conditions to invoke provisions of S.5 (1) of the act. b) submission with regard to mandatory requirement of recording 'reason to believe', c) submission with regard to requirement of establishing direct nexus or live link, d) Reliance was placed on (i) Mahanivesh Oils & Foods Pvt. Ltd. in (2016) SCC Online Del 475. (ii) J Sekar Vs. UOI in W.P. (C) 5320/2017 dated 11.01.2018 (iii) ITO Vs. Lakhmani Mewal ....
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....f income and thus, not 'proceeds of crime? iii) Whether the provision of value thereof for attaching the properties of equivalent value held within the country will be applicable with the retrospective effect, since it was inserted in the year 2015? iv) Whether the property can be attached as 'equivalent in value held within the country i.e. under third limb of the definition of proceeds of crime, despite the fact that appellant is not an accused and in the light of retrospective application of the third limb, as it was inserted in 2015? Now, we will analyse the above issues one by one in the following paras. 6. Now, coming to the issue no. i) Whether the respondent ED has brought on record any tangible material and has any reasons to belief that the appellant is in possession of proceeds of crime and such proceeds are likely to be concealed, transferred or dealt with any manner which may result in frustrating any proceedings under the Act and thereby fulfilled the requirements of Section 5? In view of the detailed facts as mentioned in para no.02 above, like the registration of FIR against the accused persons, acquisition of proceeds of crime, by sending....
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....to the property acquired or derived directly or indirectly by a person relating to the criminal activity to a scheduled offence. The second part includes "the value of any such property". The second part is generally mixed with third part for giving interpretation. However, if we see carefully, the third part is clearly an offshoot of the second part and of explanatory in nature, as before the amendment and insertion of third part, many litigants started agitating the issue that in case the proceeds of crime are not available in India, then the properties in abroad cannot be attached as value thereof. Hence, we are of the view that in case of non-availability of direct/indirect proceeds of crime, then the properties can be attached as value thereof, whether available in India or abroad. However, an elaborate judgment on the issue has been given by the Delhi High Court in the case of Prakash Industries Ltd. v. Directorate of Enforcement reported in 2022 SCC OnLine Del 2087 and in this regard, Para 105 of the judgment in the case of Prakash Industries Ltd. (Supra) are quoted hereunder:- "105. It would be pertinent to recall that properties which were acquired prior to the en....
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.... the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of "property" as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money-laundering." The paras quoted above show a detailed discussion to the interpretation to the definition of "proceeds of crime". The judgment of the Apex Court in the case of Smt. Pavana Dibbur v. The Directorate of Enforcement reported in 2023 SCC OnLine SC 1586 (supra) has also been considered. It is pertinent to mention here that para 68 of Vijay Madanlal Choudhary v. Union of India (supra) has escaped the sight of Hon'ble Supreme Court of India in Smt. Pavana Dibbur v. The Directorate of Enforcement (supra) and in the subsequent judgment of Hon'ble High Court of Kerala, E....