TaxTMI 
TaxTMI 
2025 (6) TMI 1181
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....riots and spread terror. 3. UP Police Anti-Terrorism Squad (ATS) registered FIR No. 04/2021 dated 16.02.2021 [u/s 120B and 121A of IPC, 13, 16, 18 and 20 of UAPA; 3, 4 and 5 of the Explosives Act and 3 and 25 of the Arms Act] against two PFI members - (i) Anshad Badharudeen and (ii) Firoz Khan who were arrested by UP Police and improvised explosive devices, one 32 bore pistol and 7 live cartridges were seized from them. As per the FIR, as part of criminal conspiracy, some PFI members were planning to form a terrorist gang and were collecting deadly weapons and explosive devices to simultaneously launch attacks on many important and sensitive places and personalities in UP with an intent to challenge the unity, integrity and sovereignty of the nation and to disturb communal harmony. 4. The Funds amounting to Rs. 1.36 Crore, raised/ collected abroad by office bearers/ members/ activists of PFI, CFI and their related organizations, were routed to the bank accounts of K A Rauf Sherif, the National General Secretary of CFI & also a member of PFI and his associates by way of remittances through a wide range of individuals/ entities and were used by PFI/ CFI office bearers/members/ acti....
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....s. Munnar Villa Vista Pvt. Ltd.) shares by individuals based in the Gulf countries and the transfer of such shares, without any consideration, to PFI office bearer and his relatives in India and transfer of funds from MVVPL on the bogus pretext of supply of material established that the MVV project has been developed and used by PFI leaders as a money laundering front for PFI- to launder funds raised/collected abroad as part of larger criminal conspiracy and by investing the proceeds of crime in the form of unaccounted & suspicious cash in the project; to further transfer funds to entities owned & controlled by PFI office-bearers and to project the proceeds of crime as untainted. 13. PFI & its associated individuals/ entities appear to have been directly and knowingly involved in the entire range of processes and activities connected with the proceeds of crime: (i) Generation of proceeds of crime by raising/ collecting funds in India & abroad as part of criminal conspiracy. (ii) Concealment of proceeds of crime by not disclosing them before the Government Authorities and by not revealing the source of funds. (iii) Possessing and acquiring the said proceeds of crime in its ba....
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....er has been passed by the Adjudicating Authority without application of mind because he has merely reproduced the pleadings of both the parties but failed to give reasoning for drawing conclusion and that too against the appellant thus on the aforesaid ground itself, the impugned order deserves to be set aside 19. It is further submitted that for the existence of "proceeds of crime" under the Act of 2002, what is required to be proved is that property was derived or obtained directly or indirectly as a result of criminal activity relating to the scheduled offence. In the present case, the respondents have failed to identify predicate/scheduled offence that led to generation of alleged cash said to be in the hands of the appellant Company. In fact, they failed to link any part of the appellant's real estate project to criminal activity. 20. In view of the above, the respondents erroneously invoked section 5(1) of the Act of 2002. It is without satisfying the material to represent and show that appellant was in possession of the proceeds of crime and there was eminent risk of concealment or transfer of the property to justify provisional attachment. The attachment of the common are....
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....e Managing Director Rajenderan Unni said to have acknowledged discrepancy in cash revenue and expenses and the respondents have further taken support of the statement of Abdul Razak BP. 24. It was recorded in ignorance of the fact that Rajenderan Unni had no knowledge about the discrepancies in the cash amount and it is a further fact that after the death of Moideen AM in December 2021, Abdul Risvan maintained the petty cash book but it was only for the expenses at the site. The cash book maintained by Risvan was having account of other companies also, but ignored by the respondents. In any case, any irregularities in the cash book can be said to be amounting irregularities but not a case of money laundering. No evidence could be produced by the ED to show that the cash between 80 to 90 lakhs was un-accounted money originated from the scheduled offence. 25. The learned counsel for the appellant had further made a reference of the transfer of 500 shares by Rajenderan Unni to Abdul Khadar (son of Ashraf M.K.) with an allegation of involving benami transaction of shares. 26. The fact aforesaid has no nexus with commission of alleged crime and any material to show involvement of the....
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.... the respondent would be referred while recording finding in reference to each issue raised by the appellant for the sake of brevity and to avoid repetition of facts. Finding of the Tribunal 31. The facts referred in the initial paras shows that the number of FIRs were registered in reference to the affairs of PFI and SDPI which entered into the criminal conspiracy to impart training to their cadres for use of explosive and weapons and organized a terrorist camp at Narath in Kannur District with the intention to promote enmity between different religions and prepare them for terrorist activities, thus, committed acts endangering the unity and integrity of the Nation and therefore several FIRs were registered for commission of different offences under the IPC, Explosive Substance Act, Arms Act and under section 18 and 18 (A) of Unlawful Activities (Prevention) Act, 1967. 32. The UP police registered the FIR apart from UP Police Anti Terrorist Squad involving two PFI members Anshad Badharudeen and Firoz Khan who were arrested by the UP Police and found with improvised explosive devices, one 32 bore pistol with 07 live cartridges. 12 other cases were registered against the PFI and ....
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....alment of the property by the appellant. The other arguments are in reference to the facts of the case. Thus, it would be proper for us to refer of the facts taken up by the respondents for passing the provisional attachment order to find out whether they were sufficient to make out a case of offence under section 3 of the Act of 2002 and whether there exist proceeds of crime. In this regard, we may first refer to facts revealed in the investigation conducted under the Act of 2002 and money trail and the movable and immovable assets said to be the proceeds of crime. The reference to suspicious source of fund raised and revealed by PFI and his remittance to underground the illegal channels was taken into consideration. 38. The investigation against the PFI revealed more than Rs. 60 crores was deposited in the PFI account since 2009 and out of that around Rs. 30 crores were deposited in cash. The source of those funds were found to be suspicious and otherwise PFI was indulging in various scheduled offences involving not only in terrorist activities but were found involved in different offences as referred earlier which includes the Explosive Substance Act 1908 apart from the Arms Ac....
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.... fact that PFI has been collecting funds from Gulf countries namely UAE, Qatar, Saudi Arabia, Oman, Kuwait, Bahrain, etc. The revelations of KA Rauf Sherif along with the documentary evidences seized during search operations establish the fact of collection of foreign funds by PFI through its network of members based abroad and the remittance of such funds to India through illegal and underground channels. 43. In pursuance to the FIR No. 0199/2020 dated 07.10.2020, Investigation was caused in respect of K A Rauf Sherif & other members of PFI/ Campus Front of India (CFI): PMLA investigation in respect of UP Police FIR No. against four PFI/CFI (Campus Front of India) culminated in the filing of a Prosecution Complaint against five accused viz K.A. Rauf Sherif, Atikur Rahman, Md. Alam, Sidhique Kappan and Masud Ahmed on 06.02.2021 (RUD-14) before the Court of Principal District And Sessions Judge, Special Judge (PMLA), Lucknow. Proceeds of Crime to the tune of Rs. 1.36 Crore were identified to be involved in the case. The Court was pleased to take cognizance on 10.02.2021 of the offence of money laundering against all the five accused persons. 44. After the filing of Prosecution Com....
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....of investigation, the statement of Sh. Noushad Palliyali, a director of MVVPL was recorded u/s. 50 of the Act of 2002 on 05.11.2022 and 06.11.2022 and it was stated that MVVPL is developing the project near Vijayan Kada Junction, Kallar Mankulam Road, Mankulam Village, Devikulam Taluk, Idukki District, Kerala. The project is being developed on land admeasuring approx. 7.14 acres (288.81 ares). The land has been purchased vide following sale deeds: Sl. No. Doc. No. Purchased From Date of Purchase Area (R) Amount (in Rs.) 1 19/2020 P.P. Abdul Rehman 03.01.2020 52.61 14.85.000 2 2496/1/2018 Valsa 21.12.2018 71.97 19,57,000 3 2498/1/2018 M/V. Joseph 21.12.2018 41.62 11,35,000 4 2167/1/2019 Muhammed Ali H 17.10.2019 12.14 3,50,000 5 18/2020 Muhammed Ali H 03.01.2020 68.8 18,80,000 6 2494/1/2018 Shiji Balu Paul 21.12.2018 41.67 11,35,000 Total 288.81 79,42,000 48. On the above land there was a plan to develop 67 villas in three clusters viz. cluster A having 24 villas, cluster B having 24 villas and cluster C having 19 villas. At present, 19 villas have been constructed and out of them 15 villas have been sold. Their d....
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....iminating documents/records were seized vide Panchnamas drawn at these premises. Two sets of cash books of MVVPL are available on record in this case. Firstly, petty cash book maintained by Abdul Risvan, site engineer under the instruction of Moideen AM, Accountant and Director of MVVPL which was recovered and seized during the search proceedings on 08.12.2021. Secondly, the cash book forming the part of books of account of MVVPL which was submitted to the Directorate during the course of investigation over email. A brief analysis of the Debit balance of both sets of cash books was made which is as under: F. Y. Petty cash book seized Cash Book forming part of final books of account* Difference Amount (in Rs.) Name of the cash book/ ledger Amount (in Rs.) 2017-18 1400580 Cash / Moideen AM Director 1127800 072780 2018-19 3366700 3065300 301400 2019-20 4358490 Cash- Site Book 198000 3905490 Cash book 255000 2020-21 5966597 Cash on Site Book 4049408 1917189 2021-22 2627651 Not available / not provided NIL 2627651 Total (A) 17720018 Total(B) 8695508 Total (A) Total (B) 9024510 *Two cash book were m....
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....well as Gulf Countries; v) that he had not reflected his foreign assets/interests/transactions in his Income Tax Returns; vi) that he did not reveal his business interests in other countries such as Qatar, Malaysia & Switzerland. 52. He could not explain numerous facts & documents including several pages of his seized diary containing details of his domestic and foreign businesses & transactions. 53. Ashraf M.K. deliberately withheld disclosure of true facts and tried to mislead the investigating officer during recording of his statements under Section 50 of the Act of 2002. The non-cooperative and evasive attitude of Asharal Khadir @ Ashral M.K. and failure to discharge burden of proof further established involvement in money laundering activities. Ashraf M.K, was placed under arrest vide order dated 12.04.2022. 54. It is further necessary to add that the statement of Abdul Razak BP was also recorded under Section 50 of the Act of 2002 from whom certain documents were seized which was even containing entry of Rs. 10 crores and many other documents in reference to the said person. He was asked to disclose the source of funds used for donation to PFI. He stated that he has bu....
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....fe. The summary of the statement recorded under section 50 is hereunder:- 57. Gist of statement 1. Abdul Razak Peediyakkal @ Abdul Razak B.P. Statements were recorded under Section 50 of the PMLA on 19.02.2022, 21.02.2022, 22.02.2022, 02.03.2022 and 03.03.2022 (RUD-29) wherein he, inter alia, stated that: On being shown a diary seized from his residence during search dated 08.12.2021, he explained the contents of certain pages as under: i) Page no. 10: Ashrat/Calicut was written and thereafter 10 Cr was written. Ashraf was person involved in real estate business in Calicut. "10 cr" was 10 crores which was the value of a property next to Star Care Hospital in Calicut. He was just planning to buy a building so Ashraf proposed to him that the building next to Star Care Hospital cost Rs. 10 Crores. He was a shareholder in Star Care Hospital, Calicut but previously he was also a Director and he had resigned from the post. ii) Page no. 18: On 31.12.2015, Naushad M took a loan of Rs. 2,00,000 from him for clearing his due with MK Faizy. Naushad M was an attender in Al-Falah School, Koppam, Palakkad, Kerala and was an SDPI member. MK Faizy was also an SDPI member. He paid this m....
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.... was a shareholder and not a director in MVVPL. Statements of Abdul Razak were again recorded under Section 50 of the PMLA from 11.03.2022 to 15.03.2022 during his ED custody wherein he, inter alia, stated that: On being shown documents/notebook/diary/loose papers marked as "Annexure A seized from his residence during search dated 08.12.2021, he explained their contents as under: Page No. 92 and 91. Some rough pages containing the details of his transactions with Moideen K, who was Managing Director of Malabar Ispat Ltd. Qatar project was a project regarding iron scrap in Qatar. This was a project of Moideen K but he paid 600,000 AED on Moideen's part in 2013. Moideen K had not repaid this amount to him till date. iii) Page No. 25: Contained the details of transactions/proposals between him and Moideen. AED 100,000 was paid from his card for some payment on behalf of Moideen's company named Indus. iii) Page No. 10: On being asked, he stated that two proposals were discussed in Calicut on his visit to India at that time. One was to purchase the property next to Star Care hospital for Rs. 10 Crore and the same was suggested by Mohamed Ashraf Pilasheri, Rio Malappura....
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....as noticed that there was a transfer of 22,000 shares valuing Rs. 22,00,000 in TISPL in F.Y. 2017-18 in his name and 15,000 shares valuing Rs. 15,00,000 in his wife's name. However, on perusal of the books of account & bank accounts of TISPL and his & his wife's financial information, it was noticed that prima facie, there was no consideration amount involved in the transfer of shares of TISPL from one Musthala PM and Namitha Banu. On being asked to state the reasons for the same and also who Musthafa PM and Namitha Banu were, he stated that after 3-4 raids by NIA in 2010, the goodwill of the company (TISPL) was shattered; Musthafa PM was in Abu Dhabi at that time and wanted to get out of TISPL and so Musthafa PM requested to be relieved from the company in all respects and remove his (Musthafa PM's) name from all the records; that he agreed that once the company was sold out, the dues would be settled and at that the shares were transferred to his and his wife's name without any consideration; that Musthafa PM and Namitha Banu were a couple who were presently living in Pokkakillath House, Near Amla Hospital, Thrisur District, Kerala since the last 2-3 years. He cou....
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....r Korad in lieu of half of his wife's share in Tree Top Munnar; that his wife owned 1/3d share in Tree Top Munnar against payment of Rs. 2 lakhs and sweat. equity; that Tree Top Munnar owned land having value of around Rs. 16.5 lakhs; that though the shares of MVVPL had been transferred in his wife's name, the shares of his wife in Tree Top Munnar had not been transferred as on date and it would be done only after Anwar Korad returned from UAE. v) 2000 shares which included 1000 shares of Anwar Pootheri, 500 shares of Moideen AM and 500 shares of Rajendran Unni, owned by his son had been paid out of the funds transferred by him (M.K. Ashral) to his son. vi) For transfer of 5000 and 4000 shares of Anwar Sadath and Anwar Pootheri respectively in MVVPL in his own name, he had agreed to transfer his share in Empower India Munnar to them, that in Empower India Munnar. he had invested his own funds. 3. Rajendran Unni Pallithodi Statements were recorded under Section 50 of the Act of 2002 on 11.04.2022, 12.04.2022 (RUD-35) wherein he, inter alia, stated that: i) He became the Managing Director of the company MVVPL since the date of its formation; that presently he was no....
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....t his roles and responsibilities in MVVPL, he stated that he was the site engineer of MVV project and his responsibilities included verification of construction work as per plan, supervision of laborers and handling the petty cash. He stated that he reported to Ashraf M.K. regarding construction works; that for petty cash he reported to Mr. Majeed alias Mr. Moideen A.M. Director of the company. All the affairs regarding expenses made out of petty cash by him for MVVPL were carried from the office which was searched during investigation. On being asked about the signature of persons on certain pages seized from the said office premises, he stated that these pages had been signed by Majeed alias Moideen A.M. Director MVVPL and that the expenses made out of the petty cash recorded in those documents were periodically verified and signed by Moideen A.M. Cash on Site Book for F.Y. 2020-2021 shared by MVVPL over email during the course of investigation and Petty Cash entries recorded by him in Annexure-A11 (seized from office premises) were analyzed on test check basis for the period 01.04.2020 to 31.07.2020 and certain debit entries reflected in Petty Cash Book maintained by him t....
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....Section 5(1) of the Act of 2002 was rightly invoked by the respondent because there remains apprehension of alienation or concealment of the property at any time and it is not necessary that actual concealment or transfer should be made because word "likely" has been used under section 5(1) of the Act of 2002 to form basis for attachment of property which means apprehension of the concealment or transfer of the property. The argument can be analyzed from other angle that if the appellants did not intend to conceal or transfer the property then even attachment would not affect them, rather challenge to the attachment of the properties indicates their intention to sell or conceal the property to frustrate the proceeding of confiscation. Thus, the impugned order does not suffer in reference to section 5 (1) of the Act of 2002. 59. It is to further clarify that common areas were also attached and the attachment cannot be ruled by Kerala Real Estate (Regulation and Development Rules). The appellant has not disclosed that all the villas were sold and therefore common areas are put to use by the individual villa holder and otherwise an appeal has not been filed by any such person showing....