TaxTMI 
TaxTMI 
2025 (6) TMI 1181
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....nt to disturb communal harmony, incite communal 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 an....
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....ich were not furnished. 12. Bogus/benami acquisition of MVVPL (M/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 so....
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....ista Pvt. Ltd. Arguments of the appellant 18. The learned counsel for the appellant submitted that impugned order 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 em....
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....crepancy in the cash was found in the cash book maintained at the site and official cash book submitted to that authorities. The 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 trans....
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.... elaborate arguments were made to endorse the provisional attachment order and its confirmation by the Adjudicating Authority. The arguments of 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 U....
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.... made out. 37. The counsel for the appellant further made submission regarding illegal invocation of section 5(1) of the Act of 2002 without a risk of concealment 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....
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.... evidences seized from PFI office during search operations under Section 17 of the Act of 2002 corroborate the voluntary submissions of K A Rauf Sherif and establish the 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 cas....
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.... the demise of another director named Moideen A.M. in November 2021. Rajendran Unni Pallithodi was the managing director of this company from 01.02.2018 to 31.03.2022. 47. During the course 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 Tota....
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....7/1/2019,18/2020 and 2494/1/2018 (RUD-23) for the land on which MVV project is constructed. Also the statement of Noushad Palliyali, a director of MVVPL recorded u/s. 50 of the Act of 2002 on 05.11.2022 and 06.11.2022 evidencing the value of common areas of the project. 4.6. During the course of investigation, search and seizure action under section 17 of the Act of 2002 was carried out on 08.12.2021 at the construction site office of MVVP at Munnar, Kerala; the residence of Abdul Razak Peediyakkal at Eramangalam, Kerala: and at the residence of Ashraf M.K. at Ernakulam, Kerala and various incriminating 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 bo....
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....e of the major shareholders of MVVPL, on 08.12.2022 and 14.02.2022 and his statements were recorded on 19.02.2022, 21.02.2022, 22.02.2022, 02.03.2022 and 03.03.2022 under Section 50 of the Act of 2002. The scrutiny of seized documents provided through e-mails and recording of the statement of Abdul Razak Peedivakkal u/s 50 of the Act of 2002 revealed that:- i) He had been a long-time member of PFI and was made PFI Divisional President for Perumpadappu, Malappuram, Kerala in June 2021; ii) that he had contributed around Rs. 30 lakh to Rehab India Foundation (RIF) - a front organization of PFI over the years. iii) that he had also been involved in collection of funds for PFI; iv) that he had sizable business interests in India as 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....
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....f the Act of 2002 is made out. The share holding was involving even in cash. We are not indicating all the statements otherwise if the statement of the witnesses are referred, then it will show admission of inward remittance of more than Rs. 48 lakhs by Ashraf M.K. who was looking out the entire construction work of the appellant Company. The inward remittance was received from Arablink Money Transfer to the extent of Rs. 42 lakhs and odd and from - Alfardan to the extent of Rs. 2.6 lakhs and AL-UAE Exchange Centre LLI for Rs. 95,000 and Islamic Exchange Company will company WLL for Rs. 2 lakhs. When asked about the inwards remittance of more than Rs. 48 lakhs, he could not disclose the purpose of the receipt of the amount. Though, later on try to make out receipt from his brother and wife. 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 da....
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.... whether these transactions were just planned or any of them were executed or not. Statement of Abdul Razak BP was again recorded under Section 50 of the PMLA on 10.03.2022. i) On being asked about the source of funds used to donate to RIF, he stated that it was Zakath of his business in UAE; that the funds were transferred from his personal account maintained in UAE to his NRE/NRO account in India and from NRE/NRO account, donations were made to RIF bank accounts. ii) On being asked about the huge gap in the cash expenses recorded in the books of account shared over email and the cash expenses incurred at the site of MVVPL and the source of additional cash expenses to the tune of approx Rs. 80 lakhs in the construction of Villas by MVVPL, he stated that he did not know the source of Rs. 80 lakhs spent in cash by MVVPL; and that he 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....
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....received in the said account no. 022301507220 from the following sources: Arablink Money Transfer : Rs. 42,42,646 Al Fardan : Rs. 2,67,340 UAE Exchange Centre LLC : Rs. 95,000 Islamic Exchange Co WLL : Rs. 2,00,000 iv) On being asked about the said foreign inward remittance of Rs. 48,04,986 received in the said account no. 022301507220, he stated that he did not remember the purpose of the same, and that he would verify the same from his from brothers and wife and would provide the details later; that most of these transactions were in respect of money asked from his brothers, resident of UAE, to help with sister's family issues, father's illness, family issues, to cover up loss in business and to repay personal debt; that all his brothers were in UAE at that time and they sent him the money. Statement recorded on 12.04.2022 under Section 50 of the Act of 2002 wherein he, inter alia, stated that: 1) It was 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 & b....
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....people and that this amount had been used for the repayment of advance taken from V.S. Timbers Pvt. Ltd. for the rented premises of TISPL. Later on, he made improvement in this statement to the effect that for making cash deposits of Rs. 3 lakhs on 01.01.2018 Rs. 1.5 lakhs was cash taken out of his pineapple business and Rs. 1.5 lakhs was from various other parties. But on closer thought, he remembered that during that year, he did not have income from pineapple business and therefore, the answer was incorrect; that as far as he remembered now, the said amount was given to him by his brother-in-law E H Muhammed Ali to whom he had earlier repaid loan of Rs. 7 lakhs in December, 2017 when E H Muhammed Ali needed money. iv) It was noticed that funds for the shares owned by his son and wife in MVVPL had been provided by him and hence Rs. 16 lakhs invested in MVVPL belonged to him alone. On being asked to comment, he stated that 5000 shares in the name of his wife had been transferred by Anwar 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 ....
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....sh book maintained at the project site and the office of the company, submitted over the email. It was noticed that share advance of Rs. 21,00,000 was received by MVVPL against share application money in cash in 2017-18 and 2018-19. On being asked to state the names of the shareholders who took the shares against payment in cash, he stated that he would provide the details of payment made by the shareholders and the mode of payment for each shareholder within a week. This information has not been provided till date. Statement was again recorded under Section 50 of the Act of 2002 on 25.04.2022 wherein he, inter alia, stated that: On being asked about the promoters of MVVPL, he stated that there were no promoters in the company; that Moideen AM and Ashral MK were the persons who acted as the promoters of the company, that they were the people who brought investment to the company. 4. Abdul Risvan Statement was recorded under Section 50 of the Act of 2002 on 08.12.2021 and 26.04.2022 (RUD-37) wherein he, inter alia, stated that: On being asked about his roles and responsibilities in MVVPL, he stated that he was the site engineer o....
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....ms; that he had not been able to devote time for looking after finance, banking and accounts of MVVPL He was shown and made to understand the contents of Annexure-A11 seized from the project site of MVVPL as well as the Cash on Site Book for F.Y. 2020-2021 of MVVPL provided to the investigating officer over email. He was told that it was noticed that a number of entries appearing in the Petty Cash Book were not recorded in the Cash Book of MVVPL and he was asked to comment on the same. More than half an hour passed and he chose not to respond to this question. He has submitted various documents and information regarding the MVVP which includes sale deeds of the villas, copies of share certificates of MVVPL, copy of sale deed of lands purchased by MVVPL etc. 58. In the light of the facts given above and material collected by the respondents during the course of investigation, we are not in agreement with the appellant that there is no element of proceed of crime despite failure of the appellant to account for 90 lakhs and serious allegation for heading in supporting PFI for their illegal deeds through the person managing the appellant Company and otherwise Secti....