TaxTMI 
TaxTMI 
2025 (6) TMI 1180
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....MLA) have filed by the appellants against the order dated 30.01.2017 passed by the Adjudicating Authority in Original Complaint No. 629/2016, whereby properties attached by ED vide Provisional Attachment Order (PAO) No. 15/2016 dated 09.08.2016 were confirmed. The details of the said immoveable and movable properties are mentioned in para no. 1 of the impugned order. 2. As per the facts of the case on 10.09.2015, Deputy General Manager, IDBI Bank lodged complaint against M/s First Leasing Company of India Ltd., (herein referred to as the FLCIL) to CBI, BS & FC, Bangalore, and CBI registered FIR No. 06/2015 dated 21.09.2015 against 7 accused persons i.e., (1) Shri A.C. Muthaiah (A-1), Ex-chairman, M/s. First Leasing Company of India, R/o. Adyar Villa, Koturpuram, Chennai - 85 (2) Shri Farouk Irani (A-2), Ex-Managing Director, M/s First Leasing Company of India, R/o. La Reva, No.10, River view road, Kotturpuram, Chennai-85, (3) Shri S. Dilli Raj (A-3), Ex Vice President, M/s. First Leasing Company of India, Chennai, (4) Shri L Sivaramkrishnan (A-4), Ex-Chief Financial Officer, M/s. First Leasing Company of India, Chennai, (5) M/s. First Leasing Company of India Limited (A-....
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.... each and every employee of FLCIL had reported to him on a daily basis. (ii) From the voluntary statements given under the provisions of Section 50(2) & (3) of PMLA, 2002 by the Key Officials of FLCIL, including Shri Farouk Irani, it is evident that the books of accounts of FLCIL have been manipulated and falsified and thereby the window dressed Financial Reports were presented to various statutory agencies and banks in order to lure financial support and benefits. (iii) Shri S. Dilliraj, the then CFO (Chief Financial Officer) and later the Vice-President (Treasury) of FLCIL disclosed that he worked under the instructions of Farouk Irani, the MD of FLCIL and the balance sheet and financial statements of FLCIL were prepared and unsubstantial entries, inflated income, and inflated assets in the books of accounts was a process from 1997 till he left the FLCIL. (iv) Shri L. Sivaramakrishnan, Chieh Financial Officer of FLCIL disclosed that from 1997 onwards, the practice of passing the extraneous unsubstantiated debit and credit entries in the bank ledger account without any corresponding inflow and outflow in the Bank statement maintained at the bank were passed to reflect a high....
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....e he and the other Directors had already signed the fudged accounts, though they did not know they (accounts) were fudged, they were now irrevocably committed to resolve the Company's problem. (viii) Shri Farouk Irani tried to distance himself from the said crime, in-spite of being Managing Director for FLCIL from day one, by stating that "As these accounting gimmicks were done behind my back, I am unaware of the details. I am unaware of such developments. But I am certain that these transactions were carried out by L. Sivaramakrishnan who was the Chief Accountant and Chief Financial Officer of the Company from the year 1996 till closure of the company." He has given only evasive replies and not a specific explanation for the questions put forth before him. Even though FLCIL has been operating on losses, the company has paid Income Tax in order to launder the proceeds of crime so that the said proceeds could be merged into the legal system of accounts. Dividends have been paid to all the shareholders of FLCIL in-spite of losses that have been incurred by the company. The aggregate of Dividend paid and Income Tax paid from 1995-96 to 2012-13 amounts to Rs. 178.56 Crores appr....
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....nterest on bank loans, income tax, sales tax, staff expenses etc. (xi) IDBI Bank, Chennai, one of the Complainants in the FIRs registered by CBI, BS & FC, Bangalore, had vide their Individual Facility Sanction Letter dated August 17, 2005 vide Ref. No. 119/CBB-DBSBU/05-06 addressed to the Managing Director of FLCIL had inter alia sanctioned the facilities on the terms and conditions that the company FLCIL shall utilize the sanctioned limit only for financing hire purchase/lease transactions, whereas the FLCIL had utilized the facility extended for making all payments towards expenditure of FLCIL like Salaries, Income Tax, Sales Tax, Service Tax, Dividends, Interest on Deposits, Repayment of Public Deposits and other depositors into factors, Interest to Factors Interest to Banks and other expenses. (xii) As per the voluntary statements given by various officials of FLCIL, the practice of passing the extraneous unsubstantiated debit and credit entries in the bank ledger account without any corresponding inflow and outflow in the bank statement maintained at the bank were passed to reflect a higher disbursement rather than the real/actual disbursement and collection values in vari....
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.... deposits and debentures. The nexus of the attached property that the proceeds of crime was also revealed which is mentioned in detail in para no. 6 of the impugned order and the same is not re-produced herein. On the basis of material collected during investigation conducted by CBI & ED in aforesaid two FIRs, ED officer had reasons to believe that the accused persons i.e. the key officials of FLCIL i.e. Sh. Farouk Irani and his family members are in possession of proceeds of crime, which are in the form of immovable and movable properties totally valued at about Rs.25.41 crores (approximately). Accordingly, ED vide First, Provisional Attachment Order No. 13/2016 dated 16.06.2016 attached the movable properties/bank accounts, and thereafter, filed Original Complaint No. 615/2016 before the Adjudicating Authority under Section 5(5) of PMLA, 2002, for confirmation of PAO. Thereafter, ED passed second PAO no. 15/2016 dated 09.08.2016, and attached the immovable and movable properties, as mentioned in para no.1 of the impugned order, and thereafter, filed Original Complaint No. 629/2016 before the Adjudicating Authority under Section 5(5) of PMLA, 2002, for confirmation of PAO. Th....