TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1266
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....f the movable / immovable properties. Brief facts of the case: 2. The case mainly pertains to M/s Shakti Bhog Foods Limited (SBFL), a 24 years old company, manufacturing and selling food items like wheat flour, Rice, biscuits, cookies, dalia, gram flour, maida etc. under brand name 'Shakti Bhog'. In March 2010, the company established a Biscuits and Cookies Manufacturing unit at Haridwar marketed under the Brand name DIVSS. The company had availed huge loans from a consortium of Banks led by SBI. The company failed to discharge its loan Liability which was eventually classified by the lending banks as NPA on 31.03.2015. The total volume of loss caused by SBFL to the consortium of 10 Member banks is Rs. 3269.42 Crores. Therefore, on the written complaint of Bank official, a criminal case was registered by the CBl, Bank Securities & Fraud Cell, New Delhi against the accused persons and companies for commission of Offences u/s 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 and u/s120B r/w 420, 465, 467 468 & 471 of IPC 1860. It was against M/s Shakti Bhog Foods Ltd. through its Directors, Mr. Kewal Krishan Kumar S/o Sh. Jugal Kishore, MD Guarantor, Mr. Siddharth Kumar S/o ....
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....d funds were siphoned off or further layered, rotated and siphoned off through the Bank accounts of the shell entities. 6. The bogus purchases were booked by SBFL in books of accounts as genuine purchases without any actual procurement of inventory and thereby, fraudulently inflated the inventory as well as turnover of SBFL. There was no actual movement of goods. The shell entities and their operators had created fake transport documents through shell transport companies which were not engaged in genuine business of transport. Fake transport bilty/ invoices were raised through firms namely Shree Shyam Roadlines, Maa Durga Roadlines, Kamal Transport Company, which were not existent at their declared registered address. Seized material during search operations and statements of various persons including the entry operators, proprietors of dummy entities & middlemen clearly brought that there were no godowns of the Shell entities from where goods could be moved to SBFL. Further, on verification of PAN of dummy entities, it was found that PAN of 2 dummy transporters namely Kamal Transport Company and Maa Durga Roadlines mentioned on the invoices issued to SBFL were false and did not e....
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....n Garg was Assisted by his chartered accountants - R.N. Saraf and Ramesh Goel - in legalizing and projecting his illegal activities of providing accommodation Entries to SBFL without genuine business transactions as genuine to acquire part of proceeds of crime in the form of audit/ assessment fee etc. 10. In the year 2020 (i.e., after commission of bank fraud by SBFL), Devki Nandan Garg disposed of his movable and immovable properties by way of sale or gift to his family members i.e., wife, son, grandsons, and daughters-in-Law. These beneficiaries were likely to transfer those properties. Similarly, proceeds of crime in the form of various immovable and movable properties in possession of other persons viz. Ashok Kumar Goel, Mahesh Agro Pvt. Ltd.,SKK Agro Pvt. Ltd and CAs namely RN Saraf and Ramesh Goel were also likely to be transferred or disposed to avoid attachment and confiscation. Arguments of the Ld. Counsel for the appellants: In the case of Smt. Prem Lata Garg wife of Shri Devki Nandan Garg - Appellant No.2. 11. The appellant (Prem Lata Garg) is the wife of the Devki Nandan Garg. The main allegation against the appellant is for providing accommodation entries on the ba....
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.... 18. In the year 2012-2013 accumulated amount became Rs. 38,17,959/-. The appellant further lent Rs. 4,50,000 on 25th February 2014. She was paid interest of Rs. 3,46,448/- in FY 2013-2014. TDS payment in FY 2013-2014 was deducted from the accumulated amount making closing balance of Rs. 45,79,762/. The appellant decided to buy property B-79 CC Colony ground floor front portion and for this, appellant took back Rs. 18,50,000/-. The interest of Rs. 3,80,223/- was paid in 2014-2015. It was accumulated in the principal amount and also paid total amount of Rs. 38,022/- on her behalf for TDS payment and also paid income tax of Rs. 45,000 which was deducted from the accumulated amount making closing balance of Rs. 30,26,963/-. Appellant lent Rs. 2,50,000/- on 28th August 2015 to Shri Devki Nandan Garg. She took back Rs. 9,00,000/- on 3rd June 2015 and 9,00,000/- on 12th June 2015. Shri Devki Nandan Garg paid interest of Rs. 1,97,175/- in 2015-2016 to the appellant which was accumulated in the principal amount and also he paid a total amount of Rs. 19,718/- on her behalf of TDS payment and Rs. 96,600 in 2015-2016. Which was deducted from the accumulated amount making closing balance of R....
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....11 and deducted TDS to the tune of Rs. 15,150/-. which was accumulated in the principal amount making closing balance of Rs. 13,98,853/-. 26. Similarly, In FY 2011-2012 opening balance was Rs. 13,98,853/- and Shri Devki Nandan Garg paid the interest of Rs. 1,51,500/- in FY 2010-2011 to the appellant, and further returned back an amount of Rs. 50,000/- to the appellant on 14/10/2011, which is also reflected in her bank statement and further deducted TDs to the tune of Rs. 12,386/-- which was accumulated in the principal amount making closing balance of Rs. 14,60,326/-. 27. In FY 2012-2013 opening balance was Rs. 14,60,326/- and Shri Devki Nandan Garg paid the interest of Rs. 1,32,465/- in FY 2012-2013 to the appellant, and further returned back an amount of Rs. 1,00,000/- to the appellant on 14/03/2013, which is also reflected in her bank statement and further deducted TDS to the tune of Rs. 13,247/-. which made closing balance of Rs. 14,79,544/-. 28. In FY 2013-2014 opening balance was Rs. 14,79,544/- with interest of Rs. 1,32,381/- in FY 2013-2014 and returned back an amount of Rs. 98,500/- on 14/03/2014. which is also reflected in her bank statement and further deducted TDS to....
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....ki Nandan Garg, but is the daughter-in-law of Sh. Devki Nandan Garg. Secondly, the respondent had wrongly used the same entries/transaction between the appellant and Sh. Devki Nandan Garg twice to the tune of Rs. 15,00,187/- and Rs. 11,03,600/- from the ledger account maintained by M/s Lachu Ram Aggarwal & Co. as well as the bank statement of account of Smt. Rakhi Garg. It is submitted that the complainants have used the first four transactions of Rs. 25,000/- Rs. 50,000/- Rs. 1,00,000/- and Rs. 98,500/- in the latter amount of Rs. 11,03,600/- which in fact was earlier amount of Rs. 15,00,187/-. Sh. Devki Nandan Garg had lent out a loan of Rs. 1,84,000/- on 15/05/2014 Rs. 46,100/- on dated 15/05/2014 Rs. 2,00,000/- on 12/09/2014 and Rs. 1,00,000/- on 18/02/2015 (Total: Rs. 5,30,100/-)to Smt. Rakhi Garg on her request, which was duly repaid by her on 27/03/2015 vide Cheque number 323723 drawn on Canara Bank. 35. It has been submitted that the amounts attached by the respondent by showing it to be alleged proceeds of crime, i.e. Rs. 15,00,187/-+ Rs. 11,03,600/- totaling to Rs. 26,03,787/-. It is wrongly termed to be proceeds of crime. In the case of Smt. Anju Garg, daughter-in-law ....
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....sferred to the appellant being his legal heir. Both the children of the appellant had executed Relinquishment Deed in her favour qua the said portion of the property. The amount of Rs. 25,00,000/- was paid by the deceased husband from his own account at ING Vyasa Bank, New Đelhi, vide Pay Order No. 639759 dated 07.04.2014 for a sum of Rs. 22,50,000/- and vide Cheque No. 034632 dated 07.04.2014 for a sum of Rs. 2,50,000/- both drawn on ING Vyasa Bank, New Delhi. 39. The entire statement of the appellant dated 08.11.2021 was mischievously twisted by the complainant as per their requirement to make a case against Sh. Devki Nandan Garg as well as to make full-proof criminal case against all family members. It is without producing even a single piece of paper as documentary evidence against the deceased husband of the appellant and made baseless and shameless allegations against dead person, who cannot defend himself anymore. The fact remains that property was purchased from his legitimate incomes, which was duly accounted for by him by filing regular Income Tax Returns and now after his death, the same cannot be questioned by the ED. It has been submitted that the Western Side (B....
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....hat the statement of the appellant recorded by the Complainant on 06.11.2021 was not accurately reproduced or typed as per the actual version narrated by the appellant. The said statement was not provided to the appellant at any point prior to the issuance of the Show-Cause Notice dated 14.07.2022. It was only upon receipt of the notice that the appellant was for the first time, made aware of the contents of the statement allegedly recorded on 06.11.2021. Upon reviewing it, the appellant was shocked and deeply disturbed to find that the contents were completely contradictory to what was actually stated by him during the recording. It appears that the contents were deliberately altered and manipulated by the Complainant to suit their case narrative, seemingly with an intent to strengthen the case of attachment and to frame a full- proof charge against the appellant and his family members in connection with the alleged money laundering activities of Shri Devki Nandan Garg. 44. The bank account of the appellant attached comprises of legitimate and lawfully earning. The funds accrued over a considerable period of time from 1995 through various business ventures and employment opportun....
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.... 10,000/- to Rs. 15,000/- per occasion. Such gifts were customary and personal in nature and were essentially spent by Shri Devki Nandan Garg himself on those family occasions. Thus, the said amounts cannot be considered as proceeds of crime in any manner. 46. Accordingly, the total sum of Rs. 7,00,000/-, which has now been wrongly termed by the Complainant as "proceeds of crime," is nothing but a misrepresentation and misconstruction of legitimate and lawful transactions. Therefore, the attachment of such funds is baseless. 47. Furthermore, it is submitted that the Complainant/ED had initially ordered the freezing of several bank accounts belonging to the appellant. Out of those, certain accounts have now been formally attached and are part of the present Original Complaint. However, despite the passage of considerable time and in the absence of any justified reason, the remaining frozen accounts have still not been de-freezed by the authorities. This inaction, known only to the Complainant, amounts to a grave violation of the fundamental rights of the appellant under various Articles of the Constitution of India. The appellant has suffered immense financial hardship, emotional ....
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....mt. Prem Lata Garg from her own legitimate funds; Rs. 5,00,000/- gifted by Sh. Devki Nandan Garg on 28.09.2020 via RTGS; and Rs. 2,00,000/- gifted by Sh. Devki Nandan Garg on 13.10.2020 via RTGS. 51. It was submitted that the complainant/ED had initially frozen several bank accounts of the appellant, some of which have also been provisionally attached and are now under challenge in the present Original Complaint. However, for reasons best known to the Enforcement Directorate, the remaining frozen accounts have not yet been de-freezed despite the lapse of a considerable time. This inaction amounts to a blatant violation of the appellant's fundamental rights enshrined under various Articles of the Constitution of India, particularly Articles 14, 19, and 21. The appellant continues to face severe financial hardship, distress, and loss of livelihood due to such arbitrary and oppressive action by the complainant authority, causing him irreparable damage. In the case of Shri Sarthak Garg, grandson of Shri Devika Nandan - Appellant No. 6 52. It is submitted by the Counsel for the appellant that Shri Sarthak Garg has attained the age of majority few months back and had received tota....
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....the statement was recorded post-PAO and has not been furnished to the appellant reflects a procedural irregularity that goes into the root of this matter. However, to avoid delay or technical objections, the appellant, relying on his own memory and personal records, has submitted his reply in good faith. 58. The appellant recently attained the age of majority, though a minor at the time when the alleged transactions and gifts took place. Specifically, the appellant was a minor when he received the gift of Rs. 7,00,000/- from his grandfather, Sh. Devki Nandan Garg, and the amount of Rs. 3,50,000/- from his grandmother, Smt. Prem Lata Garg. These gifts were made out of natural love and affection by the grandparents and were transferred from their own legitimate income and sources. The complainant has erred in stating that the entire amount was gifted by Sh. Devki Nandan Garg, whereas the facts are clearly different. The breakup of the gifts is as follows: Rs. 3,50,000/- was gifted by Smt. Prem Lata Garg on 07.03.2017 from her own lawful and verifiable sources; Rs. 5,00,000/- was gifted by Sh. Devki Nandan Garg on 08.10.2020 through RTGS; and Rs. 2,00,000/- was gifted by Sh. De....
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....rother Sh. Raghav Garg through two duly registered Gift Deeds bearing Nos. 5226 and 5231 on 05.09.2020. The property was purchased by Sh. Devki Nandan Garg in the year 1999 by way of a registered Sale Deed, which is prior to the period of the alleged scheduled offence spanning from 2005 to 2016. The said property could not have been classified as "proceeds of crime" under the Prevention of Money Laundering Act, 2002 (PMLA), as it was acquired well before the alleged criminal activity even began. 63. Furthermore, it is submitted that the appellant had received lawful monetary gifts from his grandparents, which the complainant has wrongly labelled as proceeds of crime. The appellant received a total sum of Rs. 10,51,000/- from his grandfather, Sh. Devki Nandan Garg, through two separate gifts of Rs. 8,00,000/- dated 31.10.2015 and Rs. 2,51,000/- dated 06.10.2016. These gifts were made from the legitimate income and savings of Sh. Devki Nandan Garg and are not linked in any manner to the alleged proceeds of crime. Additionally, the appellant received a total amount of Rs. 10,50,000/- from his grandmother, Smt. Prem Lata Garg, which includes Rs. 8,00,000/- dated 07.03.2017 Rs. 1,00,00....
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....hat the Intervener was not given an opportunity to defend her case and, as a bolt from the blue, passed the Provisional Attachment Order in question against multiple persons including the Intervener, thereby showing a pure and pious gift of a very small gift of Rs. 2,50,000/- by Sh. Devki Nandan Garg, i,e., grandfather-in-law of the Intervener namely Smt. Swati Garg as a "proceed of crime" and then again mischievously showed the said amount of Rs. 2,50,000/- to be invested by the Intervener in her two mutual funds accounts as mentioned in table above, which are having Mutual Funds of Rs. 55,00,000/- without verifying the real fact of the matter as whether the said gift amount of Rs. 2,50,000/- is still lying in the HDFC Bank Account of the Intervener or the same was used by her for investing in two mutual fund accounts or not. 68. It has been revealed that the said gifted amount of Rs. 2,50,000/- was received by the Intervener in the said account on dated 14/10/2020, which was the only gift ever given by her grand-father-in-law to her after her marriage with Sh. Mayank Garg on dated 13/11/2017. 69. It was further submitted that the said amount of Rs. 2,50,000/- is still lying in ....
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.... Proceeds of Crime acquired by Devki Nandan Garg. 74. The sources of money invested into the provisionally attached properties is directly or indirectly relatable to Devki Nandan Garg and his shell entities namely M/s Lachhu Ram Aggarwal & Co. etc. Therefore, the attempt of the appellant to mislead the Adjudicating Authority in the complexity of old transactions is directed towards acceptance of his afterthought story blurring legal conscience of the Adjudicating Authority. It has been further submitted that merely filing of income tax returns does not legitimise tainted money received by the appellant. Therefore, the properties attached vide the Provisional Attachment Order no. 07/2022 dt. 07.06.2022. The properties of the appellant have been attached after formation of cogent reasons to believe as per the requirements of the Prevention of Money Laundering Act, 2002. In Smt. Rakhi Garg (Appellant No. 2) 75. The appellant no. 2, Smt. Rakhi Garg is the daughter-in- law of Devki Nandan Garg. The specific role of the appellant no. 2 has been illustrated in the Original Complaint no. 1765/2022. The investigation revealed that Rakhi Garg daughter-in-law of Devki Nandan Garg is house ....
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....n- Law in lieu of commission which is nothing but PoC. Devki Nandan Garg was admittedly engaged in illegal business of giving accommodation entries to various entities including Shakti Bhog Foods Limited, which was rotating its loan funds through the shell entities operated by Devki Nandan Garg in lieu of commission. It served as indirect source of income for the appellant. Therefore, claim that she purchased the said properties through her own income is false, baseless and an afterthought. The gamut of financial transactions mentioned by the appellant, Smt. Anju Garg coincide with her statements that her husband was involved in providing accommodation entries in lieu of commission along with her father-in-law Devki Nandan Garg. The properties purchased or acquired by the appellant is directly or indirectly related to the proceeds of crime as she did not have any independent source of income and all the money that she had received was from her father in law Devki Nandan Garg or her husband Rajeev Garg, who has played a crucial role in the offence of money laundering. Further, it is submitted that the appellant is a beneficiary of the proceeds of crime as she has received funds dire....
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....ies to various entities including Shakti Bhog Foods Limited, which was rotating its loan funds through the shell entities operated by Devki Nandan Garg in lieu of commission, which was gifted to the appellant. 83. It has been submitted that the properties received by the appellant from his grandfather Devki Nandan Garg are attached in terms of "value thereof" as per Section 2(1)(u) of PMLA, 2002 and its reason to believe. It has been further submitted that PoC acquired by Devki Nandan Garg has been layered and projected as gift to hide its source and the amount received from Smt. Prem Lata Garg is also part of PoC as admittedly she was totally dependent on the husband for her income and expenses. It has been also submitted that funds received by the appellant were actually received from shell entity of Devki Nandan Garg through Prem Lata Garg which is nothing but layering of PoC. 84. It was further submitted that the appellant had received PoC directly in his bank account from Devki Nandan Garg and his wife Prem Lata Garg to change the colour of PoC and part of funds received as PoC were further used by defendant to create movable property i.e. FDS. The allegation made by the app....
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....s nothing but laying of proceeds of crime. The proceeds of crime had received in the bank account of the appellant directly from the bank account of Shri Devki Nandan Garg and his wife Prem Lata Garg to change the colour of proceeds of crime. 88. Therefore, the properties attached vide the Provisional Attachment Order no. 07/2022 dt. 07.06.2022 is after formation of cogent reasons to believe as per the requirements of the Prevention of Money Laundering Act, 2002. In Shri Galav Garg (Appellant No. 8 ) 89. The appellant no. 8 is the grandson of Shri Devki Nandan Garg. The appellant no. 8 received proceeds of crime from Shri Devki Nandan Garg and Smt. Prem Lata Garg in the form of gift which is nothing but proceeds of crime for value thereof for the immovable property gifted by his grandfather to save it from attachment. The amount received from Smt. Prem Lata Garg is also part of proceeds of crime. It is also submitted that the funds received by the appellant were actually received from shell entity of Devki Nandan Garg through Prem Lata Garg which is also considered to be proceeds of crime. The proceeds of crime had received in the bank account of the appellant directly from the ....
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....to deal with the case of each appellant separately. In the case of appellant no. 1 - Smt. Prem Lata Garg 94. The appellant, Smt. Prem Lata Garg is the wife of Shri Devki Nandan Garg. She is house-wife and even according to the appellant in her statement under section 50 of the Act of 2002, she was not having any business, rather, dependent on accused, Shri Devki Nandan Garg, who was engaged in illegal business of giving accommodation entries to the various entities of M/s Shakti Bhog Foods Limited. The appellant, Smt. Prem Lata Garg, however, disclosed the source to purchase the properties which was largely out of the money lent by her to her brother, Shri Pawan Kumar Singla and another brother, Shri Triloki Bhushan Singla. The accumulated amount of loan with interest has been disclosed by her to a sum of Rs. 17,28,246/- towards her brother, Shri Pawan Kumar Singla and another accumulated amount from second brother was a sum of Rs. 8,33,992/- in the year 2012-2013 and accordingly closing amount into two accounts was shown to be Rs. 25,60,000/- said to have been lent to her husband on 07.08.2012 from OBC Bank Account. The appellant has failed to disclose the source of her brother ....
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....was received by her towards repayment of the loan lent by her to her father-in-law, Shri Devki Nandan Garg. It is said to have been disclosed in the Income Tax Returns. She purchased the property to the equivalent amount of Rs. 15,00,187/- through bank transaction but no source for purchase of the property on the Eastern Side, First Floor from Smt. Pushpa Devi Garg for sale consideration of Rs. 25,00,000/- has been disclosed. We, otherwise, find that even Rs. 15,00,187/- was received by her from M/s Lachu Ram Aggarwal which was recipient of the proceeds of crime and not from Shri Devki Nandan Garg. In fact, the amount was transferred by Shri Devki Nandan Garg to layer the amount and to make it to be untainted money. The statement of the appellant, Smt. Rakhi Garg and her husband Shri Sanjay Garg reflects as to how the proceeds of crime was transferred to layer the amount and being source to purchase the property. The appellant has failed to give source to purchase the property worth of Rs. 25,00,000/- from Smt. Pushpa Devi Garg and therefore we do not find case to cause interference in the impugned order. In the case of appellant no. 3 - Smt. Anju Garg 97. The appellant, Smt. Anj....
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.... 1990 by her husband and after the death of her husband, the HUF was dissolved and the amount lying therein was used for the sale consideration of Rs. 25,00,000/-. The property aforesaid was purchased from Shri Devki Nandan Garg which is being taken to be nothing but rounding the funds and the proceeds of crime. A reference of the statement under Section 50(2) of the Act of 2002 has been given and otherwise referred in earlier part of the order which does not fortify the case of the appellant as presented. In the case of appellant no. 4 - Shri Sanjay Garg 101. The appellant, Shri Sanjay Garg has alleged that his statement recorded on 06.11.2021 was not accurately reproduced or typed as per the actual version and otherwise the statement was not provided to him prior to issuance of show- cause notice. On the receipt of the show-cause notice, he could know about his statement for the first time and shocked to notice the contents thereupon. It was, thus, prayed that the statement of aforesaid may not to be considered against the appellant. 102. It was further submitted that he was having accrued funds from the year 1995 from various business ventures and employment opportunities whi....
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....Raghav Garg. Thus, it needs no further discussion, rather, it is covered by the findings recorded in reference to the appellant no. 5. In the case of appellant no. 7 - Shri Mayank Garg 105. Ld. Counsel for the appellant has questioned the recording of the statement of the appellant on 10.06.2022. It is alleged that there was lack of transparency and procedural fairness in recording the statement. A copy of statement was not furnished despite being recorded before the issuance of PAO. The appellant, otherwise, referred to the receipt of the amount as gift from Shri Devki Nandan Garg and Smt. Prem Lata Garg, grandfather and grandmother. It is out of love and affection of the grandparents and therefore it could not have been subjected to the attachment. The amount of Rs. 5,00,000/- was gifted on 08.10.2020 through RTGS; and Rs. 2,00,000/- was gifted by Sh. Devki Nandan Garg on 13.10.2020 through RTGS. Smt. Prem Lata Garg has also gifted an amount of Rs. 3,50,000/- and thereby there was no reason to make attachment of bank account having credit balance of Rs. 8,71,066.38. We, however, find that the transfer of the amount by Shri Devki Nandan Garg and Smt. Prem Lata Garg stands on the....