TaxTMI 
TaxTMI 
2025 (8) TMI 807
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....re as under: Sl. No. Name of the Property Details of the Property Property Value (in Rs.) Valuation date 1 Sh. H.B. Chaturvedi, Sh. Sanjay Chaturvedi, Sh. Amit Chaturvedi, 98, Eastern Avenue Sainik Farms, New Delhi, 110062 a. Jewellery as per the Annexure J Valued at Rs. 1,49,50,200/-of Panchnama 1,49,50,200.00 23.06.2014 b. Cash as per Annexure C of Rs. 10,50,000/- 10,50,000.00 do c Honda City No. DL 3CBE 5465 4,05,300.00 05.07.2016 d Skoda Superb Elegance No. DL 8 CZ 0811 14,71,900.00 do e Renault Duster RXL No. DL 8CZ 9910 10,65,400.00 do f Mercedes Benz 1,19,200.00 do 2 Sh. H.B. Chaturvedi, Sh. Sanjay Chaturvedi, Sh. Amit Chaturvedi, 98, Eastern Avenue Sainik Farms, New Delhi, 110062 a One box marked A 1 containing 25 items of jewellery worth Rs. 36,41,088/- as per Annexure J 36,41,088.00 23.06.2014 b One gold watch of Rolex make 22,05,000.00 31.07.2014 c Innova Reg. No. DL 3CBX 0843 5, 54,500.00 05.07.2016 d Scorpio Reg no. DL 3 CA S 4213 7,07,400.00 do e Elantra Reg. No. DL 3 CB P 8137 8,42,550.00 Do 3 M....
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....lace, New Delhi 1,58,383.22 04.03.2016 b A/c No. 18250100001667 of UCO Bank Ferozeshah Road, New Delhi 8442.38 06.05.2016 11 Amit Chaturvedi A/c No. 18250100000431 14262.00 06.05.2016 12 Neelima Chaturvedi a A/c No. 18250310017562 of UCO Bank, Ferozeshah Road, New Delhi 78,576.00 06.05.2016 b A/c No. 18250310017579 of UCO Bank, Ferozeshah Road, New Delhi 78,905.00 06.05.2016 c A/c No. 18250310018606 of UCO Bank, Ferozeshah Road, New Delhi 1,51,900.00 06.05.2016 d A/c No. 18250310018637 of UCO Bank, Ferozeshah Road, New Delhi 1,55,702.00 06.05.2016 e A/c No. 18250310018651 of UCO Bank, Ferozeshah Road, New Delhi 1,38,206.00 06.05.2016 f A/c No. 18250310026496 of UCO Bank, Ferozeshah Road, New Delhi 74,092.00 06.05.2016 g A/c No. 18250310026502 of UCO Bank, Ferozeshah Road, New Delhi 74,095.00 06.05.2016 h A/c No. 18250310026519 of UCO Bank, Ferozeshah Road, New Delhi 74,094.00 06.05.2016 i A/c No. 18250310026526 of UCO Bank, Ferozeshah Road, New Delhi 74,093.00 06.05.2016 j A/c No. 18250310026533 of UCO Bank, Ferozeshah Ro....
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....int Managing Director; Sanjay Chaturvedi, Director; Sumit Chaturvedi, Director; and Parvin Juneja, Director (Corporate Finance) of M/s Shamken Spinners Ltd.; M/s Shamken Multifab Ltd.; M/s. Dwarkadhish Spinners Ltd.; and M/s Shamken Cotsyn Ltd. It was alleged in the FIRs that M/s Shamken Group of Companies and its Directors had committed various financial frauds by misrepresenting facts and by furnishing false and fabricated information/documents to banks for availing loans worth Rs.118.5 Crores during the years 1998-2003 for procurement of plant and machinery, but instead utilized and siphoned off the disbursed funds for the purposes other than for those sanctioned. Accordingly, the Directorate of Enforcement, Zonal Office, Delhi, recorded 8 separate ECIRs for initiating investigation for the offence of money laundering and to trace out the trail of proceeds of crime. During the investigation, ED recorded the statements of the accused/suspected persons and others u/s 50 of PMLA and also received the documents from the CBI, Lender Banks, Registrar of Companies and Income Tax Departments etc. Investigations established linkage between receipts and utilization of loan funds ....
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....ere used for availing disbursements while one M/s H.K. International named in invoices was found to be non-existent in CBI enquiries. Sh. Parvin Juneja was also arrested by the Economic Offences Wing of the Crime Branch, Delhi Police. During the course of investigations, it emerged through the officials of UCO bank, that the consortium of banks or the secured lenders to Shamken Group had organized an audit through M/s ANG & Associates, Chartered Accountants, and their audit report indicts the directors/promoters of M/s Shamken group with not just diversion of huge funds and financial frauds, but with suppression of factual financial data for delaying and obstructing IDBI's Special Investigative Audit. The investigations confirmed the non-linear nature of this case in as much as it is admitted by Sh. Sanjay Chaturvedi, Director and Sh. Parvin Juneja, Director (Corporate Finance) that funds availed through loans for specific purposes were not utilized in accordance, but rotated around to the accounts of other group companies such that they are outstanding to this date. Both the directors had placed the blame upon each other for wrong doings and have also shunned responsibil....
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....Complaint No. 642/2016 before the Ld. Adjudicating Authority (AA) for the confirmation of the said properties along with the relied upon documents and statements recorded u/s 50 of PMLA. The Ld. AA being satisfied with the allegations mentioned in the OC supported by the relied upon documents and statements under Section 50 of PMLA, issued Show Cause Notice (SCN) to the Appellants. After receiving their respective replies and hearing the rival submissions, the Ld. AA passed the confirmation order dated 03.02.2017. Aggrieved by the said Order, Appellants filed the present Appeals. 3. During the arguments, Ld. Counsel for the Appellants submitted that there was no reason to believe on the part of ED u/s 5 (1) of PMLA that the Appellants were in possession of any proceeds of crime and the such proceeds of crime are likely to be concealed/transferred or dealt with in any manner which may result in frustrating the proceedings relating to confiscation of such proceeds of crime. He contended that there is no nexus between the attached properties and the proceeds of crime in any manner, in absence of any proof that Appellants had acquired the said properties directly or indirectly fr....
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....n requirements referred to in Sub-section (1), the authorised officer can proceed to issue order of provisional attachment of such proceeds of crime. Before issuing a formal order, the authorised officer has to form his opinion and delineate the reasons for such belief to be recorded in writing, which indeed is not on the basis of assumption, but on the basis of material in his possession. The order of provisional attachment is, thus, the outcome of such satisfaction already recorded by the authorised officer. Notably, the provisional order of attachment operates for a fixed duration not exceeding one hundred and eighty days from the date of the order. This is yet another safeguard provisioned in the 2002 Act itself. 75. Moreover, for the view taken by us while interpretating Section 3 of the 2002 Act regarding the offence of money-laundering, it can proceed only if it is established that the person has directly or indirectly derived or obtained proceeds of crime as a result of criminal activity relating to or relatable to a scheduled offence or was involved in any process or activity connected with proceeds of crime." Ld. counsel for the appellants pointed out that Soh....
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....eased as the alleged predicate offences were committed during the period 1998 to 2002 i.e. prior to coming into operation of PMLA Act? (iii) Whether there was no reason to believe on the part of ED u/s 5(1) of PMLA that the appellants were in possession of any proceeds of crime and the such proceeds of crime are likely to be concealed/transferred? (iv) Whether the attached properties need to be released being not acquired directly/indirectly from the proceeds of crime? (v) Whether the said property 97-D Eastern Avenue Sainik Farms, New Delhi 110062, needs to be released in lieu of the contention that Ms. Aditi Chaturvedi is the owner of the property as she purchased the same for a consideration of Rs. 20 lakhs as per the agreement to sell and she was not served a notice regarding the proceedings for attachment of the same? (vi) Whether the contention of the appellant regarding the jewellery attached as proceeds of crime being her streedhan holds any merit and has she produced any evidences to prove the same? Now, I will decide the above issues one by one in the following paras. Issue No. 1 6. Now coming to the issue no.1, admittedly, at ....
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.... quantum of proceeds of crime on the basis of investigation conducted by it, if new facts and evidence comes to its knowledge, and thereafter, inform the police/CBI regarding the same for filing supplementary chargesheet, if any. However, it will be the prerogative of the police/CBI to file the supplementary chargesheet on the basis of information received from ED. Accordingly, issue no.1, is decided against the appellants and in favour of Respondent ED. Issue No. 2 7. With regard to issue no. 2, I find that the relevant date is a date when the tainted property is projected to be untainted and as a consequence to it, the ECIR is recorded showing offence under Section 3 of the 2002 Act. The relevant date to find out the scheduled offence and the offence of money laundering is when it is projected to be untainted property to make out an offence under section 3 of the Act of 2002. The issue aforesaid has been decided in the case of Dyani Antony Paul v. Union of India reported in (WP No. 38642/2016) dated on 21 February, 2023. The relevant paras of the judgment quoted hereby: - "77. Article 20 of the Constitution prohibits conviction except for violation of a law in f....
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....e or project/claim them as untainted property. Therefore, if a person continues to deal with proceeds of crime, even after the commission of the scheduled offence, he/she may be prosecuted under the PMLA." I further fortify my view in this regard, in lieu of the judgment of Hon'ble Supreme Court of India in the case of Vijay Madanlal Chaudhary Vs. Union of India, 2022 SCC OnLine SC 929, wherein it is held that- 42. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form -- be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in anyone of such process or activity connected with the proceeds of crime would constitute offence of money-laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence -- except th....
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....ion Act. Hence, the procedure for attachment and confiscation is not a new concept prior to coming into force of PMLA. With the coming into force of PMLA, the provisions of search, seizure and attachment were made more specific and effective to preserve the property at the initial stage of investigation, without waiting for conviction for the purpose of confiscation. Thus, the contention of the appellants that their interest is prejudiced on account of retrospective application of PMLA is devoid of any merits. Accordingly, the contention of the Ld. Counsel for the appellant raising the objection to retrospective application of PMLA, 2002 is devoid of any merits. Accordingly, issue no. 2 is also decided against the appellants and in favour of the Respondent ED. Issue No. 3 8. Now, for deciding the issue no. (iii), the relevant portion of Section 5 (1) is reproduced as under: "5 (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that- (a) any person ....
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....nce, in absence of any explanation by committing bank fraud is not ruled out. The explanation and defence taken by the appellants are apparently without any basis, as the appellants, namely, S/Sh. H.B. Chaturvedi, Chairman cum Managing Director; Amit Chaturvedi, Joint Managing Director; Sanjay Chaturvedi, Director; Sumit Chaturvedi, Director, are the accused persons in chargesheet filed by CBI and the remaining appellants are their family members. Moreover, there is apparent apprehension of alienation of these properties, seeing the fact that ED has recorded the ECIR and the properties of the Appellants are likely to be confiscated in due course under PMLA, 2002, after attachment proceedings. Thus, the conditions as stated under the second proviso of Section 5(1) are fulfilled. Accordingly, issue no. (iii) is also decided against the appellants and in favour of the Respondent ED. Issue No. 4 9. Now coming to issue no. (iv), I am of the considered view that the properties can also be attached as value thereof, in absence of any direct/indirect proceeds of crime. To analyze this issue, it would be gainful to refer to the definition of "proceeds of crime" given under Secti....
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....against properties which may fall within the ambit of ―value of any such property or "property equivalent in value held within the country or abroad". To the aforesaid limited extent, properties purchased prior to 01 July 2005 may also become vulnerable and subject to action under the Act. However, enforcement action against such properties would have to satisfy the tests and safeguards as propounded in Axis Bank with the learned Judge observing that in such a situation it would have to be established that the person accused of money laundering had an interest in such property at least till the time that he indulged in the proscribed criminal activity. The learned Judge further observed that bona fide rights acquired by third parties prior to the commission of the predicate offense would stand saved." Further, this Tribunal has also given an elaborate judgment on the issue in the case of Sadananda Nayak v. The Deputy Director, Directorate of Enforcement, Bhubaneswar in FPA-PMLA-5612/BBS/ 2023 on 14.10.2024, where all the judgments on the issue have been considered and thereby this issue was decided in favour of ED. Further, in view of the para 68 of the judgment of Hon'....
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....t ED that the appellant Aditi Chaturvedi has not disclosed the source of income and the payment tendered by her for purchasing the property 97-D Eastern Avenue Sainik Farms, New Delhi 110062. She has not even filed any bank statement to show that she was having sufficient funds for purchasing the said property from her other family members, i.e.; joint owners namely, Sh. H.B. Chaturvedi, Amit Chaturvedi and Sanjay Chaturvedi by way of agreement to sell dated 31.12.2003. It is discernible that the sale consideration of Rs. 20 Lakhs was infact from the proceeds of crime and not from her legal source of income. Hence, I agree with the contention of the Ld. counsel for respondent ED that the execution of the said documents in favor of Aditi Chaturvedi is a sham transaction to save the said property after committing the bank fraud. However, Ms. Aditi Chaturvedi may put her claim qua the said property before Ld. Special judge PMLA Court, who may release the property if the present appellant's claim is found to be genuine. Accordingly, issue no 6, is decided against the appellants and in favour of Respondent ED. Issue No. 6 11. Now coming to issue no. vi), the contention of the appe....