TaxTMI 
TaxTMI 
2026 (1) TMI 900
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.... sent by Shashi Kumar and Rajesh Kumar which resulted in two different FIRs registered on 13.12.2016 with police stations Civil lines, Gaya for commission of offence under section 419, 420, 467, 468, 469, 471, and 120-B of IPC against the bank officials of Bank of India. The allegation was for connivance of the bank officials with others for deposit of huge cash in the bank account of the complainants without their knowledge. It was based on forged documents or forgery of valuable security. After registration of the FIR, ECIR was recorded by the respondents on 26.12.2016. During the course of the investigation, five bank accounts in the name of the complainant, his wife and brothers were found. A sum of Rs. 10.93 crores was deposited during the period from July 2016 till November 2016 and subsequently transferred to the bank accounts held by different entities, namely M/s Shri Ram Overseas, M/s Shri Ganesh Overseas, M/s Rajesh Trading Company, M/s, Sunil Trading Company, M/s Radha Trading Company, M/s Sandeep Traders, M/s Shubham Enterprises, M/s Vinod Enterprises, M/s Azad Singh Manoj Kumar and others. Those firms were found to be non-existent at their registered address and there....
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....er without knowledge of the account holders in connivance of the bank officials and others at the time of demonetization of the currency notes. Aggrieved by the order passed by the Adjudicating Authority, the appeals have been preferred by the appellant. 7. The learned counsel for the appellant raised legal as well as factual issues for challenge of the impugned orders and at the outset, it was submitted that the allegation of deposit of cash in the accounts of the complainants followed by its transfer to other entities said to be non-existent does not belong to the appellants. No evidence could be collected to show involvement of the appellants in non-existing firms where the money was transferred after its deposition in cash in the accounts of the complainant and their firms. In the light of the aforesaid, very basis to cause seizure of the record and provisional attachment of the moveable property vitiate. 8. It was further submitted that the complainant made allegation for deposit of the cash in their bank account without their knowledge. The fact aforesaid was accepted in ignorance of their statement about issuance of signed blank cheques by them while opening loan accou....
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....ut of which Rs. 45,51,970/- was paid by appellant Dhiraj Jain after obtaining loan of Rs. 49,50,000/- from SBI. 12. The aforesaid fact has been ignored despite disclosure of the source and therefore Adjudicating Authority committed a grave illegality in confirming the provisional attachment of the property. For all the other properties in the name of Dhiraj Jain & others, a sweeping statement was made about declaration of the properties in the income tax returns submitted by different appellants from time to time. The properties were purchased out of their income and savings. It is however without disclosing the business and source of saving despite onus of proof on the appellant, however, the arguments were closed with the aforesaid. The prayer was made to cause interference in the impugned orders. 13. The counsel for the appellant was called upon to argue any other legal or factual issue other than what has been referred to above. The learned counsel for the appellant recorded his satisfaction to the arguments referred to above and with the aforesaid, he closed his arguments. 14. The learned counsel for the respondents contest the appeal on all the grounds raised by the ....
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....llant Sh. Dhiraj Jain to deposit it in the bank account of the complainants. After deposit of the cash in the bank account of the complainant, it was transferred in the account of the shell and non-existent companies. It was discovered during the course of investigation when the company was not found at the address of registered office. 20. The money was transacted to the benefit of the appellant in view of the fact that it ultimately came with its deposit in the non- existent companies. Thus, it is not that without their being any evidence, the case has been taken up against the appellants followed by an order for provisional attachment of the properties. In fact, evidence was recorded during the course of the investigation and has been referred by the Adjudicating Authority. The counsel for the appellant thus disclosed source for purchase of several properties by him and his relatives. A reference of the income tax return for disclosure of each property was given in ignorance of the fact that the appellant has failed to produce income tax return to support their argument. 21. The counsel for the appellant was asked as to whether properties are disclosed in the income tax re....
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....ssion of the crime, thus could not have been considered to the proceed of crime. The argument aforesaid is in ignorance of the definition of proceeds of crime defined under section 2(1)(u) of the Act of 2002. An elaborate judgement on the issue has been given by this Tribunal in the case of Shri Sadanand Nayak Vs. Deputy Director, Directorate of Enforcement, Bhubaneswar, dated 14.10.2024. The relevant paras of the judgement are quoted hereunder:- "13. The perusal of the definition aforesaid shows three limbs. In between every limb word "or" has been used to divide the definition into three parts. The first part refers to the property acquired or derived directly or indirectly out of the criminal activities relating to the scheduled offence. In the first part, all those properties which are acquired directly or indirectly out of criminal activities would be termed to be the proceeds of crime. The properties can be acquired directly or indirectly with the use of proceeds of crime. The use of proceeds directly or indirectly would be relevant part to fall in first part of the definition of 'proceeds of crime'. To clarify the definition, it may be illustrated. Assuming in a ....
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....that it may not remain available for attachment. In fact, the word "the value of any such property" was inserted by the legislature to attach the property of equivalent value, if the proceeds out of commission of crime is not available or vanished. If the second limb of the definition is made dependent on the first limb, it would be literally re-writing the provision or making it redundant to a great extent and for this, jurisdiction does not lie with any court of law which includes even the Constitutional Court. They can declare any provision to be unconstitutional but till then there remains presumption of constitutional validity." 26. Subsequent to the order of this Tribunal referred to above, recently Punjab and Haryana High Court have also dealt with the issue in reference to the definition of the proceeds of crime and in the recent judgment of the Punjab and Haryana High Court in the case of Dilbag Singh @ Dilbag Sandhu Vs. Union of India & Ors. (CWP 22688-2024) dated 13.11.2024. The relevant paras of the said judgement are also quoted hereunder:- "3.4. It is evident that the original (unamended) definition of phrase 'proceeds of crime' was structured into....
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....ny person as a result of criminal activity relating to a scheduled offence. Thereafter, the untainted properties are further divided into two parts; the first part deals with a situation where the property derived or obtained from 'proceeds of crime' is not traceable. In the aforesaid situation the competent authority is authorized to attach or confiscate any other property of accused, which is of the same value as that of the 'proceeds of crime'. The second sub-category is a result of amendment brought in 2015 and 2019 in the Act. It provides that if the property derived or obtained from the proceeds of crime has already been taken out of the Country then the property equivalent in value held within the Country or abroad can be made liable to be attached. This position has been explained by the Delhi High Court in an elaborate manner in Axis Bank's case (supra) and Prakash Industries case (supra). 3.6. It is not disputed that the Supreme Court in Vijay Madanlal Chaudhary's case (supra) was examining the scope of the '2002 Act' including definition of phrase 'proceeds of crime'. The submission put forth by the learned counsel th....
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....d before the enforcement of the '2002 Act' cannot be attached. 3.9. On the other hand the judgments passed in Vijay Madanlal Chaudhary's case (supra), Axis Bank's case (supra) and Prakash Industries case (supra) completely answer the question in favour of ED. 3.10. The petitioner's counsel has also heavily relied upon Pavana Dibbur's case (supra). This Bench has carefully read the aforesaid judgment. The aforementioned case involved attachment of properly falling under the category of 'direct' or 'indirect' proceeds of crime. The complaint under Section 44-45 of 2002 Act was quashed by the Supreme Court. The Bench was never called upon to analyse the contentions based upon Section 2(i)(u) of 2002 Act, whereas, in Vijay Madanlal Chaudhary's case (supra) the Court directly answered the aforesaid question. Hence, there is no substance in the first argument of learned counsel for petitioner." 24. The judgement in the case of Dilbag Singh (Supra) is after referring to the judgement of the same High Court in the case of Seema Garg Vs. Deputy Director, Directorate of Enforcement, reported in 2020 SCC OnLine Punjab & Haryana ....