TaxTMI 
TaxTMI 
2026 (2) TMI 1024
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....including that of Deputy General Manager, while the second appellant was working as Senior Accountant in the Office of the Accountant General (Accounts & Entitlements), Tamil Nadu. Based on reliable information, Central Bureau of Investigation, Anti-Corruption Branch (hereinafter referred to as "CBI") registered a case in FIR No. RCMA1 2009A 0061 dated 30.11.2009 alleging that Appellants had acquired assets and pecuniary resources disproportionate to their known sources of income. 2.2. In the FIR alleged disproportionate assets of Appellants was calculated on the basis of the sources of income, expenditure and assets acquired by the Appellants during the check period 01.01.2002 to 30.09.2009 as detailed in the Table below:- S. No. Description Amount (Rs) 1 Assets at the begining of the check period 5,52,040 2 Assets at the end of the check period 99,26,038 3 Assets acquired during the check period 93,73,998 4 Expenditure during the check period 16,98,891 5 Total pecuniary resources possessed by the accused 1,10,72,889 6 Income during the check period 55,73,920 7 Disproportion 54,98,969 8 Disproportiona....
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....as answered against the appellants by finding that offence of money laundering under PMLA is a continuing offence, the relevant portion is extracted hereunder: "33. Under PML Act, money laundering offence is continuing offence, it has retrospective effect as well as an overriding effect u/s 71 of PML Act. The Act deals with the process or activity with the proceeds of crime including its concealment, possession, acquisition or use. Hence, under these circumstances, the argument which has been made by the accused that the transaction is prior to the amendment of the Act is not acceptable one." 3.3. An attempt was made to submit that appellants having been convicted and sentenced for offences under Section 120-B IPC and Section 13(2) r/w. 13(1)(e) of PCA, complaint against the same accused on the same set of facts under PMLA would amount to Double Jeopardy thereby, offending Article 20 of the Constitution of India. The above contention was rejected by the Trial Court finding that offence under Section 3 of PLMA is a distinct and different offence from the Schedule / predicate offence. The relevant portion is extracted hereunder:- "44. Considering the 2(1) (u) and....
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....y the Trial Court under PMLA is without an iota of material evidence, in support of the Scheduled Offence or offence under money-laundering of PMLA. v) The impugned order for confiscation of property is against law/Act, which violates the constitutional rights of the Appellants. vi) The allegation and charges in the present case is the replica of FIR and charge sheet made in the earlier CC.No.22/2011 case, which is vexatious and false. vii) The Trial Court has committed grave error in law by giving undue weight to insufficient evidence adduced by prosecution. viii) The Trial Court committed grave error, by convicting the appellants in the absence of 'Proceeds of Crime' in the case. ix) The Trial Court has no jurisdiction for taking cognizance of offence and conviction, in the absence of prosecution sanction thereby resulting in miscarriage of justice. x) The order of Trial Court below, is perverse, since it acted solely upon presumption, surmises and conjectures and not substantiated in law and evidence on record. xi) The Trial Court has totally ignored the bristling inconsistence and the contradiction in the ev....
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.... known source of income. vii) That total cost of construction was Rs. 47,20,000/-, out of which Rs. 15 lakhs was received through cheque and Rs. 32 lakhs was received as cash on various dates as detailed in Ex.P21 to Ex.P23, which will clearly show appellants had projected proceeds of crime as untainted. viii) That the bank account statements of appellants have been found with huge cash deposit during the period to the tune of Rs. 9,12,050/- and the above deposit was not found to have been withdrawn by cash from any other account of the appellants as per Ex.P16. ix) That the respondent/complainant have examined P.W.1 to P.W.5 and marked Ex.A1 to Ex.A32 and proved beyond reasonable doubt that the appellants have laundered the proceeds of crime as untainted. 6. Heard both sides and perused the materials available on record. 7. Before proceeding further, it may be necessary to understand the object of PMLA. The Prevention of Money-Laundering Act, 2002 was introduced, as its Statement of Objects and Reasons mentions, to make money laundering an offence, and to attach property involved in money laundering, so that this serious threat to the financial sys....
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....y to this declaration. 2. In view of an urgent need for the enactment of a comprehensive legislation inter alia for preventing money laundering and connected activities, confiscation of proceeds of crime, setting up of agencies and mechanisms for coordinating measures for combating money laundering, etc., the Prevention of Money-Laundering Bill, 1998 was introduced in the Lok Sabha on 4-8-1998. The Bill was referred to the Standing Committee on Finance, which presented its report on 4-3-1999 to the Lok Sabha. The recommendations of the Standing Committee accepted by the Central Government are that (a) the expressions "banking company" and "person" may be defined; (b) in Part I of the Schedule under the Penal Code, 1860 the word offence under Section 477-A relating to falsification of accounts should be omitted; (c) "knowingly" be inserted in Clause 3(b) relating to the definition of money laundering; (d) the banking companies, financial institutions and intermediaries should be required to furnish information of transactions to the Director instead of Commissioner of Income Tax; (e) the banking companies should also be brought within the ambit of Clause II relating to obli....
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....owingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money laundering. Explanation.-For the removal of doubts, it is hereby clarified that- (i) a person shall be guilty of offence of money laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely- (a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as unta....
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.... illegally while holding office as a public servant. However, the ingredients of the offence under Section 3 of the PMLA are different. Section 3 of the PMLA reads as follows: 3. Offence of money-laundering.-Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering. 17. The ingredients of Section 3 of PMLA would indicate that the offence under Section 3 of PMLA has nothing to do with the criminal activity/commission of a scheduled offence. If a person indulges or continues to indulge in dealing with proceeds of crime, he is liable to be prosecuted under the PMLA. Even in the case of holding disproportionate assets punishable under Section 13(1)(e) of the PC Act, if the offender continues to possess or conceal the proceeds of crime, after the check period, the offence of money laundering is made out. Therefore, the two offences are distinct and different and it cannot be said that the offence under PMLA is subsumed within the PC Act. Hence, the submissio....
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.... the Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all." 12. Now having examined the above contention we shall now proceed to examine the facts and material on record to see if the ingredients of section 3 of PMLA stands satisfied. 13. Keeping in view the object behind PMLA and the scope of Section 3 of PMLA as explained by the Supreme Court in Vijay Madanlal Chaudary's case and on applying the same to the instant case, we are of the view that appellants were convicted for predicate offence under Section 3 and 4 of PMLA read with Section 13(2) and 13(1)(e) of PCA and Section 120B of IPC. The proceeds of such crime were used in construction of multi-storied building, which clearly establishes that the appellants were directly involved in possession, acquisition and use of the entire building thereby attracting the wrath of Section 3 of Prevention of Money Laundering Act punishable under Section 4 of the said Act, as evident from following reasons, thus the impugned order does not warrant interference: a) Second Appellant submitted formal prior intimation or sought previous sanction in terms of Rule 18(2....
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....2007 (Ex.D2). However, the receipt (Ex.D1) given by second appellant would reveal that second appellant borrowed a sum of Rs. 4,25,000/- by cash and Rs. 2,05,000/- from cheque from first appellant's brother without interest. Though learned counsel for the appellant herein had contended that the loan availed by the second appellant was duly informed to the Department, it was found by the Trial Court that the alleged loans were granted/extended some time in the year 2002 and according to first appellant's brother, it was meant for purchase of plot at Baba Nagar while the construction agreement between second appellant and the builder was executed only on 11.08.2006, thus the said explanation offered by appellants as a source for funding construction is of no avail rather unacceptable. i) While the first Appellant, in his statement submitted that he had no sources of income other than salary and rent from house property at Akbar Square, Villivakkam, Chennai, second appellant stated that first appellant also used to earn a small portion of income through agriculture. D.W.1, brother of appellant herein had deposed that first appellant is the owner of the agricultural pr....