TaxTMI 
TaxTMI 
2026 (5) TMI 1306
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....yber Crime Police Station, Ahmedabad under section 379 of IPC and under various provisions of the Copyright Act, 1957 and the Information Technology Act, 2000 on the complaint filed on behalf of M/s Star India Pvt Ltd. The allegation was that the website https://magicwin.games had unauthorizedly hosted/stream-broadcast ICC Men's T20 World Cup, 2025 cricket matches for which rights had been given by the International Cricket Council (ICC) to M/s Star India Pvt Ltd. Magicwin is a website compatible with any internet browser, including mobile phones, smart TVs and computers. It was gathered by the complainant that Magicwin had illegally broadcast some of the cricket matches of ICC Men's T20 World Cup 2024 causing huge financial loss to the company which officially held the broadcast rights. It was also alleged in the FIR that the website of Magicwin provides match details such as match viewing facility of different games along with payment options through various modes such as UPI-based applications. 3. On the basis of the aforesaid FIR which disclosed offence punishable under Section 63 of the Copyright Act, 1957 which constitutes a scheduled offence under the PMLA, the Enforcemen....
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....at only a 'prima facie' case has to be seen. Such an approach is unwarranted and renders the impugned order unsustainable. 8. It is next submitted that the Appellant has not committed any act nor has any concern with the allegations levelled in the FIR or the ECIR. The Appellant has no concern, connection, acquittance with any illegal screening of World Cup or any kind of cricket betting. Further, the companies which had employed the Appellant from time to time also have nothing to do with 'Magicwin'. It is contended that even after more than 6 months of investigation, no proceeds of crime have been traced to the Appellant. 9. It is next contended that nothing incriminating whatsoever was recovered from Appellant. In the OA, the ED had mentioned the following role of the Respondent No.9 (the appellant herein): "She is the sister of Sahil Gandhi (allegedly Sameer, who was a part of Speedyzone Ecom Pvt. Ltd.) Speedyzone had made payout(s) to the winner(s) of magicwin website. Shruti Gandhi has invested amount of more than 1.29 Crores to New Spice solutions Pvt. Ltd. in which she is also a shareholder. She is also a business partner of Sahil Gandhi" 1....
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....e bank accounts of the Appellant were frozen. It is submitted that Respondent No. 1 miserably failed to produce and provide any specific evidentiary 'reasons to believe' for the seizure/retention of the property qua the Appellant herein. In this regard it is submitted that 'reason to believe' is a much stronger expression than the word 'suspicion'. When Section 17(1) itself is not complied with, any compliance under Section 17(2) of PMLA by forwarding the mechanically recorded "reasons to believe" to the Ld. Adjudicating Authority is also a nullity and has no relevance in the eyes of law. It is submitted that the legal ingredients of Section 17(1) of PMLA were not met for conducting search and seizing the property of the Appellant. The funds in the bank accounts of the Appellant are from legitimate sources of her previous jobs. Furthermore, the Enforcement Directorate has not proven that the bank accounts are related to proceeds of crime or involved in money laundering. It is further contended that even the mechanically recorded "reasons to believe were never communicated to the Appellant which is against the principles of natural justice. The judgment in the case of C.B Gautam v U....
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....izure order qua the Appellant under section 17(1) of the PMLA. 14. It is next contended that the statutory obligations laid down in sections 20(1), 20(2), 20(4), and 21(4) of PMLA have not been complied with in the present case. Attempt has been made to retain the property without recording any "reason to believe" or supplying the same to the Appellant. The order passed in Rajesh Kumar Agarwal v. Directorate of Enforcement, Delhi 2019 SCC OnLine ATPMLA 1 decided on 06-02-2019, is relied upon wherein, due to the non-compliance of Section 20(2) of PMLA, the Appellate Tribunal set aside the impugned order and held that as per Section 20(2) PMLA, immediately after passing of retention order, a copy of the said order along with the material is to be referred to the Adjudicating Authority in a sealed envelope. But no order had been passed under Section 20(2) of the Act in the instant case. In view thereof, the impugned order was held unsustainable in the eyes of the law. 15. It is contended that the Ld. Adjudicating Authority failed to appreciate that there was no iota of evidence against the Appellant which may raise any suspicion whatsoever. Without any basis and cogent proof, th....
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....on to believe and nothing has been specifically alleged about the Appellant. it is contended that independent reason of the Ld. Adjudicating Authority is the sine qua non for the exercise of powers under Section 8 of PMLA and the show cause notice does not demonstrate any independent application of mind. From the mechanical mention of Section 8 of the PMLA, it is evident that there was complete non-application of mind by the Ld. Adjudicating Authority in framing the "reasons to believe under Section 8 of the PMLA and therefore the show cause notice is itself non- est and bad in law 19. The judgment of the Hon'ble Supreme Court in Vijay Madanlal Choudhary vs. Union of India (supra) is also relied upon for the proposition that the offence of money laundering is dependent upon generation of proceeds of crime from an offence stated in the Schedule to the PMLA. Relevant paragraphs of the said order are referred to. Paragraphs 250 to 253 of the said judgment as reported in SCC OnLine are cited in this regard. It is contended that it is manifestly clear that all properties recovered or attached by the investigating agency in connection with the criminal activity relating to a scheduled....
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.... the reasons to believe recorded in terms of Section 8(1) is a mere reproduction of the Section itself without actually highlighting the ground for such reason to believe to proceed against the Appellant thereby rendering the entire impugned proceedings illegal, otiose, nugatory and redundant in the eyes of law. The failure to disclose the aforesaid cogent reasons to believe at the outset cannot be termed as mere irregularity but would be an incurable illegality which would vitiate the entire proceedings and cause the order of provisional attachment to be rendered null and void ab initio. 24. It is next submitted that the presence of mens rea being a necessary concomitant which is conspicuously absent in the present case 25. It is next contended that for want of any evidence to connect the amount lying in Appellant's Bank Account with any proceeds of crime, ED has miserably failed to satisfy basic ingredients for confirmation under Section 8(3) of PMLA. 26. It is next contended that the projection of 'proceeds of crime as 'untainted property' is a necessary ingredient of Section 3 of PMLA. In the present case, there is neither any proceeds of crime nor any ....
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....rat High Court in the case of Jafar Hassanfatta & Others vs. Deputy Director & Another, Criminal Revision Application No. 926 of 2016 is also relied upon wherein it was held: "41. On the basis of the said Section 24 read with Section 3 of PMLA, it was contended on behalf of the Respondent that 'knowledge' of the Scheduled Offence or proceeds of crime is not essential under Section 3, and mere assistance in handling proceeds of crime even without knowledge would attract offence of money laundering, and burden would shift on the accused to prove that he is not involved in money laundering. It was submitted that the petitioners are all adults having knowledge of right and wrong. The bank accounts in which they received payments and made further payments were all in their names and they were the signatories having power to operate the accounts. None of them had the slightest hesitation in allowing their account to be used as a transit point for further transfer of the proceeds of crime. It shall thus be presumed that they have thus knowingly allowed the use of their bank accounts and knowingly involved themselves in this activity having full knowledge of the purpose an....
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....ein it is recorded that there is no legal presumption under section 24 of the Act that, i) the concerned property is "proceeds of crime", ii) the Accused has knowledge that property is proceeds of crime and, persons involved in or is guilty of money laundering merely of possession or are concerned, (iii) persons involved in or is guilty of money laundering merely of possession or are concerned. It is pointed out that the SLP filed by ED against the said judgment was dismissed on 19.02.2024. 32. It is submitted that, therefore, there cannot be an inference that any property is proceeds of crime and the same has to be demonstrated through evidence by the ED and this burden lies on the prosecution. As per the scheme of the Act, the burden described in Section 24 is on the accused to show why the proceeds of crime are not involved in money laundering after the prosecution has shown that there do exist proceeds which have been generated out of Schedule Offence. That therefore it is humbly submitted that there cannot be an inference that any property is proceeds of crime and the same has to be demonstrated through evidence by the ED and this burden lies on the prosecution. As per the ....
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....Appellant may be directed to be released. Arguments from the Respondent's Side 36. No reply to the appeal has been filed by the respondent Directorate in the present case although they were granted the opportunity to do so on three occasions, namely, 18.08.2025, 03.11.2025, and once again on 18.12.2025 which was given as a last opportunity. Ld. Counsel for the respondent was also directed vide order dated 25.02.2026 to seek specific instructions of the Directorate whether the frozen property, i.e., bank accounts of the appellant, had been proposed for confiscation in any prosecution complaint filed by the respondent. Furthermore, vide the same order, both parties were also directed to come prepared with the written synopsis of arguments. However, no written synopsis of arguments has been submitted either on behalf of the respondent. In his verbal arguments, ld. counsel for the respondent stressed on the facts brought out in the impugned order. As regards the submission from the side of the appellant that the Sahil Gandhi has never been known as 'Sameer' and it is a case of mistaken identity, ld. counsel for the respondent submitted that one Syed Arif had made a statement u....
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....ase which is only about copyright violation. 41. The findings recorded in the impugned order insofar as they relate to the present appellant are the following: (i) That the appellant is the sister of Sahil Gandhi who allegedly also goes by the name "Sameer", and is suspected to be involved with Speedyzone Ecom Pvt. Ltd., a company which allegedly made payouts to winners of the betting website 'Magicwin'; (ii) That the appellant invested more than Rs. 1.29 crore in the company, New Spice Solutions Pvt. Ltd., where she is a shareholder/business partner along with her brother Sahil Gandhi (allegedly "Sameer"); (iii) That the appellant failed to explain the origin of the funds in her frozen bank accounts during her statement under section 50 of the PMLA, and the burden of proving legitimacy of the funds was upon the appellant in view of section 24 of PMLA; (iv) That Sh. Sahil Gandhi ("Sameer") failed to appear before ED which has impeded further investigation; (v) That investigation is still in progress and the retention of digital devices, documents/records seized/bank accounts frozen during the searches must be as mentioned in the OA mu....
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....nd her brother are unquestionably two separate "persons" within the meaning assigned to that word 'person' under Section 2(s) of the PMLA. Nothing is mentioned in the impugned order about any finding of flow of money from the appellant's brother to her. The only finding of fact is that she and her brother were both shareholders/business partners in one M/s New Spice Solutions Pvt. Ltd. Notably, the said company, i.e., M/s New Spice Solutions Pvt. Ltd. was not a noticee before the Ld. AA and is nowhere stated to be involved in allegations of copyright violation which is underlying scheduled offence in the present case, or even in cricket-betting which is not even a scheduled offence as already noted. In the landmark case of Vijay Madanlal Choudhary v. Union of India & Ors. 2022 SCC OnLine SC 1929 the Hon'ble Supreme Court has held that the objective of enacting the PMLA was the attachment and confiscation of proceeds of crime so as to combat the evil of money-laundering, and the Act enables attachment of the proceeds of crime in whosoever's name they are kept or by whosoever they are held. However, without any finding in the first instance that that any part of the proceeds of crime....
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.... be actionable for tax violation and yet will not be regarded as proceeds of crime unless the concerned takes legislation prescribed such violation as an offence and such offence is included in the scheduled to the PMLA. 48. Even as regards the burden of proof under section 24, the position adopted by the respondents is not on firm grounds. The law in this regard, as explained by the Hon'ble Supreme Court in its landmark judgment in the case of Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. (supra) is that the legal presumption under Section 24(b) (presumption in the case person other than person charged with the offence of money laundering under Section (3), would be attracted once the foundational fact of existence of proceeds of crime and the link of such person in any process or activity connected with the proceeds of crime is established by the prosecution. Thus, the legal position with regard to the burden of proof under section 24(b) is not that on the mere say-so of the respondent directorate, the burden will shift to the person being proceeded against and that person is then required to prove his/her innocence to the hilt. 49. Upon careful perusal of the im....