TaxTMI 
TaxTMI 
2026 (7) TMI 725
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....owed to be maintained only for the first appellant, Sh. Kanheya Lal Kumawat, and the name of Smt. Manju Kumawat was deleted from the array of parties. Subsequently, upon the death of Sh. Kumawat, his name was substituted by that of his legal heirs, Smt. Manju Kumawat, Sh. Bhupesh Kumawat, Sh. Kapil Kumawat, Ms. Kalpana Kumawat and Ms. Sunaina Kumawat. 2. The underlying facts were discussed at length in the consolidated order passed by this Appellate Tribunal on 06.03.2025 in the case of Sh. Shiv Narayan Joshi (FPA-PMLA-1258/JP/2016) and other connected appeals. The said Sh. Shiv Narayan Joshi is the main accused in the scheduled offence case from which this appeal also arises. The relevant facts as narrated in that order are reproduced below for ready reference: [Quote] Brief facts of the case: 3. The appellant, Shri Shiv Narayan Joshi, Assistant Engineer of Public Works Department, Government of Rajasthan, was on deputation to Jaipur Development Authority (in short "JDA") upto 18.12.2008. During the period of deputation, a liver transplant surgery of his son, Shri Amit Joshi was undertaken at Sir Ganga Ram Hospital, New Delhi where his son remained hospital....
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....eupon for the offence under Section 420, 463, 464, 465, 467, 468, 471 & 120B of the IPC. During the course of investigation, the police authorities recovered Rs. 48.62 lacs from the persons to whom the money was transmitted by the appellant, Shri Shiv Narayan Joshi. The respondent then attached the flat because amount reimbursed to the appellant towards alleged medical bills was not available. It was a flat at the value of Rs. 15 lacs as against proceeds of crime of Rs. 2,65,96,086/-. The details of the aforesaid payments to Shri Shiv Narayan Joshi are given as under: Table 1 S. No. Medical Bill No. & Date Date of Credit in A/c No. 61069216008 Amount (INR) 1 40 / 19.06.09 19.06.09 7,05,301 2 45 / 06.07.09 08.07.09 7,41,462 3 48 / 15.07.09 15.07.09 1,52,927 4 52 / 22.07.09 22.07.09 21,94,140 5 56 / 31.07.09 31.07.09 3,05,623 6 57 / 06.08.09 03.08.09 24,99,626 7 61 / 18.08.09 10.08.09 24,99,626 8 69 / 25.08.09 25.08.09 24,99,626 9 77 / 02.09.09 03.09.09 24,99,626 10 80 / 14.09.09 14.09.09 24,99,626 11 82 / 22.09.09 22.09.....
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....ted that he did not know Shri Shiv Narayan Joshi directly, but knew him through Shri Kanheya Lal Kumawat of Udaipur; that to expand his business, he was in need of money; that he asked Shri Kanheya Lal Kumawat for a loan as he usually took loans from Sh. Kumawat; that Sh. Kumawat told him that he (Kumawat) would be receiving some money from an officer of Jaipur, namely, Shri Shiv Narayan Joshi, and asked him (Lokesh Paliwal) to give his bank account number so that money can be transferred by said officer to his account; that he accordingly gave his account nos. 004501505666 and 004501510001 maintained with ICICI Bank, Udaipur. He further stated that he received two RTGS of Rs. 18 lakh each in his bank account. On being asked about the use of said Rs. 36 lakhs received from Shri Shiv Narayan Joshi; he stated that he gave Rs. 22 lakhs (in cash) to Shri Kanheya Lal Kumawat after withdrawal (in cash) from his bank accounts and kept Rs. 14 lakh with him for his business purpose; that he had still not returned the said Rs. 14 lakh, either to Shri Kanheya Lal Kumawat or to Shri Shiv Narayan Joshi. On being asked about the evidence/documentary proof with respect to the money which was tran....
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....Paliwal in contradiction of his earlier statement dated 18.12.2017, deposed that he had paid Rs. 22 Lakh to Kanheya Lal Kumawat and remaining Rs. 14 Lakh have been kept by him for his personal use. To support the concocted story, Lokesh Paliwal, this time, voluntarily produced a cash book and two planted witnesses before the investigating authority. The investigating authority is now erroneously relying on the statement of Lokesh Paliwal dated 14.05.2019, and failed to lead any expert evidence to ascertain the genuineness of the alleged cashbook. 10. It is also submitted that the investigating authority overlooked the fact that Lokesh Paliwal, right from the year 2010, never produced. The said cashbook, and, for the first time in the year 2019, he produced the alleged cashbook and witnesses to support his concocted story. 11. It is further submitted that the appellant, during investigation, also handed over a copy of the letter dated 07.01.2010 written by Lokesh Paliwal to Chief Minister, Rajasthan admitting the fact he sold 2-3 residential plots to Shiv Narayan Joshi in 2009 against which Joshi transferred Rs. 18,00,000/- on 26.08.2009 and Rs. 18,00,000/- on 27.08.2009 to hi....
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.... copy of attached property papers has also been taken by the authorities. A perusal of the impugned order would show that the AA has not considered the reply of the appellant at all. 14. It is submitted that for determining what property can be confiscated under the Act, Sections 2(u), 3, 5(1) and 8 have to be read together. S. 2(u) defines proceeds of crime to mean any property derived or obtained by any person as a result of "criminal activity relating to a scheduled offence or the value of any such property". This means that there must be a connection between the property in question and the criminal activity relating to a scheduled offence. S.3 defines the offence of money laundering. Perusal of S.3 indicates that only a person who is knowingly a party to any activity or is involved in such activity connected with proceeds of crime and projects or claims it as untainted property can be guilty of the offence. S.5(1) shows that before any property can be provisionally attached there must be material prima facie to show any person is in possession of any proceeds of crime which are likely to be concealed, transferred or dealt with in a manner which may frustrate the confiscatio....
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....ed in money laundering and was acquired out of proceeds of crime generated in the year 2007-2009 2009 is misconceived, baseless and presumptuous. The AA has not dealt with the issue as to what are the scheduled crimes which have been committed. Moreover, property, as such, cannot be involved in money laundering and only legal persons i.e. humans or corporate identities can be involved in money laundering. Further the property cannot be stated to be acquired out of the proceeds of crime when the property in question was purchased in the year 2004. 17. It is submitted that the AA should have applied his mind and given reasons as to why in his opinion he reached the conclusion that the mortgaged properties were proceeds of crime as mentioned in the Schedule II of the PMLA. How and on what basis he came to the prima facie conclusion that the said crime was committed and the property in question is relatable to the said crime is not disclosed. The AA has not applied his mind at all and has passed the impugned order assuming that whatever is mentioned in the complaint is the gospel truth. It is submitted that the approach of AA shows complete lack of understanding of the subject on hi....
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....behalf of the appellant that the present appeal be allowed. Arguments on behalf of the respondent 23. The arguments and contentions raised on behalf of the appellant are strongly opposed by the respondents. It is stated that Shiv Narayan Joshi maintained a salary account no. 61069216008 in State Bank of Bikaner and Jaipur (now State Bank of India), Public Works Department (PWD) Complex, Jaipur. Scrutiny of the account statements of the bank account received from Bank vide letter dated 29.11.2012 confirmed that Shiv Narayan Joshi had received reimbursement of medical claims worth Rs. 2,65,96,086/- in thirteen tranches against thirteen forged medical claims. 24. It is also submitted that the said amounts received by Shiv Narayan Joshi were transferred to various bank accounts held in other banks, and also withdrawn in cash from his salary account no. 61069216008. An amount of Rs. 1,18,00,000/- was transferred to the bank accounts of fourteen different persons, including different bank accounts of Shiv Narayan Joshi and Lokesh Paliwal. Further Rs. 86,94,000/- were withdrawn by cash and Rs. 60,98,000/- withdrawn by cheque, totalling to Rs. 1,47,92,000/. The total sum of amount....
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....sked about the use of said Rs. 36 lacs received from Sh. Shiv Narayan Joshi, he stated that he gave Rs. 22 lacs in cash to Sh. Kanheya Lal Kumawat after withdrawal in cash from his bank accounts and kept Rs. 14 lacs with him for his business purposes; that still he had not returned Rs. 14 lacs neither to Sh. Kanheya Lal Kumawat nor to Sh. Shiv Narayan Joshi. On being asked about the evidence/ documentary proof with respect to the money which was transferred to his account and end use of the said Rs. 36 Lacs, he submitted a letter dated 01.10.2015 of SBBJ (Now SBI) issued to the S.H.O., Police Station, Sadar, Jaipur wherein three RTGS/NEFT application form attached and in the said application form purpose of remittance was written as "Repayment of loan taken from Mr. Kanheya Lal Kumawat" and account nos. and signature of Shiv Narayan Joshi appended. He also submitted a 'Cash Book ("Rokad Bahi") mark Adarsh along with ledger Register for the financial year 2009-10 maintained by him. 29. The transaction of "Cash Book ("Rokad Bahi")" shows that out of said Rs. 36 Lacs an amount of Rs, 22 Lacs were given to Sh. Kanheya Lal Kumawat by Sh. Lokesh Paliwal after withdrawing cash from....
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.... 2 27.08.2009 600000 149 9 3 28.08.2009 600000 150 10 4 02.09.2009 500000 155 11 5 05.09.2009 200000 158 12 TOTAL (Rs.) 22,00,000 34. It is also submitted that based on the above evidence, facts & findings, it is established that Rs. 2.66 Cr. (proceeds of crime) received by Sh. Shiv Narayan Joshi (by of reimbursement of medical claim), on the instructions of Sh. Kanheya Lal Kumawat flowed from the accounts of Sh. Lokesh Paliwal through RTGS and Rs. 22,00,000/- (cash) reached In the hands of Sh. Kanheya Lal Kumawat on the abovesaid dates. Based on the above findings, the movable & immovable properties of Sh. Kanheya Lal Kumawat and Sh. Lokesh Paliwal were identified and attached and the same was confirmed by the Ld. AA 35. It is argued that the Cash Book (Rokad Bahi) and Original Ledger Register which was maintained by Sh. Lokesh Paliwal (accused) in the course of his business was in his possession and control and, was produced by him and therefore, presumption arises under Section 22 of PMLA, 2002 that the Cash Book belonged to him and the contents were true and in his handwriting, bearing hi....
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....red by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material' before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted." 37. It is further pointed out that ED has filed Prosecution Complaint as well as a Supplementary Prosecution Complaint in the instant matter, wherein, the Appellant (Late Sh. Kanheya Lal Kumawat) and Sh. Lokesh Paliwal were made accused. 38. It is further submitted that the Ld. AA, after considering the submissions of both parties, held that the documents relied upon by the Respondent clearly establish that Sh. Kanheya Lal Kumawat and Sh. Lokesh Paliwal have received funds from Sh. Shiv Narayan Joshi, which was n....
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....g been made, the burden of proof that the said monies were not the proceeds of crime and were not, therefore, tainted shifted to Respondent I under Section 24 of the PML Act, 2002" 42. It is also submitted that the statements recorded under Section 50 of PMLA, 2002 are an admissible piece of evidence and the Hon'ble Supreme Court in Rohit Tandon Vs. Directorate of Enforcement wherein the Hon'ble Supreme Court held that: - "27. ..... In the facts of the present case, we are in agreement with the view taken by the Sessions Court and by the High Court. We have independently examined the materials relied upon by the prosecution and also noted the inexplicable silence or reluctance of the Appellant in disclosing the source from where such huge value of demonetized currency and also new currency has been acquired by him. The prosecution is relying on statements of 26 witnesses/accused already recorded, out of which 7 were considered by the Delhi High Court. These statements are admissible in evidence, in view of Section 50 of the Act of 2002. The same makes out a formidable case about the involvement of the Appellant in commission of a serious offence of money-launder....
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....ns of Section 50 PMLA would prevail in terms of Section 71 read with Section 65 thereof." 44. It is further pointed out that the Hon'ble Supreme Court in the aforementioned judgment underscored that such statements, being recorded in the course of an inquiry rather than an investigation, are not subject to the restrictions under Article 20(3) and Article 21 of the Constitution. Instead, they are deemed to be judicial proceedings under Section 50(4) of the PMLA and, therefore, admissible as evidence in proceedings under the PMLA. Also, the Hon'ble Supreme Court of India in the matter of Tarun Kumar vs. Assistant Director, Directorate of Enforcement "15. In our opinion, there is hardly any merit in the said submission of Mr. Luthra. In Rohit Tandon Directorate of Enforcement MANU/SC/1403/2017: (2018) 11 SCC 46, a three Judge Bench has categorically observed that the statements of witnesses/ Accused are admissible in evidence in view of Section 50 of the said Act and such statements may make out a formidable case about the involvement of the Accused in the commission of a serious offence of money laundering. Further, as held in Vijay Madanlal (supra), the offence o....
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.... upon the case of in Vijay Madanlal Chaudhary Vs. Union of India Special Leave Petition (Criminal) No. 4634 of 2014. (2022 SCC OnLine SC 929) wherein the Hon'ble Supreme Court held that offence of money laundering is an independent offence; "269. 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 any one 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 the proceeds of crime derived or obtained as a result of that crime." 47. The Respondent has also brought to notice of the Bench that vide its judgement dated 06.03.2025, this....
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....he had given Rs. 22 Lakh in cash to the present appellant, Sh. Kanheya Lal Kumawat on various dates from 26.08.2019 to 05.09.2019, as per specific details and dates provided by him. He further stated that he kept the remaining Rs. 14 lakh for personal use. He also produced a cash book ('Rokad Bahi') to substantiate the transactions. No doubt, as pointed out by the counsel for the appellant, there is some discrepancy in the amount stated to have been paid by him in cash to the appellant as per his two statements, i.e., the first statement recorded on 18.12.2017, and the second statement recorded on 14.05.2019. While in the statement recorded on 18.12.2017, in response to Question No.6, he stated that out of Rs. 36 lakh received by him, he gave Rs. 21 lakh in cash to the appellant, in his statement recorded on 14.05.2019, he said that he gave Rs. 22 lakh in cash to Sh. Kumawat and also provided specific details of dates and amounts. Having perused the two statements, I do not find any discrepancy so large as to discredit the statement altogether. Furthermore, the authenticity of the entries in the Rokad Bahi are substantiated by statements of two witnesses, namely, Sh. Narendra Joshi....