TaxTMI 
TaxTMI 
2026 (8) TMI 1522
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....and retention of electronic devices. The details of the frozen bank accounts/fixed deposits (FDs) are as under: S. No. Account Holder Account Number & Type Bank Principal Amount SW No. 1. Sanjay Narang 002201022328 (C.A. A/c) ICICI Bank Rs. 44,33,261.46/- 146 of 2025 2. M/s Encon 002205005287 (S.A. A/c) ICICI Bank Rs. 48,85,789.51/- 146 of 2025 3. Sanjay Narang 002213036220 (FD) ICICI Bank Rs. 1,99,74,326.00/- 146 of 2025 4. Sanjay Narang 002213036048 (FD) ICICI Bank Rs. 53,25,164.00/- 146 of 2025 5. Sanjay Narang 002213037119 (FD) ICICI Bank Rs. 7,00,000.00/- 146 of 2025 6. Sanjay Narang 002213037120 (FD) ICICI Bank Rs. 70,00,000.00/- 146 of 2025 7. Sanjay Narang 002213036877 (FD) ICICI Bank Rs. 25,00,000.00/- 146 of 2025 Total Rs. 44,81,18,540.00/- Details of digital devices seized from the Appellant during search conducted on 01.07.2025 at his residential premises situated at Flat No. 201, Senorita Apartment, Gulmohar Road, Juhu, Mumbai-400002 are as follows: S. No. Details of digital devices Owner SW No. 1. iP....
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....ned from criminal activity relating to the scheduled offence, or constituted incriminating material related to the commission of offences. Insofar as the present appellant, Mr. Sanjay Shyam Sunder Narang is concerned, the case of the ED is that he is an architect who, at the relevant time, was working with Sh. Y. S. Reddy Deputy Director, Town Planning, VVMC. He was dealing with bribe amounts and handled the same through his office staff, and thus, assisted in transfer, possession and generation of PoC. The accounts of M/s ENCON, the proprietorship concern of Mr. Sanjay Shyam Sunder Narang, were also frozen as the concern was owned by the Appellant and was found to be an indirect beneficiary of the proceeds of crime. Arguments for the Appellants 6. is firstly submitted on behalf of the Appellants that they were neither named as accused in the FIR nor in the Chargesheet pertaining to the scheduled offence. They are also not named as accused in the ECIR or Prosecution Complaint filed before the jurisdictional court under Section 45 PMLA. Further, the proceedings are a fishing and roving inquiry by branding the Appellants and other architects as part of a 'cartel of architects' ....
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....18 PMLA without prior notice, supplying reasons or opportunity of hearing to the Appellants, resulting in violation of statutory safeguards provided under Sections 17 and 18 PMLA as well as principles of natural justice. The Appellants submitted that the entire amount is lawfully acquired, fully explained and duly reflected in income tax returns and audit reports, arising from professional income, sale of a residential flat and old gold and sanctioned home loan proceeds. 14. It was contended that freezing of accounts has caused grave and irreparable hardship to the Appellants as they have been rendered incapable of paying salaries of Rs. 10,62,500/- to 30 employees and for discharging statutory dues (PF, ESIC and GST). Likewise Rs. 3,50,000/- for meeting business expenses including vendor, stationary, electricity and maintenance bills, honoring contractual and civil liabilities, thereby seriously impairing the right to livelihood and profession. Additionally, the Appellants are not able to pay the home loan EMIs and complete other commercial transactions. 15. The Appellants explained the sources of deposits in the frozen accounts in the following manner: i. The amoun....
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....ered under Section 3 PMLA. Even otherwise, offence under PMLA is an independent offence and a person accused of money laundering need not necessarily be arrayed as an accused in the scheduled offence. Reliance in this regard is placed on Pavana Dibbur v. Enforcement Directorate, (2023) 15 SCC 91. 18. It was also submitted that the POA can be passed against any person and such person does not necessarily need to be an accused in the money laundering case. Reliance in this regard is placed on decision of this Appellate Tribunal in FPA-PMLA-5387/CHD/2023 titled as Sant Singh v. Deputy Director, ED. Nevertheless, the Appellant (Sanjay Shyam Sunder Narang) has been arrayed as an accused in the Prosecution Complaint filed by ED before the jurisdictional court on 10.10.2025. 19. The Respondent further submitted that the Appellant acted as an intermediary between the developers/builders and government officials in collection and delivery of cash bribes and he was specifically linked to the bribe transaction of Rs. 1.57 Crore relating to a green zone clearance. The Appellant also deleted the data of his mobile phones so that his involvement in the alleged offences is not traced and re....
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....Reliance in this regard is placed on decision of this Appellate Tribunal in FPA-PMLA-5330/AHD/2023 titled as Rishi Kamlesh Agarwal v. Deputy Director, ED. 24. It was also submitted that PMLA does not permit de-freezing merely on equitable grounds where the property is prima-facie linked to money laundering. Even otherwise, the plea of the Appellants that the freezing of accounts has caused financial hardship is misconceived and merely an attempt to create a false urgency. Also, the plea is self-contradictory to the case of the Appellant as he himself admitted in his statement recorded under Section 50 PMLA dated 09.07.2025 that his annual income is approximately Rs. 5 Crore and his source of income is profits derived from business activities. 25. It was also contended on behalf of the Respondent that self-serving ledgers do not discharge the burden under Section 24 PMLA. 26. In sum and substance, the Respondent submits that the Order of the Ld. AA in OA No. 215/2025 dated 17.12.2025 is well reasoned, passed after due diligence and does not require any interference. Analysis & Findings 26. I have given careful consideration to the facts on record and rival contentions....
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....vant parts of the two sections are materially the same. Insofar as reasons to believe under Section 8(1) are concerned, it was noted by the Hon'ble Madras High Court that the language used in section 8(1) of the Act is different from the one used in section 5(1). The AA is not required u/s. 8(1) to record reasons and on the basis of the complaint filed by the initial authority u/s. 5(5) can proceed with the process on the basis of subjective satisfaction. In light the factual and legal positions stated above, I find no merit in the arguments raised regarding the absence/non-recording of 'reasons to believe' under Sections 17(1) and 8(1). 28. It is next contented that the appellant was not named in the FIR, the chargesheet or the ECIR. In this regard, firstly, the respondent directorate pointed out that prosecution complaint now stands filed on 10.10.2025 wherein Sh. Sanjay Narang stands accused of the offence of money laundering under the PMLA. Moreover, even the legal position is by now very clear that in order for a person's property to be attached/seized/frozen under the Act, it is not an essential requirement that the owner/holder of the property is accused in either the sch....
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....with VVCMC. He acted as an intermediary in the collection and delivery of cash bribes. He deleted the data of his mobile phones so that no trace regarding his involvement could be revealed. 14. In a specific case, he was also linked to a large bribe transaction of Rs. 1.57 crore relating to a green-zone clearance. His work ensured that developers' files moved smoothly through the Town Planning Department. He acted as a channel between builders and DD(TP)/Commissioner, thereby insulating the officers from direct involvement in the act of bribery for building permissions. 15. His employee, Mr. Mahendra Rawat, who works in M/s Encon, has deposed that Mr. Sanjay Narang has been actively involved in the collection as well as delivery of the cash bribe. Mr. Sanjay Narang was a liasioner who used to handle numerous cases of bribery and then subsequent approvals from the officers. He used to deploy his staff for cash delivery as well as collection. Even, for destruction of evidences, Mr. Sanjay Narang had instructed his staff to delete chats as well as other data from their phones. 16. Mr. YS Reddy has stated that on various occasions, the cash was given by M....
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....sion of proceeds of crime not to speak of making any effort for quantification thereof. It is inter alia stated that "he was also linked to a large bribe transaction of Rs. 1.57 crore". However, no specific details with regard to the nature of his involvement, whether he was the recipient of the said amount or facilitated or abetted the payment of bribe, is not mentioned. It is stated that the employee of the appellant, Mr. Mahendra Rawat, who works with ENCON, has deposed that Mr Sanjay Narang "has been actively involved in the collection as well as delivery of cash bribe" and that he "was a liaisoner who used to handle numerous case of bribery and then subsequent approvals from the officers. He used to deploy his staff for cash delivery as well as collection. Even for destruction of evidences, Mr. Sanjay Narang had instructed his staff to delete chats as well as other data from his phones." Once again, I find that the allegations, even if taken on face value as per the statement of Mr. Rawat, are non-specific of any particular transaction or the amount involved, and is worded in terms of a general practice. No specific conclusions with regard to the deriving of proceeds of crime ....
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....nd more specifically, the extent of proceeds of crime available in the hands of the appellant which could have been frozen/ seized. The respondent appears to have frozen all available bank accounts and FDs assuming that all of them represented proceeds of crime. The contention of the appellant is that the amount of the alleged proceeds of crime was at best only Rs. 1.57 cr. relating to the green-zone clearance. Against the same, the respondent has frozen assets amounting to Rs. 44.81 crore in the hands of the appellant. The appellant contends that the same were entirely out of his explained sources of income which he had duly submitted before the Ld. AA but was entirely ignored by the AA. A copy of the reply filed by the appellant before the Ld. AA has been placed on record by the appellant as a relied upon document in the present appeal. I also find that the appellant had provided details of his sources of income out of which the frozen bank balances and FDs were derived in paragraphs 6 to 10 of the appeal memo. Perusal of the reply filed by the respondent reveals that the respondent has not rebutted the specific explanations provided by the appellant as to his sources of income. ....
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....LA), as mentioned in the Original Application (OA) must be permitted to proceed. This decision is made with due regard for the investigation's advancement, the upholding of principles of justice, and the preservation of crucial evidence required for a comprehensive examination of the case. a. The Application as filed by the Enforcement Directorate is allowed b. Hence OA No. 215 of 2025 is allowed. Order is pronounced on 17.12.2025 through Video Conference." 34. A careful perusal of the above reveals that the retention of the frozen properties and seized records has been permitted by the Ld. AA purely based on the finding regarding the "importance of ongoing investigation" and because "currently, a thorough investigation into money laundering is underway". The provisions of the PMLA do not permit retention or continued freezing of properties based on the finding that the same are necessary for further investigation. The same is only permissible based on the finding by the Ld. AA that the properties in respect of which show cause notice was issued are involved in money laundering. No doubt, the Ld. AA has recorded a single, all-encompassing, bird's-e....