TaxTMI 
TaxTMI 
2026 (5) TMI 1854
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.... may kindly be pleased to grant stay on the effect and operation of the impugned order till disposal of present petition. 10.4 Any other relief which the Hon'ble Court deems fit and proper under the facts and circumstances may also be provided to the petitioner." 2. Brief facts of the case are that the petitioner is engaged in trading in shares and securities through M/s Kedia Fintrade Private Limited and through their association with Motilal Oswal Financial Services Limited. According to the petitioner, they have been carrying on business for several years and have regularly complied with statutory requirements under various enactments. The petitioner has pleaded that substantial taxable income earned by them from the financial years 2016-17 to 2022-23 was duly disclosed before the Income Tax Department and taxes amounting to several crores of rupees were paid thereon. They contend that the assets held by them, including gold, jewellery and investments, originate from disclosed sources of income and form part of their accounted wealth. Even before the year 2016, they were in possession of gold bars, coins and jewellery weighing approximately 4.260 kilograms, which....
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....respect of the gold weighing 10.250 kilograms. 4. The pleadings further disclose that thereafter, the ED instituted Original Application No. 1012 of 2023 before the Adjudicating Authority seeking retention of 4.260 kilograms of Gold and 293.15 carats of Diamonds, under Section 17(4) of the PMLA-2002. A show- cause notice was issued to the petitioner on 13.10.2023, and they filed a detailed reply on 06.11.2023, along with supporting documents to establish the lawful acquisition of the assets. According to the petitioner, even in the rejoinder filed on 30.01.2024, before the Adjudicating Authority, the ED acknowledged that gold weighing 10.250 kilograms had been disclosed by the petitioner under the Income Declaration Scheme, 2016 and that the investigation was essentially confined to the excess quantity of gold. The petitioner, therefore, contend that there existed no basis for the continued detention of the gold weighing 10.250 kilograms, which stood admitted to be covered by prior disclosures made before the Income Tax authorities. 5. It is also the case of the petitioner that after hearing the parties, by order dated 15.02.2024, the Adjudicating Authority allowed the applic....
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....dit cards, SIM cards, cheque books and cash were seized. The investigation further revealed that the accused persons had allegedly created online IDs, collected money from punters through banking channels and facilitated betting transactions through the Mahadev Book platform. On the basis of the said scheduled offences, the ED commenced an investigation under the PMLA. During the course of the investigation, the ED gathered information regarding several FIRs registered across the country in connection with illegal betting operations conducted through Mahadev Book and allied platforms. Particular reliance was placed upon FIR No. 206/2023 dated 02.06.2023 registered by the Cyber Crime Police Station, Visakhapatnam, Andhra Pradesh, for the offence under Sections 419, 420, 467, 468, 471, 120-B read with Section 34 of the IPC, Sections 66-C and 66-D of the Information Technology Act, 2000, and Sections 3, 4 of the Andhra Pradesh Gaming Act, 1974 (as amended from 25.09.2020) wherein it was alleged that a network of 21 persons was operating call centres for the collection of betting money and placing bets through various online platforms. 8. The investigation disclosed that bets wer....
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....d allied betting applications, as well as FIR No. 206/2020 dated 24.09.2020 registered at Burtolla Police Station, Kolkata under Sections 120-B and 420 of the IPC and Sections 3 and 4 of the West Bengal Prize Chits and Money Circulation Schemes Act against Hari Shankar Tibrewal, Suraj Chokhani and others for their alleged involvement in online betting activities. These materials formed part of the investigation conducted by the ED in relation to the offences under the PMLA-2002. 9. The case of the ED, in substance, is that Mahadev Online Book was allegedly operating as a large-scale international online betting syndicate facilitating illegal betting on various sporting events, card games and other activities through multiple online platforms and websites. According to the investigation, the syndicate was promoted by Sourabh Chandrakar and Ravi Uppal from Dubai through a franchise-based panel system, wherein betting proceeds collected through numerous benami bank accounts were systematically layered, routed through banking channels, remitted abroad by hawala and projected as legitimate funds. During the course of investigation, the Directorate claims to have unearthed a complex n....
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....sing, using and projecting proceeds of crime as legitimate assets. According to the Directorate, the petitioner failed to furnish any satisfactory explanation regarding the source of substantial investments, cash deposits, and gold declared by them under the Income Declaration Scheme, 2016, and the investigation revealed that such assets were also connected with the proceeds generated from illegal betting operations. On the basis of the material collected during investigation, including statements of witnesses, digital evidence, financial records and bank transactions, the ED has arraigned the petitioner as an accused in the Fourth Supplementary Prosecution Complaint dated 03.02.2025, alleging commission of offences under Sections 3 and 4 of the PMLA- 2002, and has asserted that the offence of money-laundering is a continuing offence in terms of the Explanation to Section 3 of the Act. 11. Learned counsel for the respondent No. 2/ED also raised a preliminary objection regarding the maintainability of the present writ petition on the ground of the availability of an efficacious statutory remedy under the Prevention of Money Laundering Act, 2002. It is pleaded that on 29.01.2026, ....
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.... retention proceedings or the filing of the Original Application before the Adjudicating Authority cannot be construed as recognition of the lawful source of the remaining gold. It was also pleaded that the petitioner's disclosure of assets under the Income Declaration Scheme, 2016, does not confer immunity from proceedings under the PMLA-2002 nor establish the lawful source of acquisition of the assets. According to the respondent No.2, the investigation revealed that the petitioner had no legitimate source capable of explaining the substantial cash deposits made during the relevant period and that the material collected during the investigation disclosed a nexus between the subject gold and the proceeds generated from illegal betting activities. Reliance was placed upon the decision of the Hon'ble Supreme Court in Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46, to aver that declaration of assets under the Income-tax laws does not preclude proceedings under the PMLA-2002 where the property is otherwise found to be derived from criminal activity. It was, therefore, submitted that the provisional attachment has been made strictly in accordance with Sections 5 a....
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....to be attached constitutes "proceeds of crime" and is likely to be concealed, transferred or dealt with in a manner that may frustrate eventual confiscation. According to the petitioner, neither the Provisional Attachment Order nor the material relied upon by the respondent No.2 discloses any live nexus between the subject gold and the alleged scheduled offences or establishes that the petitioner acquired or possessed the said assets from criminal activity. It is argued that mere declaration under the Income Declaration Scheme, 2016, may not by itself create immunity under the PMLA; nevertheless, such declaration, coupled with payment of taxes and the respondent No.2's own acknowledgement of the disclosure during the earlier retention proceedings, constitutes a highly relevant circumstance which could not have been ignored while forming the statutory satisfaction under Section 5. Learned counsel further submits that the power of attachment under the PMLA is preventive and preservative in nature and cannot be exercised on mere suspicion or conjecture without satisfying the jurisdictional requirements prescribed by the statute. It is urged that the respondent No.2 has failed to d....
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....tenable. It was argued that declaration of an asset under the Income Tax laws or payment of tax thereon neither establishes the lawful source of acquisition nor creates any immunity from proceedings under the PMLA. The offence of money-laundering is an independent offence, distinct from proceedings under the Income Tax Act, and once investigation reveals that the property has been derived or obtained from criminal activity relating to a scheduled offence, the same becomes liable for attachment and eventual confiscation under the PMLA irrespective of any disclosure made under taxation statutes. In support of the aforesaid submission, reliance was placed upon the judgment of the Supreme Court in Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46, particularly paragraph 33, wherein it has been categorically held that declaration in income-tax returns or payment of taxes does not absolve the person concerned from disclosing the lawful source of the property nor confer immunity against prosecution for the offence of money-laundering. It was thus contended that the petitioner's reliance upon the Income Declaration Scheme is wholly misplaced and cannot invalidate the attachm....
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.... 226 of the Constitution. It was submitted that the validity of the attachment, the existence of "reason to believe", the nature of the attached assets and their eventual confiscation are all matters statutorily entrusted to the Adjudicating Authority and the Special Court under the PMLA. The respondent No. 2 contended that interference by this Court at the present stage would frustrate the statutory scheme enacted by Parliament and impede the ongoing proceedings under the Act. It was, therefore, prayed that the writ petition, being devoid of merit and barred by the availability of alternative statutory remedies, deserves to be dismissed with costs. 19. I have heard learned counsel for the parties at length and considered their rival submissions, and gone through the record of the writ petition. 20. The principal questions which arise for determination are: (i) whether the present writ petition challenging the Provisional Attachment Order dated 29.01.2026 is maintainable in the exercise of jurisdiction under Article 226 of the Constitution despite the statutory mechanism provided under the Prevention of Money Laundering Act, 2002; and (ii) whether the impugned provisional att....
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....confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the Adjudicating Authority decides unde....
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....here the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money- laundering after having regard to the material before it. (8) Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering: Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable....
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....may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. Explanation .- For the purposes of this section, "High Court" means- (i) The High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) Where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain." 23. In the case of Special Director and Another v. Mohd. Ghulam Ghouse and Another, 2004(3) SCC 440, the Hon'ble Supreme Court held that where a statute provides an efficacious alternative remedy before a competent forum, the High Court should ordinarily decline to entertain a writ petition unless exceptional circumstances are demonstrated. In para 5, it has been held that :- "5. This Court in a large number of cases has deprecated the practice of the High Courts ent....
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....raise all the pleas including that of the jurisdiction before the Adjudicating Authority. 12. It is trite law that Article 226 of the Constitution of India vests wide discretion in the Writ Court to entertain the writ petition on any grievance and to grant appropriate relief. It is an extraordinary jurisdiction vested in the writ Court. The Writ Courts observe self- imposed restraint in exercising the jurisdiction under Article 226. Availability of alternative remedy is not a bar to entertain a writ petition. However, ordinarily, the writ petition is not entertained under Article 226 if the aggrieved person has an efficacious and effective remedy provided by concerned statute whereunder an adverse decision is taken against the person, which he seeks to assail in the writ petition. Notwithstanding, availability of alternative remedy in a case of exceptional nature or a case of glaring injustice, Writ Court can entertain a writ petition. However, that would not mean that writ jurisdiction can be exercised in every case, where alternative remedies are available to safeguard the interest of the aggrieved person. It is one thing to say that in exercise of power vested in it und....
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.... Thansingh Nathmal v. Supt. of Taxes [1964 SCC OnLine SC 13 : AIR 1964 SC 1419] this Court adverted to the rule of self- imposed restraint that the writ petition will not be entertained if an effective remedy is available to the aggrieved person and observed: (AIR p. 1423, para 7) '7. ... The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by the statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution the machinery created under the statute to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up.' 13. In Titaghur Paper Mills Co. Ltd. v. State of Orissa [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : 1983 SCC (Tax) 131 : (1983) 53 STC 315 : (1983) 142 ITR 663] this Court obser....
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....India Ltd., [(1985) 1 SCC 260 : 1985 SCC (Tax) 75 : (1985) 58 Comp Cas 145 : (1985) 154 ITR 172], Ramendra Kishore Biswas v. State of Tripura [(1999) 1 SCC 472 : 1999 SCC (L&S) 295], Shivgonda Anna Patil v. State of Maharashtra [(1999) 3 SCC 5], C.A. Abraham v. ITO [(1961) 41 ITR 425 : 1960 SCC OnLine SC 128 : AIR 1961 SC 609 : (1961) 2 SCR 765], Titaghur Paper Mills Co. Ltd. v. State of Orissa [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : 1983 SCC (Tax) 131 : (1983) 53 STC 315 : (1983) 142 ITR 663], Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath and Sons [1992 Supp (2) SCC 312 : (1990) 77 STC 1], Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1], Tin Plate Co. of India Ltd. v. State of Bihar [(1998) 8 SCC 272 : (1999) 112 STC 543], Sheela Devi v. Jaspal Singh [(1999) 1 SCC 209] and Punjab National Bank v. O.C. Krishnan [(2001) 6 SCC 569 : (2001) 107 Comp Cas 20].)" 14. In Union of India v. Guwahati Carbon Ltd. [(2012) 11 SCC 651 : (2013) 19 GSTR 506] this Court has reiterated the aforesaid principle and observed: (SCC p. 653, para 8) "8. Before we discuss the correctness of the impugned order, we intend to rem....
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....noticed that if an appeal is from "Caesar to Caesar's wife" the existence of alternative remedy would be a mirage and an exercise in futility. 19. In view of the above, the writ petition before the learned Single Judge was itself not maintainable." 46. In Dr. U.S. Awasthi v. Adjudicating Authority PMLA, 2023 SCC OnLine Del 401, the Court has observed as under - "21. However, the question here is whether a writ petition is to be entertained against such an order. While there can be no doubt that in case of violation of principles of natural justice or jurisdictional errors, a writ petition can be entertained, as per the settled legal position in Whirlpool Corporation (supra). However, the entertaining of a writ petition while an Appellate Tribunal is fully functional, in the opinion of this Court ought not to be done in each and every case. XXX 23. Dealing with the issue raised by ld. Sr. Counsel as to the interpretation of the expression 'an order under this Act', this Court is of the opinion that when the Appellate Tribunal can entertain an appeal against the final order passed by the Adjudicating Authority, any interim orders or ....
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....In the given factual conspectus, the same would not be inefficacious. 50. Section 26 of the PMLA specifically provides that any person aggrieved by an order of the Adjudicating Authority may prefer an appeal to the Appellate Tribunal. Accordingly, the statutory scheme itself envisages that all questions relating to the validity, scope, and effect of an attachment order must first be adjudicated within the framework of the Act. 51. As regards the contention of the petitioners that the attachment of their properties is in violation of the orders of the Supreme Court dated 19.05.2022 and 11.01.2023 in SLP (C) No. 6013 of 2022, whereby status quo was directed to be maintained in respect of possession of the plots pending adjudication before the Punjab and Haryana High Court, this Court is of the view that such an argument can also be appropriately raised before the Appellate Tribunal. 52. In Rohit Mahendru v. Directorate of Enforcement, W.P.(C) 12188/2022 (order dated 27.09.2024), the Court dealt with a similar plea concerning a status quo order regarding plots attached in connection with proceedings involving M/s Krrish Realtech Pvt. Ltd. and passed the foll....
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....ion considering the fact that counsel for Petitioners is agreeable to withdraw the present petition with liberty to approach the concerned tribunal, the Court is inclined to accede to their request. 9. In view of the above, the present writ petition is dismissed as withdrawn. The Petitioners shall be at liberty to assail the impugned order and all the contentions urged in the present petition before the Appellate Authority or the appropriate forum provided under the PMLA Act, if so advised." 53. All pleas of the petitioner, inter-alia, as regards jurisdiction/coram non judice would also necessarily be considered by the Appellate Tribunal." 26. In the aforesaid circumstances of the case and availability of alternative statutory remedy of appeal, this Court is of the considered opinion that the challenge to the Provisional Attachment Order cannot be entertained in exercise of writ jurisdiction under Article 226 of the Constitution. The Act provides a complete and efficacious adjudicatory mechanism whereby the legality of the provisional attachment is required to be examined in the first instance by the Adjudicating Authority under Section 8, with further statutor....
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....e disclosure of an asset before the Income Tax authorities or payment of taxes thereon cannot, by itself, establish the lawful source of acquisition or confer immunity against proceedings under the Prevention of Money Laundering Act. The offence of money-laundering is an independent offence, and if the property is ultimately found to have been derived or obtained from criminal activity relating to a scheduled offence, such property would answer the definition of "proceeds of crime" under Section 2(1)(u) of the Act, notwithstanding its disclosure before the tax authorities. 29. In Rohit Tandon v. Directorate of Enforcement, 2018 (11) SCC 46, the Hon'ble Supreme Court categorically held that declaration in income tax returns or payment of taxes does not absolve a person from explaining the lawful source of the property, nor does it grant immunity from prosecution for the offence of money-laundering. In para 33, it has been held that :- "33. We fail to understand as to how this argument can be countenanced. The fact that no limit for deposit was specified, would not extricate the appellant from explaining the source from where such huge amount has been acquired, posses....