TaxTMI 
TaxTMI 
2026 (9) TMI 556
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....on a complaint of Income Tax Department alleging that Shri Tanaji Mandal Adhikari, while serving as a Senior Tax Assistant, exploited his access to computer systems and security information (RSA Tokens and Login credentials) of his supervisory authorities. It was in collaboration with others, who orchestrated a fraud to illicitly generate TDS refunds amounting to a sum of Rs. 263 Crores. Those fraudulent refunds were subsequently transferred to the bank account of M/s SB Enterprises, a proprietary concern of Shri Bhushan Anant Patil. During the search of the premises of Shri Bhushan Anant Patil by Income Tax Department, mobile phones and laptops were seized. It was revealed that the funds received from the accused were transferred to various accounts keeping a balance of approximately Rs. 93 Crores and were frozen by the Income Tax authorities. Additionally, cash amounting to Rs. 22 Lakhs along with original documents of seven properties purchased by Shri Bhushan Anant Patil, was also recovered. Role of Purushottam Chavan 3. During the investigation, the role of Purushottam Chavan emerged in connection with the handling, possession, diversion and concealment of the proceeds o....
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....r or paid during the period from 26.08.2023 to 21.11.2023, while an amount of approximately Rs. 1.87 crores was shown as remaining with Rajesh Batreja as on 29.11.2023. When confronted with the document, Rajesh Batreja stated that most of the entries represented cash payments made to Purushottam Chavan on the respective dates. He further stated that the amount described as "HK Transfer" represented money sent to Hong Kong, against which approximately Rs. 1.70 crores was subsequently repatriated to the account of M/s SB Enterprises. 8. As regards the source of the cash delivered to Purushottam Chavan, Rajesh Batreja stated that Urban Lancy D'Souza, his partner in M/s Etaion Trading LLC, arranged funds from Dubai to India through the hawala channel. Thus, Purushottam Chavan was not merely a passive recipient but was allegedly involved in receiving and handling substantial amounts of cash which were generated from or represented the proceeds of crime. 9. Another WhatsApp communication relied upon by the investigation was dated 14.02.2024, wherein Purushottam Chavan sent Rajesh Batreja a photograph of a withdrawal slip of Emirates NBD Bank, showing withdrawal of AED 50,000. I....
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....on also recorded that Purushottam Chavan had frequently travelled to Dubai during the period from July 2023 to February 2024. He was also allegedly using international SIM cards of the United Kingdom and the UAE. In these circumstances, when considered along with the incorporation of the Dubai entity, the foreign currency recovered from his premises, the communications with Rajesh Batreja and the alleged cash transactions, were relied upon by the Enforcement Directorate to contend that Purushottam Chavan had an active role in the international movement and concealment of proceeds of crime. 14. The WhatsApp communications were further relied upon to show that Purushottam Chavan was involved in arranging investments in Indian companies in which funds were allegedly routed under the guise of share investment. The investigation specifically referred to M/s Ventugrow Consultants Pvt. Ltd. and M/s Clensta International Pvt. Ltd., and alleged that Purushottam Chavan was involved in arranging investors for these entities. According to the Enforcement Directorate, this demonstrated that his role extended beyond mere receipt of cash and included assisting in the movement, layering and pro....
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....eja and other accused persons. It was, therefore, alleged that his conduct constituted participation in the offence of money laundering within the meaning of Section 3 of the Act of 2002. 18. The Enforcement Directorate has alleged that since a substantial portion of the proceeds of crime dealt with by Rajesh Batreja and Purushottam Chavan was in cash or was held outside India and, therefore, not traceable or available for direct attachment. The properties identified in their names could be treated as the "value of any such property" within the meaning of Section 2(1)(u) of the Act of 2002. The properties of Rajesh Batreja and Purushottam Chavan were accordingly attached because the proceeds of crime were unavailable for attachment. 19. So far as the appellant is concerned, he was found in close association in dealing with proceeds of crime generated by Shri Tanaji Mandal Adhikari and others. He was even found in direct association in dealing and receiving proceeds of crime to the tune of Rs. 11 Crores with Rajesh Batreja and others. The fact aforesaid was established from the material recovered during the course of search. It was also found that the appellant had withdrawn A....
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....rovisional Attachment Order. 24. The learned counsel for the appellant lastly submitted that the respondents failed to establish a money trail to show that the amount of proceeds was transferred to the appellant. In absence of money trail, the provisional attachment of the property cannot be said to be legitimate. It is more so when it was acquired out of the disclosed source of the appellant. The prayer was made to set aside the impugned order. 25. The counsel for the appellant did not raise any other argument than referred to above. It is despite an opportunity and called upon to raise any other legal or factual issue. The counsel for the appellant recorded his satisfaction to the issues already raised and prayed for disposal of the appeal after causing interference in the impugned order. Arguments of counsel for the respondents: 26. The learned counsel for the respondents has contested the appeal on all the grounds urged by the appellant. Elaborate arguments were made on each issue and would be referred while recording finding by this Tribunal. It is to avoid repetition of facts and otherwise for the sake of brevity. Finding of the Tribunal: 27. I have consider....
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....d other documents relating to a Dubai-based entity. The electronic evidence was also collected to connect the appellant with commission of crime. In fact, WhatsApp Chats recorded from the mobile phone of Rajesh Batreja have disclosed that the appellant was actively coordinating the delivery and receipt of cash on 21.03.2024 and 27.03.2024. The appellant even shared contact details of persons, Word files and other messages concerning investments in M/s Jarvis, in which proceeds of crime of approximately Rs. 4.37 crores had been routed. The contact details of one Kartik Shinde were also revealed who received the cash on behalf of the appellant when he was not available. 30. Rajesh Batreja was confronted with WhatsApp communications. He stated that the currency-note numbers were exchanged for the purpose of identifying and effecting delivery of cash to persons associated with Purushottam Chavan. In fact, sufficient material could be collected by the respondents to connect the appellant for layering of the proceeds, rather his active role was found therein along with Rajesh Batreja. 31. In the investigation, Excel sheet/image exchanged between Rajesh Batreja and Purushottam Chava....
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.... per Section 2(1)(u) of the Act of 2002 defining proceeds of crime. I may refer to the recent decision of the Punjab and Haryana High Court on the issue. It was in the case of Dilbag Singh @ Dilbag Sandhu Vs. Union of India & Ors. (CWP 22688-2024) dated 13.11.2024. The relevant paras of the judgment in the case of Dilbagh Singh (supra) are quoted hereunder: "3.2. In light of the Division Bench's judgment in Seema Garg's case (supra), this Bench would have been obligated to either follow it or refer the matter to a Larger Bench. However, the Supreme Court in Vijay Madanlal Chaudhary's case (supra) has interpreted the provision in para 298, which is extracted as under: "It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of "proceeds of crime" is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, eve....
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....he '2002 Act' was enacted to prevent money laundering and connected activities. The act of money laundering is a multi-layered, complex and complicated diversion of the property, which is required to be prevented. Consequently, the definition of proceeds of crime has undergone transformative changes from time to time so as to include all the complex acts involved in the offence of money laundering. 34.5. In Axis Bank's case (Supra), the Delhi High Court has dissected the definition in three parts while covering tainted property and untainted property held in India; and the 'proceeds of crime' taken out of the country or any other property of equivalent value thereof. However, this Court is of the considered view that the definition can be divided into two broader categories namely tainted properties and untainted properties. The first part provides about the tainted properties derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. Thereafter, the untainted properties are further divided into two parts; the first part deals with a situation where the property derived or obtained from ....
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....h property' is superfluous does not appear sound. It appears that transformative journey of the definition of phrase 'proceeds of crime' was not brought to the notice of the Division Bench in Seema Garg's case (supra). In Abdullah Ali Balsharaf's case (supra), Delhi High Court inadvertently overlooked the sub-category (i) of second part of definition of 'proceeds of crime'. Similarly, Andhra Pradesh High Court in Kumar Pappu Singh's case (supra) was not properly assisted. Furthermore, the attention of Patna High Court was not drawn to part 2(i) in HDFC Bank's case (supra). Similar is the position in M/s. Himachal Amta Power Limited's case (supra). In this case, the attention of the Bench was not drawn to the second broader category of the definition. In Hemanshu Rajnikant Shah's case (supra) the Court relied upon Seema Garg's case (supra) and held that the properties acquired before the alleged crime and before the enforcement of the '2002 Act' cannot be attached. 34.9. On the other hand the judgments passed in Vijay Madanlal Chaudhary's case (supra), Axis Bank's case (supra) and Prakash Industries case (supra....