TaxTMI 
TaxTMI 
2026 (10) TMI 313
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....467, 468, 471 and 477-A of the Indian Penal Code, 1860, against Shri Ashwani Upadhyay, Sales Head, and other directors/employees of M/s Cooperative Company Limited, Tapri, Saharanpur ("CCL"), along with other persons. The Directorate of Enforcement recorded ECIR No. ECIR/LKZO/23/2021 on 31.03.2021. 3. During the course of investigation, it was found that a Special Investigation Team ("SIT"), Lucknow, was also investigating the matter. Consequently, the Enforcement Directorate addressed a communication dated 03.06.2021 to the Superintendent of Police, SIT, Lucknow, pursuant to which it was found that FIR No. 03/2021 dated 06.03.2021 was also registered by the SIT under Section 60 of the U.P. Excise Act. 4. A charge sheet bearing No. 02/2021 dated 31.05.2021 was filed before the Special Judge, CBI, Central Lucknow, for offences under Section 60(2) of the U.P. Excise Act, Sections 120-B, 420, 467, 468, 471 and 477-A of the IPC, Section 66 of the Information Technology (Amendment) Act, 2008, and Sections 7 and 13 of the Prevention of Corruption Act, 1988. Another FIR bearing No. 04/2021 dated 06.03.2021 was also registered by the SIT for the offences under Sections 420, 467, 468,....
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....t corresponding entries in the "Out-Register" and that the CCTV cameras were switched off during such movement. The transporters, including Shri Jaibhagwan and his brother Shri Satyavan, allegedly instructed the truck drivers to switch off the GPS so as to prevent tracking of the vehicles. It was further alleged that the CCTV display was located in the cabin of the HR Head, Shri Veerendra Shankhdhar, who instructed Shri Ashok Kumar Kashyap, Attendant, to switch off the CCTV cameras when trucks carrying illegal liquor were being taken out of the factory premises. 10. The material collected by the SIT also indicated the involvement of various management officials of CCL, including Shri Pranay Aneja, Managing Director, Shri Ashwani Upadhyay, Sales Head, Shri Kamal Daniel, Vice-President (Technical), and Shri Somshekhar, along with transporters, CL-2 warehouse owners and certain Excise Department officials. It was alleged that officials posted at CCL and at CL-2 warehouses facilitated the illegal activity. When the truck No. UP11 BT 0935 was intercepted at Saharanpur, a team was also sent to the CL-2 warehouse at Unnao. It was allegedly found that Shri Ravindra Verma, an Excise Depa....
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....d, and further investigation could potentially establish a higher amount of loss. 14. The investigation further alleged that a portion of the evaded excise duty was paid to Excise Department officials posted at the factory. It was also alleged that Shri Jaibhagwan, owner of the transport company, had accumulated wealth and acquired vehicles out of the illegal earnings generated from the sale of liquor supplied to various warehouse owners. The material collected during investigation, including statements recorded under Section 50(2) and 50(3) of the PMLA, was relied upon to explain the generation, possession, deployment and utilisation of the alleged proceeds of crime. 15. In the case of Shri Sant Lal Jaiswal, the material relied upon by the Enforcement Directorate indicates that he was one of the CL-2 warehouse owners/persons associated with the supply and sale of country liquor from CCL. The SIT specifically records that double trips were undertaken for the supply of country liquor to CL-2, thereby benefiting Sant Lal Jaiswal. The investigation attributed an excise-duty benefit/loss of Rs. 35,08,650/- to each double trip and, in respect of two such double trips relating to t....
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....ments; (v) the search and recovery of Rs. 11,26,000/- from his premises; (vi) the absence of a satisfactory and contemporaneously supported explanation for the source of the cash; (vii) the increase in his income during the relevant financial year; and (viii) the alleged absence of invoices/documentary evidence supporting legitimate purchases from CCL. 19. The principal issue arising for consideration, therefore, is whether the aforesaid material establishes a sufficient nexus between the cash of Rs. 11,26,000/- provisionally attached from Shri Sant Lal Jaiswal and the alleged proceeds generated from the scheduled/predicate offences. 20. Shri Sant Lal Jaiswal is the licence holder of the CL-2 godown at Jaunpur. It is alleged that, during the period from 03.01.2021 to February 2021, he received consignments of country liquor, namely "Shabnam Angoori", from M/s Cooperative Company Limited, Saharanpur Tapri ("CCL"). The Enforcement Directorate relied upon the investigation conducted in respect of the alleged double-trip mechanism adopted by CCL and its associated persons and alleged that certain consignments were supplied to CL-2 godowns by using the same bilty, gate pass and PD....
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....d accordingly neither the predicate offence agency nor the Enforcement Directorate could produce any evidence establishing involvement of the appellant. According to him, all liquor received at CL-2 godown was duly accounted for and proper books of account, including the cash book and stock register were maintained. 25. The counsel for the appellant submitted that neither the SIT nor the Enforcement Directorate had alleged any excess or shortage of liquor stock at the appellant godown. The stock registers and other records were periodically verified by the Excise Department. No variation or discrepancy had ever been detected. According to him, had any unaccounted or illegal liquor been received or sold from his godown, the same would have been resulted in a corresponding discrepancy in the physical stock or the records maintained at the godown. 26. The counsel for the appellant further denied any nexus with the alleged illegal transportation and sale of country liquor. It was submitted that the appellant was merely a licensed liquor seller carrying on his business lawfully and was not aware of any illegal activities allegedly undertaken by CCL, its management, transporters or....
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....cy conclusively weakened the allegation that he had received illegal liquor or sold any liquor outside the authorised quota. 32. It was further submitted that neither the predicate agency nor the Enforcement Directorate had conducted specific investigation which could establish that the appellant had received unaccounted "Shabnam Angoori" liquor. According to the appellant, the investigation was principally directed against CCL, Saharanpur, and other CL-2 dealers situated at places such as Kanpur, Unnao, Badaun, etc., whereas no independent evidence had been collected against him to establish his involvement in the alleged illegal transactions. 33. Accordingly, the appellant contends that the essential nexus between the specific property attached, i.e. Rs. 11,26,000/-, and the alleged proceeds of crime has not been established. According to him, the cash represented legitimate business proceeds duly reflected in the books of account, whereas the allegation that the same constituted proceeds of crime is based upon an inference drawn from his association with the licensed liquor trade and the alleged movement of CCL trucks to Jaunpur, without any direct evidence of his receipt,....
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....nocent and not connected with the commission of crime thus the main thrust of the argument was that without involvement of the appellant in commission of crime, the provisional attachment of the amount of Rs.11,26,000/- could not have been caused. 39. The argument aforesaid was contested by the respondents with detailed submissions to show not only involvement of the appellant so as to connect him with the crime but also the recovery of unexplained amount of Rs.11,26,000/-. The appellant was one of CL-2 warehouse owner/person associated with the supply of the country liquor from CCL. The SIT specifically recorded 99 instances of double trips carried out to the benefit of CCL and its associates. It has resulted in a total loss of Rs.34,73,56,350/-to the Government Exchequer. It is for that reason the appellant could not give explanation to possess a sum of Rs.11,26,000/- at the time of search. The appellant though made a reference to the bank account with UBI but no document in lieu thereof was submitted. It could have been the bank statement to show the withdrawal of the equivalent amount immediately before the search. The further statement of the appellant was about receipt of ....