2013 (8) TMI 359 - HC - FEMA

Detention of property u/s 3(1) - Husband of the present petitioner was ordered to be detained by u/s 3(1) of the COFEPOSA following seizure of foreign currency Department issued Notice u/s 6(1) of the SAFEMA to show cause why the property belonged should not be forfeited and to show the source of income, earnings and assets, out of which or by means of which, the property was acquired Held that - The Tribunal had considered all the submissions made by the them and after examining the reasons assigned by the Authority and documentary evidence produced by the petitioner - the Tribunal thought it fit not to interfere with the order passed by the Authority - the reasons for issuance of notice were attached with the Notice - the Authority had not committed any breach of provisions of SAFEMA while issuing the notice. The persons engaged in smuggling and foreign exchange manipulations do not keep regular and proper accounts with respect to such activity or its income or of the assets acquired therefrom - The violation of foreign exchange laws and laws relating to export and import necessarily involves violation of tax laws - the idea of defining the word relative in detail was to reach his properties in whosoever s name they were kept or by whosever they were held - It had been further held that the idea was to forfeit the illegally acquired properties of the convict/detenue irrespective of the fact that such properties were held by or kept in the name of or screened in the name of any relative or associate as defined in the said Explanations of Section2 of the Act - The Authority had rightly appreciated the provisions of the SAFEMA and the definition of relative and, therefore, had rightly held that they had miserably failed in proving that the property in dispute was purchased by legal means - The burden to prove the same lies upon the person affected to prove that the property which was under the process of forfeiture was purchased by legal means either by himself or his relatives - Attorney General of India, etc. etc vs. Amratlal Prajivandas and Ors. 1994 (5) TMI 235 - SUPREME COURT Decided against Petitioner.

Summary

Issues Involved:
1. Legality of the Notice dated 23.5.2007 issued under Section 6(1) of SAFEMA.
2. Sufficiency of evidence to prove that the property was acquired legally.

Detailed Analysis:

1. Legality of the Notice dated 23.5.2007 issued under Section 6(1) of SAFEMA:

The petitioner challenged the legality of the notice issued by the Competent Authority under Section 6(1) of SAFEMA, arguing that it did not mention the reasons for issuance and failed to establish a nexus between the property and the alleged illegal money. The petitioner relied on the Supreme Court decision in P.B. Abdulla vs. Competent Authority, which emphasized strict compliance with statutory provisions for confiscation orders.

The court found that the Competent Authority had annexed the reasons for issuance of the notice along with the notice itself. The notice was issued to both the detenue and his wife, the petitioner, calling upon them to explain the source of income for acquiring the disputed property. The court held that the Competent Authority did not breach SAFEMA provisions, as the reasons were provided with the notice. Therefore, the facts of P.B. Abdulla vs. Competent Authority were not applicable in this case.

2. Sufficiency of evidence to prove that the property was acquired legally:

The petitioner argued that sufficient evidence was provided to establish that the property was acquired legally, including an affidavit from her brother and bank account details showing a gift of Rs.1,50,000. The petitioner contended that the Competent Authority and the Tribunal erred in not accepting this evidence.

The court noted that the husband of the petitioner was detained under COFEPOSA for possession of foreign currency worth Rs.33,06,667.50. During the investigation, the disputed property was found to be in the name of the petitioner, who is the wife of the detenue. The Competent Authority provided multiple opportunities to the petitioner and her husband to produce evidence of legal income but found the evidence insufficient. The petitioner and her husband failed to produce any documentary evidence, such as income tax returns, to prove the legal source of income. The court emphasized that the burden of proof lies on the affected person to establish that the property was acquired legally, as per Section 8 of SAFEMA.

The court also referred to the Supreme Court decision in Attorney General of India vs. Amratlal Prajivandas, which supported the forfeiture of properties acquired through illegal means, even if held in the name of relatives. The court concluded that the petitioner failed to prove that the property was purchased from legally earned income and upheld the decisions of the Competent Authority and the Tribunal.

Conclusion:

The court rejected the petition, finding no merit in the contentions raised by the petitioner. The Competent Authority and the Tribunal were found to have acted within the legal framework of SAFEMA, and the petitioner failed to establish that the property was acquired through legal means. The petition was dismissed, and the ad interim relief granted earlier was vacated.