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2018 (2) TMI 578 - AT - Money LaunderingOffence under PMLA - valuables in the Lockers involved in money laundering - criminal act of money laundering to sabotage the demonetization policy announced by Govt. of India - period more than 180 days is already elapsed and the Enforcement Directorate has not passed any orders under section 5(1) of PMLA - Held that - In the present case there are no allegation against her involving in the schedule offence or under the PML Act, 2002. More than 180 days period already expired. No proceedings are initiated against the appellant. Only on the basis of apprehension jewellery ornaments are attached. No document and currency was recovered in the locker when it was search. The involvement of her brother cannot be attributed to her as nothing indiscriminating material was either recovered from her and from the locker. Both sisters are married sister. Thus, it is apparent that there are no reason to believe that the valuables in the Lockers are involved her in money laundering. Section 20(1) of PMLA absolutely bars and prohibits retention of the seized property beyond 180 days from the day on which such property was seized.It is apparent that the statutory requirement as to entertainment of reasonable belief in relation to section 17 of PMLA does not exist in the present case. Thus orders passed agaisnt assessee set aside and the lockers of the appellant is de-freezed accordingly by allowing the appeal.
Issues Involved:
1. Legality of the seizure and retention of the appellant's jewelry and ornaments under the Prevention of Money Laundering Act (PMLA). 2. Whether the jewelry constitutes "proceeds of crime" under PMLA. 3. Compliance with procedural requirements for "reasons to believe" under PMLA. 4. The appellant's rights to her property under the concept of "stridhan". Issue-wise Detailed Analysis: 1. Legality of the Seizure and Retention: The appeal was filed under Section 26 of the PMLA against the order dated 05.06.2017, which allowed the retention of the appellant's movable property (jewelry and ornaments) found in Locker No. 004262/003/005/0096. The jewelry was seized on 02.01.2017 and retained for further investigation under Section 5(1) of PMLA. The Enforcement Directorate did not pass any orders under Section 5(1) of PMLA within the stipulated 180 days, rendering the retention of the property beyond this period illegal. 2. Jewelry as "Proceeds of Crime": The appellant argued that the jewelry in question was her personal property ("stridhan"), acquired through gifts at the time of her marriage and over time, much before the demonetization date of 08.11.2016. The jewelry could not be termed as "proceeds of crime" as it was her stridhan. The appellant cited several judgments, including Pratibha Rani Vs. Suraj Kumar and Ashok Chaddha Vs. Income Tax Officer, to support her claim that a Hindu married woman is the absolute owner of her stridhan property. 3. Compliance with Procedural Requirements: The judgment emphasized the necessity of having "reasons to believe" in writing before authorizing the retention of property under Section 20(4) of PMLA. The Division Bench of the Delhi High Court in J. Sekar Vs. Union of India clarified that reasons must be explicit and based on material evidence, not mere assumptions. The appellant was not served a copy of the reasons to believe, which is a procedural lapse as established in previous cases like P.P Abdullah Vs. Competent Authority and CIT & Ors. v. Oriental Rubber Works. 4. Appellant's Rights to Property: The appellant's claim to her jewelry as stridhan was supported by legal precedents, which state that a Hindu married woman is the absolute owner of her stridhan and can deal with it as she pleases. The court noted that there was no evidence linking the appellant's jewelry to money laundering activities. The involvement of her husband in criminal activities did not implicate the appellant or her property directly. Conclusion: The Tribunal concluded that there were no sufficient reasons to believe that the jewelry was involved in money laundering. The statutory requirement of having a reasonable belief under Section 17 of PMLA was not met. The impugned order dated 22.07.2017 was set aside, and the appellant's locker was ordered to be de-frozen. The appeal and pending applications were disposed of without costs.
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