2024 (8) TMI 403 - AT - Money Laundering

Seizure of Indian Rupees under PMLA, 2002 - allegation of involvement of the appellant in Hawala transaction. The first argument was that the appellant is not an accused in the FIR or ECIR thus the currency, apart from the mobile phone and the documents could not have been seized by invoking Section 17 of the Act of 2002 - HELD THAT - The material on record shows Hawala transaction of total sum of Rs.15 Crore and odd. It is also that the appellant failed to indicate as to from where he was getting and putting the money in the bank account. No material to show innocence of the appellant could be produced and otherwise the statement recorded under Section 50of Arun Muthu proved involvement of the appellant in Hawala transaction, that too at his instance or to facilitate Sukesh Chandrasekhar and his wife, Leena Paulose. Thus, the first argument raised by the appellant cannot be accepted. The second argument is in reference to the facts of the case. It is submitted that the amount was withdrawn by the appellant from time to time and has been reflected in the bank account - HELD THAT - The bank account shows withdrawal of Rs.6.5 lakhs and 8 lakhs on the relevant date and may be lying in the office for that reason but appellant has failed to clarify as to how the Company used to utilize the money after its withdrawal because if the matter is looked in sequence of events, the total transaction in the hands or through the appellant s company comes to Rs.15 Crore and odd. If the appellant was involved in foreign exchange business, the withdrawal of the amount should have been shown to have utilized for foreign exchange and for that to produce the document. The appellant has failed to do so - there are no case in favour of the appellant. Appeal dismissed.

Summary

Issues:
Challenge to the order confirming the seizure of Indian Rupees 15,66,340 under the Prevention of Money Laundering Act, 2002.

Analysis:
1. The appellant, an authorized money changer, had their office premises searched by the respondent based on suspicion of Hawala transactions. Despite cooperation and explanations, the currency was seized under Section 17 of the Act. The appellant provided detailed representations and documents to explain the source of the money seized, which was from bank withdrawals for business operations. The Adjudicating Authority confirmed the seizure, leading to the appeal.

2. The respondent introduced individuals to show a business relationship with the appellant, alleging Hawala transactions. The appellant, not named in the FIR or ECIR, argued against the seizure, presenting bank statements and justifying the source of the seized amount. The appellant claimed the money was part of the working capital and requested its return, but the Adjudicating Authority upheld the seizure order.

3. The respondent alleged involvement in Hawala transactions based on statements from individuals associated with criminal activities. The appellant's employee confirmed the recovery of the seized amount and incriminating documents. The investigation against the appellant was ongoing, with a prosecution complaint pending. The respondent urged dismissal of the appeal due to the ongoing investigation.

4. The Tribunal considered the submissions and perused the record, noting the involvement of the appellant in money transactions related to Hawala operations. The appellant's arguments regarding non-involvement as an accused and lack of connection to the seized amount were rejected. The Tribunal analyzed Section 17 of the Act, emphasizing that possession of proceeds of crime could lead to seizure, even if not directly linked to the accused.

5. The Tribunal addressed the appellant's arguments concerning the withdrawal and utilization of funds, highlighting the lack of evidence showing legitimate use for foreign exchange transactions. Despite bank records reflecting withdrawals, the appellant failed to demonstrate proper utilization of the funds. The Tribunal found no merit in the appeal, as the appellant's defenses were insufficient to counter the allegations of involvement in Hawala transactions. The appeal was dismissed based on the lack of compelling arguments presented during the proceedings.