2024 (10) TMI 393 - AT - FEMA

Forfeiture of property under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act - Ownership and tenancy rights over the disputed property - alleged that the property in question was acquired out of the illegal earning by Dawood Ibrahim Sheikh - appellant, submitted that the property in question is a rented premises in her hands thus not liable to be forfeited. HELD THAT - The assessment order reflects as to how the property was occupied by Dawood Ibrahim Sheikh and thereupon huge amount was invested on it. They could not disclose the sources to invest huge amount of Rs.80 lakhs and in absence of which the Income Tax Department added entire investment in the hands of Dawood Ibrahim Sheikh and accordingly seizure of the property was ordered. The appellant has shown the property to be under the ownership of K.M. Pardawala. Even if it is assumed for the sake of argument that the property belongs to him, he or his legal heirs could have challenged the order of forfeiture of property. However, neither he nor his legal heirs ever challenged the seizure of property, rather challenge is made by the deceased appellant who claims herself to be not the owner but the tenant. The logical consequence of the above would be that while the alleged owner has not challenged the order of forfeiture of the property, the person having no ownership right is challenging it despite the fact that the property is rented out and the forfeiture may not affect because the tenant can be evicted by the means of law. The property in question was acquired by Dawood Ibrahim Sheikh by taking possession somewhere in the year 1990 and thereupon given to his sister and Rs.80 lakhs were invested on the property. Dawood Ibrahim Sheikh was subjected to assessment by the Income Tax Department and the amount spent on the property was added. Thus, argument of the appellant cannot be accepted. We have otherwise analysed the rent receipts recently submitted by the appellant to show regular payment of rent to K.M. Pardawala and now his legal heirs. The payments therein are not through cheques but seems to be in cash. The rent receipts further shows that at many places the receiver has not signed the receipt and even the signature of landlord differs. We are not commenting the way the receipts have been generated. The prayer was made by the respondents to allow them to lodge the prosecution against the appellant and now the legal heirs for production of receipts which are not trustworthy. The permission was sought to lodge the criminal case against them. Since certain receipts were produced even at the final stage of arguments, we would not preclude the respondents to take up the matter in reference to those receipts produced before the Tribunal. The Registry is directed to preserve the receipts produced by the respondents and if it is called upon for the investigation, if a criminal case is lodged by the respondents, then give it to the police. The conduct of the party should be such where one can depose confidence and not where the platform of Court/Tribunal is misused. We are not precluding the respondents to take the action in reference to the rent receipts produced before us at the time of hearing. We would not comment on the conduct of the legal heirs who produced the rent receipts but we are unable to depose our confidence therein.

Issues Involved:

1. Legitimacy of the forfeiture of property under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.
2. Ownership and tenancy rights over the disputed property.
3. Validity of investment claims and income tax assessments related to the property.
4. Procedural aspects concerning the appeal and representation of legal heirs.
5. Authenticity of rent receipts presented by the appellant.

Detailed Analysis:

1. Legitimacy of the Forfeiture of Property:

The appeal challenges the order dated 29.03.2005 by the Competent Authority, SAFEMA, Mumbai, which forfeited properties allegedly acquired through illegal earnings by Dawood Ibrahim Sheikh. The properties include premises at the 3rd Floor and terrace of Ismail Building, Mumbai, and Garib Nawaz Guest House. The forfeiture was based on the Act of 1976, following a show cause notice issued under Section 6(1). The appellant, Hasina Ibrahim Parkar, argued that the property was rented, not owned, and thus should not be forfeited. However, the Competent Authority concluded that the property was acquired using illegal earnings from Dawood Ibrahim Sheikh's activities, supporting the forfeiture decision.

2. Ownership and Tenancy Rights:

The appellant claimed tenancy rights, asserting that the property belonged to K.M. Pardawala, and provided rent receipts as evidence. The deceased appellant did not claim ownership but stated she was a tenant paying rent. The Tribunal noted that if the appellant was merely a tenant, the forfeiture should not affect her rights unless ownership was proven otherwise. The Tribunal found that the alleged owner, K.M. Pardawala, did not challenge the forfeiture, implying the appellant's challenge lacked merit.

3. Validity of Investment Claims and Income Tax Assessments:

The respondents argued that an investment of Rs.80 lakhs was made in the property, attributed to illegal earnings. The Income Tax Department's assessment for 1990-91 added the investment to Dawood Ibrahim Sheikh's income. The appellant failed to provide a lawful source for the investment, leading to the presumption that it was funded by illegal activities. The Tribunal upheld the Competent Authority's reliance on the income tax assessment to support the forfeiture.

4. Procedural Aspects Concerning the Appeal and Representation of Legal Heirs:

The appeal faced procedural challenges due to the appellant's death and incomplete representation of legal heirs. The Tribunal noted the delay in filing an application to bring legal heirs on record and the absence of all heirs, which could have led to dismissal. However, the Tribunal decided to address the appeal on its merits despite these procedural issues.

5. Authenticity of Rent Receipts:

The appellant presented rent receipts to demonstrate tenancy, but the Tribunal questioned their authenticity. Variations in signatures and unsigned receipts raised doubts about their credibility. The respondents suggested potential forgery and sought permission to investigate the receipts. The Tribunal directed the preservation of receipts for potential investigation but refrained from making definitive comments on their authenticity.

Conclusion:

The Tribunal, after considering all arguments and evidence, confirmed the Competent Authority's order of forfeiture. It found the appellant's claims unconvincing, particularly given the lack of challenge from the alleged owner and the questionable authenticity of rent receipts. The appeal was dismissed, reaffirming the forfeiture of the property under the Act of 1976.

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