2024 (4) TMI 686 - AT - Money Laundering

Money Laundering - provisional attachment order - Without there being any evidence to prove a case of money laundering by the appellant the order of attachment has been confirmed by the Adjudicating Authority - violation of principles of natural justice - HELD THAT - As per the accounting system payment towards the supply of material has to be made by the firm to whom supplies have been made. It cannot by a stranger firm unless proper arrangements in writing are made. The facts of this case are quite alarming. The transaction to deposit the amount in the bank account of the appellant was not under normal circumstances but was at the time of demonetization of money by the Govt. of India. Although the appellant is not an accused but the proceeds of crime has been channelized to him thus attachment cannot be held to be illegal. The detailed charge sheet has not been quoted which otherwise refers further facts as to how demonetized money was channelized in the bank accounts of the companies and ultimately it came in the account of appellant. The appellant no doubt submitted the invoices to show supply of cloths to Ajay Kumar Jain but he has not produced any material to show arrangement for payment towards the supply to Ajay Kumar Jain through the bank account of three non-existing companies. The appellant has shown his innocence for receipt of the money towards its supply to Ajay Kumar Jain but it cannot be accepted. The appellant was knowing receipt of money through the firms to whom he never supplied any material. There are no illegality in the impugned order - appeal dismissed.

Summary

Issues Involved:
1. Whether the Adjudicating Authority correctly confirmed the provisional attachment order.
2. Whether the appellant was involved in money laundering or received proceeds of crime.
3. Validity of the payment received by the appellant from non-existing companies.

Issue-Wise Summary:

1. Confirmation of Provisional Attachment Order:
The appeal was filed under \u/s 26 of the Prevention of Money Laundering Act, 2002, against the order dated 04.10.2019, confirming the provisional attachment order. The appellant argued that the Adjudicating Authority confirmed the attachment order without evidence of money laundering and ignored applicable legal provisions.

2. Appellant's Involvement in Money Laundering:
The appellant, engaged in the textile business since 1985, sold cloth to Ajay Kumar Jain and received payment through cheques. However, the payment was considered proceeds of crime as it came from non-existing companies' bank accounts created using fake documents. The appellant claimed no knowledge of the fraudulent activities and argued that the payment was for legitimate business transactions.

3. Validity of Payment from Non-Existing Companies:
The respondents contended that the money attached was tainted, and the appellant received payments from non-existing companies with whom he had no business transactions. The investigation revealed that demonetized money was deposited in these companies' accounts and then transferred to the appellant's account. The appellant argued that he was unaware of the fraudulent nature of these companies and received payment for legitimate supplies.

Judgment:
The Tribunal found that the appellant received payments from non-existing companies without any business transactions, indicating involvement in money laundering. The appellant's bank accounts were attached for sums of Rs. 15,737/- and Rs. 49,910/- in two appeals. Despite not being an accused in the FIR or charge sheet, the Tribunal held that the proceeds of crime were channeled to the appellant, justifying the attachment order. The appellant's claims of innocence were not accepted, and the appeals were dismissed. The Tribunal suggested that the appellant could seek legal remedies against Ajay Kumar Jain if necessary.