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TMI Blog2009 (3) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... t the petitioner shall file an affidavit of undertaking that he will not alienate, encumber or in any manner transfer the rights and interest of the property before this Court within two weeks from today. The second respondent has filed a counter affidavit dated 19.8.1999. 3. The facts leading to the forfeiture of the petitioner's property are as follows:- The petitioner purchased half share of the house property situated at No.4, Vannier Street, Chennai -1 by a registered sale deed dated 21.3.1966. The competent authority under section 3(b) read with Section 5 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (for short, 'SAFEMA') recorded reasons on 25.5.1977 as found in his proceedings in paragraphs 4 and 5, which read as follows: Para 4. I have therefore reason to believe that the following assets are illegally acquired properties:- i. House property bearing door No.4, Vaniar Street, Madras. ii. Amount due from T.S.A.Hameed Abdul Kader and T.S.A.Omar Farook (joint rent account). iii. Right, title and interest in proprietory business of Hameed Abdul Khader (firm). iv. Amount due from T.S.A.Ameer Hamsa. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the contention that the income tax assessment could be taken as evidence for source of income was valid and that is also an important piece of evidence. 10. In paragraphs 9 and 16, the Tribunal recorded the following finding:- Para 9. ... However, if the income tax assessment orders are the only evidence available with the appellant, then the Competent Authority has every right to look beyond the evidence so generated and see whether the sources of income from which the appellant was able to save so much and invest in such a huge proportion was from legitimate sources or from illegal activities. Para 16. .... here again the only evidence relied upon by the appellant in respect of his claim of withdrawal of cash is that it had been mentioned as a foot note in the statement of income filed before the Income Tax Officer. The Department of Income Tax had been utilised by the appellant for creating evidence in support of claim for which the appellant has no independent evidence whatsoever. If such a business was being carried out on a regular basis by the appellant then there should have been a bank account and this huge withdrawal should have been reflected in such a bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be exercised by him for any purpose under the Income Tax Act,1961 (43 of 1961), and the provisions of the said Act shall, so far as may be, apply accordingly. 14. The petitioner in his explanation had given details regarding purchase of properties, loans from creditors, remittances received under the NDRS, his half share in the house property purchased separately, the expenditure incurred in the renovation of the house property, investment in business, etc. The petitioner also submitted returns under the Income Tax Act, 1961 as well as under the Wealth Tax Act, 1957 and he produced the assessments made for the years 1962-63 to 1977-78. The petitioner had also made for the year 1966-67 declaration under the voluntary disclosure scheme disclosing his income and wealth and such amounts disclose under the VDS has to be credited to the books of account relating to any source of income to which it may relate and such income is not to be included in the total income for any assessment year in respect of which such declaration has been made. The petitioner's disclosure under the VDS was made before the show-cause notice was issued. If for any reason, the competent authority had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extending the provisions of SAFEMA to the relatives, associates and other holders is again a case of overreaching or of over-breadth, as it may be called a case of excessive regulation. It is submitted that the relatives or associates of a person falling under clause (a) or clause (b) of Section 2(2) of SAFEMA may have acquired properties of their own, may be by illegal means but there is no reason why those properties be forfeited under SAFEMA just because they are related to or are associates of the detenu or convict, as the case may be. It is pointed out that the definition of relative in Explanation (2) and of associates in Explanation (3) are so wide as to bring in a person even distantly related or associated with the convict/detenu, within the net of SAFEMA, and once he comes within the net, all his illegally acquired properties can be forfeited under the Act. In our opinion, the said contention is based upon a misconception. SAFEMA is directed towards forfeiture of illegally acquired properties of a person falling under clause (a) or clause (b) of Section 2(2). The relatives and associates are brought in only for the purpose of ensuring that the illegally acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct/detenu; (iii) any association of persons, body of individuals, partnership firm or private company of which such convict/detenu had been or is a member, partner or director; (iv) any individual who had been or is a member, partner or director of an association of persons, body of individuals, partnership firm or private company referred to in clause (iii) at any time when such person had been or is a member, partner or director of such association of persons, body of individuals, partnership firm or private company; (v) any person who had been or is managing the affairs or keeping the accounts of any association of persons, body of individuals, partnership firm or private company referred to in clause (iii); (vi) the trustee of any trust where (a) the trust has been created by such convict/detenu; or (b) the value of the assets contributed by such convict/detenu to the trust amounts, on the date of contribution not less than 20% of the value of the assets of the trust on that date; and (vii) where the competent authority, for reasons to be recorded in writing, considers that any properties of such convict/detenu are held on his behalf by any other person, such oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with on a separate footing. If such person proves that he is a transferee in good faith for consideration, his property even though purchased from a convict/detenu is not liable to be forfeited. It is equally necessary to reiterate that the burden of establishing that the properties mentioned in the show-cause notice issued under Section 6, and which are held on that date by a relative or an associate of the convict/detenu, are not the illegally acquired properties of the convict/detenu, lies upon such relative/associate. He must establish that the said property has not been acquired with the monies or assets provided by the detenu/convict or that they in fact did not or do not belong to such detenu/convict. We do not think that Parliament ever intended to say that the properties of all the relatives and associates, may be illegally acquired, will be forfeited just because they happen to be the relatives or associates of the convict/detenu. There ought to be the connecting link between those properties and the convict/detenu, the burden of disproving which, as mentioned above, is upon the relative/associate. In this view of the matter, the apprehension and contention of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons for such belief to be recorded in writing) that all or any of such properties are illegally acquired properties, it may serve a notice upon such person (hereinafter referred to as the person affected) calling upon him within such time as may be specified in the notice, which shall not be ordinarily less than thirty days, to indicate the sources of his income, earnings or assets, out of which or by means of which he has acquired such property, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties, as the case may be, should not be declared to be illegally acquired properties and forfeited to the Central Government under this Act. Para 7. Learned counsel submitted that it has been expressly stated in Section 6(1) that the reason to believe of the competent authority must be recorded in writing. In the counter-affidavit it has also been stated in para 8 that the reasons in the notice under Section 6(1) were recorded in writing. In our opinion this is not sufficient. Whenever the statute requires reasons to be recorded in writing, then in our opinion it is incumbent on the respondents to produce the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced below:- Para 13. So far as the contention based upon Sections 11 and 16 of Voluntary Disclosure Act is concerned we have already pointed out, while setting out the said provisions that the immunity conferred thereunder is of a limited character and that it is not an absolute or universal immunity. The immunity cannot be extended beyond the confines specified by the said provisions. There is also no reason to presume that the Parliament intended to extend any immunity to smugglers and manipulators of foreign exchange who are proceeded against under enactments other than those mentioned in Sections 11 and 16 of the Voluntary Disclosure Act. So far as the argument that the authorities under the Act have not properly considered the explanation offered by the appellants and the material produced by them, we must say that we are unable to agree with the same. Both the competent authority and the appellate authority have considered the same and held against the appellants. We see no reason to interfere with the concurrent findings in this appeal under Article 136 of the Constitution. We are equally unable to agree with the learned counsel for the appellants that the findings reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. In the said decision, the Division Bench held as follows:- ''We are of the view that when the Income-tax Officer appointed as Commission and on recording the evidence, has opined that what the witness had deposed was true, the non-consideration of the same by the competent authority and the Appellate Tribunal has vitiated the finding recorded by them. Further, the property involved is not of great value, inasmuch as, it is stated that it is of the value of ₹ 12,861 and out of this a sum of ₹ 5,040 has been found by both the authorities that it has been met from lawful sources. Therefore, we are of the view that there is no justification to remit the case after a lapse of 15 years. We, accordingly, hold that the petitioner has proved that he has purchased the property in question by the amount obtained from lawful source. Hence, the forfeiture is not warranted. Accordingly, the writ petition is allowed. The orders of the competent authority and the Appellate Tribunal are quashed. 26. Therefore, inasmuch as the respondents have not utilised their power vested under Section 6(1) read with Section 18 of the SAFEMA in order to impeach the claim made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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