9911796707
TMI Blog2020 (11) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants within 180 days from the date of receipt of this order or from the date of the order when either of the parties brings it to the knowledge of this order. The appellants are directed to file appropriate application within thirty (30) days from today raising all the legal issues raised in these appeals, before the Adjudicating Authority, who shall after giving due opportunity to both the parties decides all the legal issues including the issue of reasons to believe - The Adjudicating Authority shall decide all the issues raised in the case, except the issues decided above, in accordance with provisions of sub-section 2 of Section 8 of PMLA,2002 and also record findings whether all or any of the properties attached are involved in money laundering under Section 8(3) of PMLA, 2002. This Tribunal has not expressed any opinion on merits of the source of income, earnings out of which or by means of which the appellants have acquired attached properties. However, during the course of proceedings before the Adjudicating Authority the attachments shall continue and both the parties shall maintain status quo in respect of the attached properties - Application disposed off. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant no.1 respectively. Since the facts of these appeals are interconnected and the issues involved are common, so the same are taken up together for a common order. By order dated 14.02.2020, the Hon‟ble Patna High Court has set aside the order dated 03.04.2019 passed by this Tribunal and directed to decide the pending appeals. The then Learned Single Member of this Tribunal, vide her order dated 03.04.2019 held: to keep this appeal in abeyance until the Special Court who has already taken cognizance finally disposes of the case. The interim orders are also vacated. Both the parties are directed to inform this tribunal as and when the final order is pronounced by the Special Court. In the present appeals the following properties have been attached: A. Immovable properties acquired in the name of Shri Bharat Yadav = ₹ 2,16,18,059/-:- (i) Khata No.39, Plot No. 3741AB, Thana No.14, Mauza-Jamalpur, Tauzi No.2724, Sheet No.39, Jamabandi No.138, Area 7.82 Dismal, District Registry Office-Munger, Bihar purchased vide Sale Deed No.3821 dated 10.11.2005 for a consideration amount of ₹ 7,00,000/- with charges of Stamp Duty- ₹ 73,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.2015 for a consideration amount of ₹ 13,00,000/- with charges of Stamp Duty- ₹ 1,85,094/- Reg. other fees-₹ 62,548/-, total amounting to ₹ 15,47,642/-. (viii) Khata No.92, Khesra No.1250, Tauzi No.445, Jamabandi No.91, Mouza-Bariyarpur, Thana No.93, Area 12.93 Dismal, District Registry Office-Munger, Bihar purchased vide Sale Deed No.874 dated 26.02.2016 for a consideration amount of ₹ 10,25,000/- with charges of Stamp Duty-₹ 2,82,600/- Reg. other fees-₹ 95,050/-, total amounting to ₹ 14,02,650/-. (ix) Khata No.44, Khesra No.636, Tauzi No.3135, Jamabandi No.9, Mouza-Chandanpura, Thana No.201, Area 50.75 Dismal, District Registry Office-Munger, Bihar purchased vide Sale Deed No.2377 dated 18.07.2014 [correction of Sale Deed No.693 dated 05.03.2013] for a consideration amount of ₹ 3,71,000/- with charges of Stamp Duty-₹ 23,260/- Reg. other fees-₹ 9,220/-, total amounting to ₹ 4,03,480/-. (x) Khata No.119, Khesra No.303 305, Tauzi No.3135, Jamabandi No.133, Mouza-Chandanpura, Thana No.201, Area 16 Dismal, District Registry Office-Munger, Bihar purchased vide Sale Deed No.2378 dated 18.07.2014 [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -. BACKGROUND OF THE CASE On the basis of letter dated 04.11.2013, sent by the Superintendent of Police, Economic Offences Unit, Bihar, Patna, the Respondent (ED) registered an Enforcement Case Information Report (ECIR) No. PTZO/07/2014 dated 07.01.2014. Along with the said letter a list of 27 FIRs lodged against the appellant no.1 Mr. Bharat Yadav was also sent. The details of the said 27 FIRs are listed at Page No(s).2-3 of PAO No.01/2018. It appears that the FIR No.121/10 dated 20.10.2010 which led to filing of Charge Sheet No.40/2012 dated 31.03.2012 for commission of offences under sections 302/34 of IPC and the FIR No.227/10 dated 28.05.2010 led to filing of Charge Sheet No.318/2013 dated 30.09.2013 for commission of offences under sections 420/414/465/467/468/471/120-B of IPC are taken into consideration for investigation by the respondent under the PMLA, 2002 as Section 302 with respect to FIR No.121/2010 Sections 420/414/467/471/120-B of IPC are Schedule Offences under PMLA, 2002. It is alleged that the appellant no.1 Mr. Bharat Yadav has acquired properties in his name as well as in the name of his family members from the proceeds of above mentioned crimes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ).121/10 227/10 were registered as scheduled offences under PMLA, 2002 against appellant no.1 Shri Bharat Yadav as mentioned in the Provisional Attachment Order dated 01.01.2018 and the appellant no.1 Mr. Bharat Yadav got acquitted in the said cases vide orders dated 11.06.2013 08.05.2018 i.e. prior to the passing of the confirmation of Provisional Attachment Order and that no appeals have been preferred till date by the State Government against those acquittal orders and that no case is registered under the scheduled offence against the appellant no(s).2 3 namely Smt. Satyabati Devi and Shri Amit Kumar. So far as Shri Amit Kumar, appellant no.3, is concerned his involvement is only with six bank accounts which are attached and the same accounts are with zero balance amount. It is further contended by the learned counsel for the appellants that PMLA is a penal statute and therefore, can have no retrospective or retroactive operation as Article 20(1) of the Constitution of India expressly forbids that no person can be tried and convicted of any offence except for the violation of a law in force at the time of the commission of the act charged as an offence and no person can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was set aside solely on the ground that court of competent jurisdiction has acquitted the accused in the schedule offence which are the basis of proceeding under PMLA and the judgments of this Tribunal are judgments dated 06.06.2018 in FPAPMLA/ 1620/BNG/2017, FPA-PMLA/1496/BNG/2016, FPAPMLA/ 1465/BNG/2016, and judgment dated 13.04.2018 in FPAPMLA/ 1748/DLI/2017. The above mentioned judgments of this Tribunal have been passed on the ground of acquittal by the court who originally tried the accused not by the Special Court under PMLA. (iii) Arun Kumar Mishra Vs. Directorate of Enforcement 1015 V AD (Delhi) 353 on the point of PMLA cannot have retrospective effect. The learned counsel for the appellants raised legal issue that reason to believe as envisaged under sections 5 and 8 of the PMLA has not been followed and the PAO and impugned order are mere mechanical in nature and that the respondent has not brought anything on record to show that the appellants are likely to dispose of the properties or valuable which are subject matter of the PAO. Therefore, the PAO and the impugned order liable to be quashed and set aside. In this regard he has relied on the following judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in O.C. No.873/2018. CASE OF THE RESPONDENT (ED): On the other hand, the Respondent in their reply to the appeal as well as in their written submission contended that the Adjudicating Authority on consideration of the complaint and the accompanying materials found sufficient reasons to believe that the appellants had committed an offence under Section 3 and/or were in possession of proceeds of crime and therefore, issued notices under Section 8 of PMLA and that the appellant no.1 has been charged for commission of offences punishable under various Schedule Offences under Indian Penal Code, 1860 and Arms Act,1959 since 1988 onwards and that admittedly the appellant no.1 has been convicted in Jamalpur P.S. Case No.50/98 and that the date of coming into force of PMLA,2002 is of no consequence and that it is the date of projection of tainted properties as untainted which is relevant and not the date of commission of offence as held in judgment of Hon‟ble High Court in Writ Petition (Cr.) No.325 of 2010 in the case of Harinarayan Rai Vs. Union of India. It is further contended that the burden of proof lies on the accused as required under section 24 of PMLA, 2002 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contentions of the learned counsel for the respondent in brief are as follows: Bharat Yadav was a habitual offender indulging in offences of robbery, dacoity (392/395/397 IPC), extortion (384/387 IPC) and indulging in offences under Arms Act under sections [25(1-B)(a)/26 of Arms Act, 1959], since 1988. It is revealed that Bharat Yadav have been charged for, inter-alia , indulging in offences under sections 302, 420, 414, 467, 471, 120 B of Indian Penal Code (IPC), 1860 and Bharat Yadav (appellant no.1) has been convicted in Jamalpur P S in Case No.50/1998 and further it is revealed from the letter dated 04.11.2013 forwarded by SP, EOU, Bihar, Patna that Bharat Yadav had acquired properties in his own name, as well as in the name of his wife Smt. Satyabati Devi (appellant no.2) and in the name of his younger brother Shri Amit Kumar (appellant no.3) from the proceeds of the above mentioned crimes, and invested said proceeds of crimes in various movable and immovable properties in an attempt to project them as untainted. Such investments represent the process of integration of the proceeds of the crime with the main stream economy and by investing the said proceeds of crime in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aling his proceeds of crime through these firms so as to project the same is untainted and Bharat Yadav in his statement has admitted that he has acquired immovable and movable assets in the name of his family members and his employee and further also stated that Income Tax Returns of these persons were filed on his directions which shows that Bharat Yadav is knowingly involved in concealment and transfer of proceeds of crime to project the same as untainted and that during investigation under PMLA, 2002 the appellants have failed to discharge burden of proof cast upon them as specified under section 24 of PMLA, 2002 which is reproduced as under: Section 24: - Burden of proof In any proceeding relating to proceeds of crime under this Act,- (a) In the case of a person charged with the offences of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and (b) In the case of any other person, the Authority or Court, may presume that such proceeds of crime are involved in money-laundering. and that the submission of Bharat Yadav that some cases have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.2019 in the matter of VGN Developers (P) Ltd. Anr. Versus Deputy Director, Directorate of Enforcement, Chennai . The respondent has filed written submissions and the relevant portions of which are reproduced below to avoid repetition; (a) The adjudicating authority on analysis of documents relating to acquisition of properties both movable as well as immovable, statement of bank accounts, LIC policies, Income Tax Returns, liquor shops operated by Bharat Yadav and statements recorded under Section 50 of PML Act found that properties acquired by appellants do not match with income shown in their Income Tax Returns. (b) Appellant no.1, Bharat Yadav, has acquired various immovable and movable properties after 01.07.2005 from his criminal activities in his name and in the name of his family members valued at ₹ 4,23,61,990/-. Bharat Yadav has acquired 10 immovable properties in his name valued at ₹ 2,16,18,059/- whereas four properties in name of his wife appellant no.2 valued at ₹ 1,64,75,500/-. During scrutiny of sale deed, it was found that cash was directly utilized for purchase of immovable properties and all these 14 immovable properties in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, in the conspiracy with others appellants. Immovable Properties There are 14 properties, ten in the name of Bharat Yadav and four in the name of Smt. Satyabati Devi, the wife of Bharat Yadav (O.C. internal pages 8 to 13). Total value of these properties was when valued by authorized and competent valuer who valuated ₹ 3,80,93,559/- (Bharat Yadav = ₹ 2,16,18,059/- + Satyabati Devi = ₹ 1,64,75,500/-). Mode of payment of consideration had not been mentioned in the Sale Deeds except in respect of five sale deeds. In case of these five sale deeds thus it is clear that proceeds of crime, derived/obtained as a result of criminal activity relating to scheduled offences is layered through appellants Smt. Satyabati Devi, Amit Kumar, M/s. Jai Ma Kali Construction and Other entities and proceeds of crime was projected as untainted property by the appellants. The proceeds of crime were routed through various entities by the appellant Bharat Yadav. The placement, layering and integration of proceeds of crime are show through charts/documents from internal Page No. O.C. 14 to page No. 26 (Volume III of Appeal). B. Movable Assets Total movable assets eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O.C.29/Appeal 175 (ii) M/s. Jay Maa Kali Construction ₹ 16,71,914/- O.C.30/Appeal 176 (iii) M/s. Rani Construction ₹ 5,824/- O.C.31/Appeal 177 (iv) M/s. Khusboo Construction ₹ 1,625/- O.C.29/Appeal 175 Total ₹ 38,66,773/- (a) Bharat Yadav stated in his statement that he has not filed the ITR during which no work was carried out (Appeal page 177, 178 OC page 31) (b) Income Tax Returns were filed without any basis. (c) ITR were created to project the tainted money as untainted. (d) ITR filed by appellant satyabati page 178-179 OC. Page 32. ITR was filed without any basis, however, income shown ₹ 49,60,718/- where as only one property was purchased for ₹ 57,87,000/-. Appellant Amit Kumar filed ITR for total income ₹ 12,11,750/-. Reasons to believe are given at page 1 to 10 of PAO (Page 209 to 218 252). Transfer, deal with, concealment is given at page 194 (APPEAL). LEGAL POINTS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting it as untainted. Therefore, the fundamental right of the petitioner guaranteed by Article 20(1) is not being violated . (c) In Sajan Singh Vs State of Punjab , reported in AIR 1964 SC 464 and A.K. Samsuddin Vs UOI , WP (C) No.15378 of 2016 , d/o 19.07.2016. (d) In these cases similar view was taken. (e) In this respect Section 3, Explanation (ii) made the position very clear. 3. Appellant Bharat Singh acquitted in many cases i.e. schedule offences In this regard position is made clear in Section 44 (1) Explanation, which is as under:- the jurisdiction of the Special Court while dealing with the offence under the Act, during investigation, enquiry or trail under this Act, shall not be dependent upon any orders passed in respect of the schedule offence . According to section 6 of the general clause act, if the amendment is of clarificatory nature than the amendment would operate retrospectively. Similar view was taken by the Hon‟ble Supreme Court in the matter of M/s. Brij Mohan Das Laxman Das Vs. Commissioner of Income Tax AIR 1997 SC. 1651 . This view was again confirmed by the Supreme Court of India in the matter of Zile Singh Vs. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended in acquittal. The appellant no.1 has filed the translated copy of the judgment dated 10.06.2013 passed by Ld. Additional District Session Judge, Special Court, Second Munger. The criminal case initiated under FIR No.227/2010 also ended in acquittal vide judgment dated 08.05.2018 passed by Ld. Chief Judicial Magistrate, Munger. On the basis of the acquittal in the criminal cases arising out of the aforesaid FIRs the appellants are claiming that the proceedings under PMLA, 2002 does not survive. The appellants have also referred to the amended provisions of Section 8(3)(b) of PMLA, 2002 and submitted that it is prospective in nature. To substantiate their submissions the appellants have relied on the judgments quoted above. FINDINGS ON EFFECT OF ACQUITTAL ON ATTACHMENT PROCEEDINGS UNDER PMLA, 2002 I have gone through the said judgments passed by the Hon‟ble High Court Delhi in M/s. Mahanivesh Oils Foods Pvt. Vs. Directorate of Enforcement, AIR 2016 Delhi-54 and other judgments passed by this Tribunal. The judgment in M/s. Mahanivesh Oils is under challenge before the Division Bench of Hon‟ble Delhi High Court wherein their Lordships vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Bureau of Investigation would provide a death knell to the proceedings of the respondent. In a given case, the complaint may emanate from a registration of a case involving scheduled offence. But the fate of the investigation in the said scheduled offence cannot have bearing to the proceedings under the Prevention of Money Laundering Act, 2002. Section 2(u) of the Act merely speaks of a criminal activity relating to a scheduled offence. Therefore, we are concerned with the criminal activity qua a scheduled offence. Section 3 deals with the offence on money laundering. Once the respondent is of the view that a person is involved in any process of activity connected with the proceeds of crime , which definition is very wide then he gets the power to investigate further. When such an investigation gets completed and found that there indeed was a money laundering, then the matter will have to be proceeded with before the jurisdictional Court, on a complaint being taken on file. Hence, there is no difficulty in holding that both the investigations can go on using the same channel while their waters need not mix all the time. In view of the aforesaid observation of the HonR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, the respondent has not filed any judgment in support of their contention nor rebutted the judgments relied on and cited by the appellants on the present issue. Similar, questions about reasons to believe was raised in the following matters: a) Judgment dated 23.08.2018 in the matter of M/s. Himachal Emta Power Limited Vs. UOI Ors. passed by the Hon‟ble Delhi High Court in W.P.(C) 5537/2018, b) Judgment dated 11.01.2018 in the matter of J. Sekar Vs. Union of India Ors. passed by Division Bench of the Hon‟ble Delhi High Court in W.P.(C) 5320/2017. c) Judgment dated 06.03.2020 in the matter of Seema Garg Versus Deputy Director, Directorate of Enforcement passed by Division Bench of Hon‟ble Punjab Haryana High Court at Chandigarh. I have gone through the aforesaid judgments the latest being the judgment passed by Division Bench of Hon‟ble High Court of Punjab Haryana in the matter of Seema Garg Ors. Versus The Deputy Director, Directorate of Enforcement. Several issues were raised and decided in all the three aforesaid matters and one of the important issues decided is on reason to believe . In the matter of J.Sekar Vers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely because power may sometimes be abused, it is no ground for denying the existence of power. The wisdom of man has not yet been able to conceive of a Government with power sufficient to answer all its legitimate needs and at the same time incapable of mischief. 58. A Court examining the constitutional validity of a provision, particularly on the ground of possible abuse of the powers thereunder, has to be satisfied that there are sufficient safeguards in the provision itself as introduced by the legislature. In that regard, if the second proviso to Section 5(1) PMLA is carefully perused, it will be noticed that there are several conditionalities that will have to be satisfied before the power thereunder can be exercised: (i) The power of provisional attachment can be exercised only by an officer of the rank not below the rank of a Deputy Director and such a Deputy Director or equivalent has to be authorized by the Director to exercise the powers. (ii) The officer has to record the reasons to believe that the property is (a) involved in money-laundering; (ii) if not attached immediately, the proceedings of confiscation under the PMLA will be frustrated; and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y mutually throw light on each other and result in a harmonious construction. 61. Later, in Union of India v. Dilip Kumar (supra), the Supreme Court reiterated, it is settled law that a proviso does not travel beyond the provision to which it is a proviso. Therefore, there has to be a satisfaction that the proceeds of crime‟ are likely to be concealed, transferred or dealt with in a manner that might frustrate the confiscation proceedings under the PMLA. This is, therefore, another safeguard as far as the second proviso to Section 5(1) PMLA is concerned. 62. The further safeguards are that the order of attachment by the Director or the Deputy Director, as the case maybe, is only for a period of 180 days to begin with. Further, within a period of 30 days after the passing of such order, the AA takes over under Section 8(1) PMLA. Even under Section 8(1) PMLA, the AA is not supposed to mechanically issue an SCN. The AA has to apply its mind and again record the its reasons to believe that any person has committed an offence under Section 3 PMLA or is in possession of proceeds of crime. Here again, two kinds of persons are envisaged: (i) a person who has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariness as pointed out by us above would apply to negate legislation as well under Article 14. 68. Therefore, the Court is not satisfied that the second proviso to Section 5(1) PMLA of the PMLA is so excessive and disproportionate so as to render it arbitrary. Reasons to believe 69. What should constitute the reasons to believe‟ that are to be recorded? In this context, it must be seen that even for the exercise of power under Section 5(1), the Director/Deputy Director/Authorized Officer has to record his reasons to believe in writing. That is the expression that is used in the second proviso to Section 5(1) PMLA as well. It is the same expression that is used even as far as the powers exercised by the AA under Section 8(1) PMLA are concerned. 70. The expression reasons to believe‟ under Section 26 IPC is understood in the sense of sufficient cause to believe that thing but not otherwise‟. In Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 (SC) , the Supreme Court in the context of the Income Tax Act, 1961 explained the expression as under: Since, the belief is that of the Income-tax Officer, the sufficiency of reasons for formin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re contained in the show cause notices themselves. They, however, in our opinion, do not contain any reason so as to satisfy the requirements of sub-section (1) of Section 68H of the Act. 72. Reasons to believe cannot be a rubber stamping of the opinion already formed by someone else. The officer who is supposed to write down his reasons to believe has to independently apply his mind. Further, and more importantly, it cannot be a mechanical reproduction of the words in the statute. When an authority judicially reviewing such a decision peruses such reasons to believe, it must be apparent to the reviewing authority that the officer penning the reasons has applied his mind to the materials available on record and has, on that basis, arrived at his reasons to believe. The process of thinking of the officer must be discernible. The reasons have to be made explicit. It is only the reasons that can enable the reviewing authority to discern how the officer formed his reasons to believe. As explained in Oriental Insurance Company v. Commissioner of Income Tax [2015] 378 ITR 421 (Delhi) , the prima facie formation of belief should be rational, coherent and not ex facie incorrec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or `rubber-stamp reasons' is not to be equated with a valid decision making process. m. It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harvard Law Review 731-737). n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, adequate and intelligent reasons must be given for judicial de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 8(1) PMLA is entitled access to the materials on record that constituted the basis for reasons to believe‟ subject to redaction in the manner explained hereinbefore, for reasons to be recorded in writing. (vi) If there is a violation of the legal requirements outlined hereinbefore, the order of the provisional attachment would be rendered illegal. (vii) There can be single-member benches of the AA and the AT under the PMLA. Such single-member benches need not mandatorily have to be JMs and can be AMs as well. In Himachal Emta Power Ltd. case the J.Sekar Judgment has also been followed. In Seema Garg matter also their Lordships has followed the J.Sekar matter and held as follows: 17. Q. Whether officer attaching property is required to record reason that property is likely to be concealed, transferred or dealt with in any manner which may frustrate proceedings relating to confiscation? Section 5(1) specifically requires that Director or any other officer authorized by him shall record reasons in writing on the basis of material in his possession that he has reason to believe that proceeds of crime are likely to be concealed, transferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances were not to exist, can the government still say that in its opinion they exist or can the Government say the same thing where the circumstances relevant to the clause do not exist? The legislature no doubt has used the expression circumstances suggesting . But that expression means that the circumstances need not be such as would conclusively establish an intent to defraud or a fraudulent or illegal purpose. The proof of such an intent or purpose is still to be adduced through an investigation. But the expression circumstances suggesting cannot support the construction that even the existence of circumstances is a matter of subjective opinion. That expression points out that there must exist circumstances from which the Authority forms an opinion that they are suggestive of the crucial matters set out in the three sub-clauses. It is hard to contemplate that the legislature could have left to the subjective process both the formation of opinion and also the existence of circumstances on which it is to be founded. It is also not reasonable to say that the clause permitted the Authority to say that it has formed the opinion on circumstances which in its opinion exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good faith and should not be a mere pretence. Hon‟ble Court has observed as under: The reasons for the formation of the belief contemplated by Section 147(a) of the Income-tax Act, 1961, for the reopening of an assessment must have a rational connection or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the I.T.O. and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the I.T.O. on the point as to whether action should be initiated for reopening the assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The reason for the formation of the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things it acts reasonably and in good faith and upon lawful and relevant grounds of public interest. The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good. There is nothing paradoxical in the imposition of such legal limits. It would indeed be paradoxical if they were not imposed. 33. The Court is entitled to examine whether there has been any material available with the State Government and the reasons recorded, if any, in the formation of opinion and whether they have any rational connection with or relevant bearing on the formation of the opinion. The Court is entitled particularly, in the event, when the formation of the opinion is challenged to determine whether the formation of opinion is arbitrary, capricious or whimsical. It is always open to the court to examine the question wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Appellant in the case of Sanjay Agarwal (Supra) while dealing with detention under COFEPOSA has held that simply taking the words of Section 3(1) of COFEPOSA and repeating it as part of grounds would not constitute a finding arrived after an application of mind. Delhi High Court has observed in Para 42 and 43 as under: 42. However, that is not the case here. It is apparent to the Court that the Detaining Authority was unclear about the grounds on which it should authorise the detention of Mr. Sanjay Agarwal. This is evident from the reading of para 34 where repeatedly the word 'or' is used to separate out the different grounds. This is suggestive of two things: first, the Detaining Authority was unsure if the facts brought on record constituted one or more of these grounds; and second, there was in fact non-application of mind as simply taking the wording of the Section 3 (1) COFEPOSA and repeating it as part of the grounds would not constitute a finding arrived at after an application of mind. 43. The differences in the wording used between the order of detention and the grounds of detention are too stark to simply be dismissed as typographical errors. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit limit of ₹ 2 Crore was used by M/s Jaldhara Export which fraudulently availed VAT refund. Firstly, the aforesaid fact was not even raised before Tribunal leaving aside Adjudicating Authority and it cannot be raised in appeal filed by Appellant. Secondly, the allegation against Jaldhara Export is that it took VAT refund without actual export of goods which has no relevancy with cash credit limit availed on the basis of security furnished by Appellant. It is not case of bank fraud, thus said argument is totally out of context, misconceived irrelevant, therefore rejected. 19. In view of above discussion, we summarise our findings as below: i) In case investigation is pending, filing of complaint against others is not sufficient to deprive any person from benefit of time cap of 365 days, ii) Property acquired prior to commission of scheduled offence i.e. criminal activity or introduction of PMLA cannot be attached unless property obtained or acquired from scheduled offence is held or taken outside the country. iii) Director or any other officer authorised by him is bound to record reasons which must be specific and mere reproduction of wording of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [offence under section 3 or is in possession of proceeds of crime], he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. The plain reading of the aforesaid provisions indicates that the reason to believe to be recorded in writing that any person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
