2018 (5) TMI 1066 - AT - Money Laundering

Offence under PMLA - attachment orders - Held that - From the entire gamut of the above mentioned three appeals with regard to the two properties which were purchased by S.V. Srinivas for a total sum of Rs. 9, 30, 000/- which were given by him to his mother and wife. The allegation made against him is that he has declared in the Income tax Return for the period 2007-08 was only Rs. 5, 17, 888/- whereas the two properties the declared value is Rs. 9, 30, 000/-. The appellant has furnished the details in order to show that he has the sufficient amount at the time of purchasing the above mentioned two properties. Taking the face value of the allegation of the respondent without expressing anything as alleged he was only having Rs. 5, 17, 888/- whereas the value of two properties are Rs. 9, 30, 000/- in order to strike balance the difference of the same i.e Rs. 4, 12, 112/- is directed to be deposited by S.V. Srinivas with the respondent by way of Fixed Deposit Receipt for initial period of two years within four weeks and the same be renewed by S.V. Srinivas until the final order is passed in the prosecution complaint in the name of respondent. As far as the other allegation of the amount spent by him to purchase the property of Rs. 7, 00, 000/- is concerned the same is not correct as entire payment was paid by his father who is the husband of Saraswati ( one of the appellants) . The appellant shall also file an Undertaking by way of affidavit that in case the appellant is finally held guilty in the prosecution complaint he shall deposit a sum of Rs. 10.0 lac (ten lac only ) with the respondent as the said amount was spent by him for renovation of his father s property as per alleged allegation made in the prosecution complaint. Once the Fixed Deposit Receipt and Undertaking are filed by the appellant with the respondent within the time granted the above named two properties shall stand released. The said directions are passed without prejudice and I may also clarify that in case the prosecution complaint is decided in favour of S.V. Srinivas and his wife Reshma the said amount shall be released to them by the respondent immediately.

Summary

Issues Involved:
1. Attachment of properties under the Prevention of Money Laundering Act (PMLA).
2. Accusations and charges against the appellant.
3. Income and property acquisition justifications by the appellant.
4. Compliance with procedural and legal requirements for attachment orders.
5. Relevance of prosecution complaints and pending proceedings.

Detailed Analysis:

1. Attachment of Properties:
The impugned order involved the attachment of four properties belonging to a single family. The appeals specifically focus on two properties held by Smt. Saraswathi and Smt. Reshma. The properties in question were registered in 2007, with declared values of Rs. 4,80,000 and Rs. 4,50,000 respectively. The adjudicating authority confirmed the attachment of these properties on 21.02.2013.

2. Accusations and Charges:
The appellant, Mr. S.V. Srinivas, was accused in SPL CC 135/2011 and SPL CC 124/2014. The charges included conspiracy and fraudulent activities related to land acquisition through a company named ITASKA Software Development Pvt. Ltd. The Lokayuktha charge-sheet alleged that Mr. S.V. Srinivas and others misused their positions to gain wrongful profits and were involved in illegal transactions amounting to Rs. 87 crores.

3. Income and Property Acquisition Justifications:
Mr. S.V. Srinivas claimed that his income from 2007-08 was Rs. 5,17,880 and from 2010-11 was Rs. 43,18,104. He argued that the properties in question were purchased using legitimate income and agricultural earnings. The appellant provided detailed income sources, including professional fees, agricultural income, and remuneration from M/s. Chalapathy & Srinivas and ITASKA. He contended that the properties were gifts to his wife and mother, funded by his own income.

4. Compliance with Procedural and Legal Requirements:
The appellant argued that the provisional attachment order was passed without proper notice or opportunity to be heard, violating principles of natural justice. The adjudicating authority confirmed the attachment based on allegations without considering the appellant's detailed submissions. The appellant highlighted discrepancies in the respondent's calculations and interpretations of income and property values.

5. Relevance of Prosecution Complaints and Pending Proceedings:
The prosecution complaint under Section 45 of the PMLA was filed after the confirmation order, and proceedings were stayed by the High Court of Karnataka. The appellant argued that the confirmation order should be void as it did not comply with the amended Section 8(3) of the PMLA, which requires pending proceedings at the time of confirmation.

Conclusion:
The tribunal directed Mr. S.V. Srinivas to deposit Rs. 4,12,112 by way of Fixed Deposit Receipt and file an undertaking to deposit Rs. 10 lakhs if found guilty in the prosecution complaint. Upon compliance, the attached properties would be released. The appeals were disposed of with these directions, without prejudice to the final outcome of the prosecution complaint.