2025 (5) TMI 2099 - AT - Money Laundering

Money Laundering - attachment of properties - amassing assets disproportionate to the known sources of income - legitimate sources of income - HELD THAT - The attachment of the properties is for the value of the proceeds of crime which is for a different value than initially assessed at the time of registration of the FIR. Thus the ground raised by the appellants alleging attachment of properties disproportionate to the proceeds of crime is not made out. It is found that for the sale or transfer of the property the document is not a pre- condition and required to be placed before the Sub-Registrar for registration of the deed. Even if the property documents were seized possibility of sale transfer or alienation could not have been rule out rather it was likely to exist. It is necessary to state that the check period in this case is from the year 1980 till 2013 and has been indicated in the impugned order. The appellant on his own assumption taken the check period from the year 2009 till 2013. It seems to be based on some erroneous presumption and contrary to record. The properties attached by the respondents were acquired during the check period of 1980-2013. Thus there is no illegality in the attachment of the properties acquired during the check period. All the properties acquired in the name of Pragya Kumari have not been purchased by her as she was having no independent source of income. All the properties in her name were either purchased by her relatives or purchased through the alleged gifts received from them especially during the period 2008- 2011. Further there is no evidence produced in investigation with regard to the alleged gifts provided by Nand Kishore Sinha Prabhat Keshav and his wife Anjali Pandey Ravi Sundaram and his wife Renu Sharma and by others alleged to have given to Pragya Kumari except notarized affidavit which is not a valid document and can be made postdated. It is evident that the appellants could not satisfy the source of income. It is now understood how Vinita Kumari had supported her son and daughter for purchase of the properties when she herself was not having source of income. The position of fact was similar for father Nand Kishore Singh and brother Prabhat Keshav. However their matters would be dealt with separately. We find that the appellants Vinita Kumari Bhanu Sinha and Pragya Kumari have failed to prove their source of income to purchase the properties therefore it was rightly taken in the hands of Shishir Kumar. Thus there are no substance in the arguments raised by the appellants Vinita Kumari Bhanu Sinha and Pragya Kumari. Further scrutiny of the bank account of the appellant revealed that he was getting Rs. 13-14 thousand per month towards pension. If the monthly withdrawals are excluded the appellant had no source to purchase the properties and to extend financial assistance to others. In the light of the discussion made above it is found that properties in the name of the appellant Nand Kishore Singh had rightly been taken for determination of the disproportionate assets because not only property documents were found with the main accused during the course of search but the appellant was not knowing about the few properties and otherwise had not disclosed the source. The agriculture income has been referred to by the appellant and that has been considered by the Adjudicating Authority but finding value of the properties disproportionate to any income the PAO was rightly confirmed by the Adjudicating Authority. On the analysis of the bank account maintained with Union Bank of India there was cash deposits of Rs. 26.5 lakhs during the period of 2007-2011. No substantial deposit was observed in his bank account after the year 2011 which indicates that this account was utilized for putting cash and for acquisition of immovable property during the year 2010-2011 - One of the source to acquire properties by them was the gift money received from Prabhat Keshav who was not having the source for acquisition of property worth of more than Rs. 40 Lakhs and then to divert the money from Brick factory and at the same time to extend the gift to Vinita Kumari and Pragya Kumari. It is also that all the properties were acquired by him paying in cash without corresponding cash withdrawals from the bank account - even Prabhat Keshav failed to disclose the source for acquisition of immovable properties and accordingly we do not find any error in the order passed by the Adjudicating Authority. Conclusion - i) Attachment of properties under PMLA can exceed initial FIR quantification if subsequent investigation reveals additional disproportionate assets. ii) Attachment under Section 5(1) of PMLA was valid despite seizure of documents. iii) Properties held by wife son daughter father and brother were rightly attached due to failure to prove legitimate sources. There are no merit in any of the appeals. The appeals accordingly fail and are dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this case are:

• Whether the attachment of properties worth Rs. 2,71,98,661/- is justified when the initially alleged disproportionate assets were Rs. 1,01,66,405/-;
• Whether attachment under Section 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA) is valid despite prior seizure of property documents, which allegedly precluded alienation or transfer;
• Whether properties acquired prior to the check period (claimed as 2009-2013 by appellants) could be attached;
• Whether attachment of properties belonging to family members (wife, son, daughter) who allegedly had independent sources of income was lawful;
• Whether immovable properties belonging to appellant Nand Kishore Singh (father) and appellant Prabhat Keshav (brother) could be attached when they claimed independent sources of income;
• Whether the appellants have satisfactorily demonstrated legitimate sources of income for acquisition of attached properties.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of attachment exceeding initially alleged disproportionate assets

Legal framework and precedents: The Prevention of Money Laundering Act, 2002 empowers attachment of properties involved in money laundering. Disproportionate assets are assessed against known sources of income. Attachment must correspond to proceeds of crime.

Court's interpretation and reasoning: Although the FIR initially quantified disproportionate assets at Rs. 1,01,66,405/-, subsequent search operations and inventory-cum-seizure lists revealed immovable properties worth Rs. 2,27,98,542/- and movable properties worth Rs. 34,91,114/-, totaling Rs. 2,71,98,661/-. The Tribunal noted that the initial figure was preliminary and the final assessment included additional discovered assets.

Key evidence and findings: Detailed tabulation of properties acquired from 1997 to 2012 showed acquisition of 33 properties worth Rs. 2,75,92,305/-. The properties were held in the names of the main accused and family members. The modus operandi included acquisition in relatives' names and subsequent transfers to conceal ownership.

Application of law to facts: The Tribunal held that attachment of properties corresponding to the updated assessment of disproportionate assets was justified. The initial figure in the FIR was not final, and the attachment aligned with the actual proceeds of crime.

Treatment of competing arguments: The appellants argued that attachment was excessive and beyond the scope of the FIR. The Tribunal rejected this, emphasizing the evolving nature of investigation and discovery of additional assets.

Conclusion: The attachment of properties worth Rs. 2,71,98,661/- was lawful and proportionate to the proceeds of crime as finally assessed.

Issue 2: Validity of attachment under Section 5(1) of PMLA despite seizure of property documents

Legal framework: Section 5(1) of PMLA permits attachment of property involved in money laundering to prevent alienation or transfer.

Court's interpretation: The Tribunal rejected the contention that seizure of documents precluded transfer or alienation. It held that possession of documents is not a precondition for transfer; registration of sale deeds requires presentation of documents but absence of documents does not eliminate risk of alienation.

Key findings: The possibility of alienation or transfer existed despite seizure of documents, justifying attachment.

Conclusion: Attachment under Section 5(1) was valid and not vitiated by prior seizure of property documents.

Issue 3: Attachment of properties acquired prior to the check period

Legal framework: The check period defines the timeframe for assessing disproportionate assets under the Act.

Court's reasoning: The appellants erroneously assumed the check period as 2009-2013. The Tribunal clarified that the check period extended from 1980 to 2013 as per the impugned order.

Application to facts: Properties acquired during 1980-2013 were rightly included in the attachment.

Conclusion: Attachment of properties acquired prior to 2009 was lawful as they fell within the actual check period.

Issue 4: Attachment of properties belonging to wife, son, and daughter despite claimed independent sources

Legal framework: Under PMLA, properties acquired from proceeds of crime can be attached even if held in relatives' names. The burden lies on appellants to prove legitimate sources.

Facts and evidence: The appellants claimed independent sources such as unsecured loans, gifts, savings, and education-related income. However, investigation revealed:

• Loans/gifts were unpaid, undocumented, and unsupported by legal evidence;
• Son was a student till 2009 with no income;
• Properties were often acquired via transfers from relatives with no coherent source of funds;
• Medical daughter had no independent income and purported gifts were unsupported by credible evidence;
• Bank account scrutiny showed large unexplained cash deposits and transactions inconsistent with declared income;
• Properties were acquired by payments through cheques from accounts linked to main accused or family members, indicating use of unaccounted money.

Court's interpretation: The Tribunal found the appellants failed to prove legitimate sources of income for acquisition of properties. The properties were rightly considered as proceeds of crime held in their names to conceal ownership.

Conclusion: Attachment of properties held by wife, son, and daughter was justified due to failure to establish lawful sources.

Issue 5: Attachment of properties of appellant Nand Kishore Singh (father)

Facts and evidence: The appellant claimed salary as a retired government teacher, pension, and agricultural income as sources for two properties purchased post-retirement. He also claimed to have provided financial assistance to family members.

Investigation findings: Documents related to his properties were found with the main accused during search. The appellant could not satisfactorily explain source of funds or financial assistance given. Bank account scrutiny revealed large cash credits from unknown sources. He was unaware of some properties purchased in his name. His pension was modest and insufficient to justify property acquisitions.

Court's reasoning: The Tribunal held that the appellant failed to prove legitimate sources of income. The properties were rightly included in disproportionate assets. The agriculture income was considered but found inadequate.

Conclusion: Attachment of appellant's properties was lawful and justified.

Issue 6: Attachment of properties of appellant Prabhat Keshav (brother)

Facts and evidence: The appellant claimed monthly income of Rs. 30,000/- from business and disclosed sources for property acquisition including loans/gifts from relatives.

Investigation findings: Bank accounts showed large cash deposits inconsistent with declared income. No documentary proof of loans/gifts was produced. Properties worth over Rs. 40 lakhs were acquired despite modest income. Properties were acquired via cash payments without corresponding withdrawals. Transfers among family members suggested concealment of true ownership.

Court's reasoning: The Tribunal concluded that appellant failed to satisfactorily disclose source of income or funds for property acquisition. The properties were rightly attached as proceeds of crime.

Conclusion: Attachment of appellant's properties was proper and justified.

Additional observations: The Tribunal clarified that it does not record findings on commission of crime, which remains the domain of the Trial Court. It only forms a prima facie opinion on involvement of properties in money laundering.

3. SIGNIFICANT HOLDINGS

"It is no doubt that initially the disproportionate asset was assessed to a sum of Rs. 1,01,66,405/- but as per the inventory-cum-seizure list prepared during the course of search operation, documents relating to various immovable properties worth Rs. 2,27,98,542/- were recovered... The appellants could not give source to acquire those properties... The value was initially taken on a different amount but in the search operation when further property was discovered, there remained different figures from time to time and finally disproportionate asset was found for a sum of Rs. 2,71,98,661/-."

"For the sale or transfer of the property, the document is not a pre-condition and required to be placed before the Sub-Registrar for registration of the deed. Even if the property documents were seized, possibility of sale, transfer or alienation could not have been ruled out, rather it was likely to exist."

"The check period in this case is from the year 1980 till 2013... The properties attached by the respondents were acquired during the check period of 1980-2013. Thus, there is no illegality in the attachment of the properties acquired during the check period."

"The appellants Vinita Kumari, Bhanu Sinha and Pragya Kumari have failed to prove their source of income to purchase the properties, therefore, it was rightly taken in the hands of Shishir Kumar."

"The appellant Nand Kishore Singh... could not submit any evidence to prove the source and the financial assistance to the persons named above... The agriculture income has been referred to by the appellant and that has been considered by the Adjudicating Authority but finding value of the properties disproportionate to any income, the PAO was rightly confirmed."

"Prabhat Keshav failed to disclose the source for acquisition of immovable properties and accordingly we do not find any error in the order passed by the Adjudicating Authority."

Core principles established include:

• Attachment of properties under PMLA can exceed initial FIR quantification if subsequent investigation reveals additional disproportionate assets;
• Seizure of property documents does not preclude attachment under Section 5(1) to prevent alienation or transfer;
• Check period for assessing disproportionate assets must be determined from the record, not appellants' assumptions;
• Properties held in relatives' names can be attached if legitimate source of income is not satisfactorily established;
• Burden lies on appellants to prove legitimate sources for acquisition of attached properties;
• Prima facie opinion on involvement of properties in money laundering can be formed by Tribunal, without prejudging trial on commission of crime.

Final determinations:

• Attachment of properties worth Rs. 2,71,98,661/- was lawful and proportionate;
• Attachment under Section 5(1) of PMLA was valid despite seizure of documents;
• Properties acquired during 1980-2013 were rightly attached;
• Properties held by wife, son, daughter, father, and brother were rightly attached due to failure to prove legitimate sources;
• All appeals challenging attachment were dismissed for lack of merit.