Allowed

FPA-6/BOM/2012 of Neelima Lavana v/s The Competent Authority, Mumbai

ATFP11 Nov 2016FPA-6/BOM/2012

Case brief

AI extract

What is this about?

The Appellate Tribunal allowed the appeal and set aside the forfeiture order. It held that service of notice to the convict at the appellant's address was invalid and no nexus between illicit funds and seized property was proven. Appellant demonstrated licit sources from UAE business.

What did the court decide?

Impugned order dated 30.01.2012 forfeiting the property is set aside with consequential relief.

FPA-6/BOM/2012 of Neelima Lavana v/s The Competent Authority… — Money Laundering | ATFP (2016)

¶1

APPELLATE TRIBUNAL

¶2

(Under Section 12 of SAFEMA, 1976 as Amended by Finance Act, 2016)

¶3

Date of decision: 11^th November, 2016.

¶4

FPA-6/BOM/2012

¶5

Neelima Lavana … Appellant

¶6

Versus

¶7

The Competent Authority, Mumbai

¶8

… Respondent

¶9

Advocates/Authorized Representatives who appeared

¶10

For the appellants	: Shri B. Seshagopalan, Advocate
For the respondent	: Shri R.N. D‟souza, Joint Commissioner
	Shri Ratnesh Srivastava, Inspecting Officer
CORAM
JUSTICE MANMOHAN SINGH	: CHAIRMAN
SHRI KAUSHAL SRIVASTAVA	: MEMBER
SHRI G.C. MISHRA	: MEMBER

¶11

JUDGEMENT

¶12

KAUSHAL SRIVASTAVA

¶13

FPA-6/BOM/2012

¶14

The present appeal has been filed by Ms. Neelima Lavana, wife and Legal Heir of Late Dhiraj Ratilal Thakkar (hereinafter referred to as Affected Person No. 2 or AP-2/Appellant) against Order of Forfeiture dated 30.01.2012 passed by the Competent Authority, SAFEMA, 1976 Mumbai. forfeiting the property namely Flat No. 602, 6^th Floor, Oyster Shell Cooperative Housing Society, Plot No. 931/1, Off Juhu Tara Road, Juhu Beach, Mumbai-400 049 (for short, „the said property‟/‟the subject property‟). This is the second round of litigation in the case. Earlier, the property had been forfeited by the Competent Authority vide order dated 12.01.2000 which was challenged in appeal before this Tribunal and the said order was quashed by the Tribunal‟s order dated 11.8.2009 with all consequential benefits. Subsequently, after some enquiries, a fresh Show

¶15

FPA-6/BOM/2012

¶16

Page 1 of 29

¶17

Cause Notice dated 3.09.2010 was issued which culminated in the impugned order dated 30.01.2012 forfeiting the said property. The present appeal is filed against the impugned order dated 30.01.2012.

¶18

At this stage, the brief facts of the case may be referred. The brother of the appellant/AP-2, Vijay Ratilal Thakkar (hereinafter referred to as the Convict/AP-1) was convicted under the Customs Act for smuggling foreign currency abroad from the country in 1985 equivalent to Rs. 3, 84,080/-. The said Shri Vijay Ratilal Thakkar (AP-1) was tried in the Court of Chief Metropolitan Magistrate, Mumbai and was sentenced to undergo two months rigorous imprisonment and a fine of Rs. 25,000/- and in default thereof, six months rigorous imprisonment. In terms of Section 2(2) (c) of SAFEMA, 1976, and being covered under the definition of „relative‟ under the Act, the Competent Authority initiated forfeiture proceedings against Shri Dhiraj Ratilal Thakkar (AP-2), being the brother of AP-1, by issuing show cause notice dated 16.10.1992 calling upon him to indicate the sources of his income, earnings or assets out of which and by means of which the appellant had acquired the said property. The proceedings resulted in forfeiture of the said property vide the order dated 12.01.2000 by the Competent Authority.

¶19

AP-2 assailed the order of forfeiture dated 12.01.2000 in this Appellate Tribunal interalia , on three main grounds namely (i) that the initiation of proceedings under Section 6(1) of SAFEMA vide the show cause notice dated 16.10.1992 did not satisfy the conditions laid down under the provisions of SAFEMA, 1976; (ii) that there was no connection between the business of AP-2 with that of late Vijay Kumar Ratilal Thakkar (AP-1), his brother, and (iii) that the payments for purchase of the subject property were made through Bank Drafts/regular banking channels from the money earned from his independent licit business in UAE. The source of the funds for purchasing the forfeited property was

¶20

FPA-6/BOM/2012

¶21

Page 2 of 29

¶22

also explained with supporting evidence and that the Competent Authority erroneously rejected the contentions.

¶23

The forfeiture order dated 12.01.2000 was quashed by this Tribunal‟s order dated 11.08.2009 on account of non issue of the Show Cause Notice to the convict Shri Vijay Kumar Ratilal Thakkar (AP-1) coupled with the absence in compliance with jurisdiction fact. The following extracts from the Tribunal‟s said order may be referred in this context:

¶24

“14. We have heard the learned counsel/representative for the parties at length and perused the material on record and the law laid down by the country. It is undisputed fact that the show cause notice was issued to Shri Dhiraj Ratilal Thakkar (the brother of the Convict) only and not to the convict Shri Vijay Kumar Ratilal Thakkar under Section 6(1) of the SAFEMA Act, 1976.

¶25

15. We find that there is no allegation by the Competent Authority either in the Show Cause Notice or in the reasons to believe dated 16.10.1992 issued to the Appellant Shri Dhiraj Ratilal Thakkar that the source of funds for purchase of the impugned properties were out of illegal income from the prejudicial activities indulged by the convict Shri Vijay Kumar Ratilal Thakkar. We are also at a loss to find as to how one can presume in the absence of any specific allegation in the show cause notice that the impugned properties of the noticee was acquired out of illegal income/property of the convict which is statutory requirements as per the judgments of Supreme Court in the case of Fatima Mohd. Amin and Aslam Mohd. Merchant. Such allegation as well as nexus ought to be found in the show cause notice/reasons to believe formed on the basis of material brought on record.

¶26

16. The recent Division Bench judgment of High Court of Madras in the case of V. Mohan Vs. I.T.O., Kumabkonam (rendered under SAFEMA) is squarely applicable to cases where no show cause notice has been issued to the convict/detenue but only to the relatives. The Hon’ble High Court has held that the Competent Authority had no jurisdiction to issue notice under Section 6 to the relative when no notice under Section 6(1) has been issued to the convict/detenue.

¶27

17. In terms of the judgment of the Hon’ble Supreme Court, Aslam Mohd. Merchant Vs. Competent Authority, Mumbai in which their Lordships have categorically held that prior to issue of Show Cause Notice, nexus of income of the convict/detenue with that of impugned properties of the noticee had to be established and thereafter if the Competent Authority had reasons to believe, the reasons have to be recorded in writing on the basis of material produced before him, that the properties were illegally acquired properties having nexus with income of convict, a person affected would thereafter be called upon to discharge his burden provided a link or nexus is traced between the holder of the property proceeded against and income/property of detenue. The judgments of the case of Amritlal Prajivandas, Fatima Mohd. Amin and PP Abdulla are applicable to the fact of the present case.

¶28

FPA-6/BOM/2012

¶29

Page 3 of 29

¶30

18. We, therefore, find that non issue of show cause notice to the convict Shri Vijay Kumar Ratilal Thakkar coupled with the absence in compliance with jurisdiction fact, and there being no allegations whatsoever in the show case notice that the impugned properties were acquired out of the illegal income generated out of the prejudicial activities of the convict goes to the root of the lack of jurisdiction of the Competent Authority to issue show cause notice under SAFEMA, 1976 and in the absence of proper jurisdiction all the subsequent proceedings namely forfeiture of properties vide his order dated 12.01.2000 are vitiated.

¶31

19. We accordingly quash the impugned forfeiture order dated 12.01.2000 of the Competent Authority with all consequential benefits.

¶32

20. During the course of the arguments, the authorized representative of the respondent sought time to issue fresh show cause notices to the concerned persons on the basis of records and material available in their file. No such permission is required from this Tribunal. The Competent Authority is free to take action whatever legally permissible.”

¶33

( Emphasis supplied)

¶34

During the pendency of the above appeal, and subsequent to the death of Dhiraj Lal Thakkar (AP-2) on 03.06.2007, he was substituted by his wife and legal heir Ms. Neelima Lavana as the appellant.

¶35

Subsequent to the above order of the Appellate Tribunal, the office of the Competent Authority Mumbai while examining the issue of initiating any fresh proceeding in the matter, vide the letter dated 9.2.2010 asked the appellant (AP-2) to explain with original document/papers his legal sources of income. The reply was furnished by AP-2 vide letter dated 27.04.2010/03.06.2010 and it was stated that the originals of the documents (authenticated by Embassy of India, Abu Dhabi, UAE) regarding the appellant‟s commercial activity in Abu Dhabi since 1984 and the source of funds for the acquisition of the subject property had been submitted before the then Competent Authority in 2000. It was also submitted that if still insisted, the originals of the certificates shall also be submitted on further directions.

¶36

5.1 In the reply and for better appreciation of the facts, it was submitted in brief that the appellant (AP-2) (Late) Dhirajlal Thakkar along with his wife Smt. Neelima Lavana, the present appellant, were /are FPA-6/BOM/2012 Page 4 of 29

¶37

Page 4 of 29

¶38

settled in Abu Dhabi, UAE since 1984; that they were having business in Henna and cosmetics by name and style of “Indian Henna Art Centre” at Abu Dhabi from 08.11.1984 till date. The said business was run as a partnership business and as per the partnership agreement 8.11.1984, the firm had three partners namely Saud Mohamed Abdhul Waheed , a UAE National along with the AP-2, Dhirajlal Thakkar and his wife Smt. Neelima Lavana, the present appellant. As required under the UAE Laws, this firm was duly registered with the Chamber of Commece and Industry of Abu Dhabi having registration No. 6669 dated 18.11.1984. The professional license was issued by the Department of Abu Dhabi Municipality and Town Planning vide Registration No. 16787 dated 19.12.1984. From the year 1989, additional permission for Ladies Saloon and Ladies Dresses was also granted.

¶39

5.2 Along with the letter, copies of duly authenticated Financial statements and Auditor and Accountant‟s reports for the years ending 31.12.1985, 1986, 1987 and 1988 as audited by Kothari Auditors and Accountants, Sharjah, UAE was also submitted in terms of which the net profits of the firm for the years 1985 to 1988 were UAE Dirhams 2,30,045/-, 5,50,801/-, 5,58,952/and 9,09,716/respectively. Withdrawals by the partners AP-2 and his wife Smt. Neelima Lavana, the present appellant from the partnership firm during this period were UAE Dirhams 1,50,000/-, 5,02,500/- 5,32,240/- and 8,81,000/- respectively.

¶40

5.3 As regards the acquisition of the subject property, it was stated that the subject property was acquired by public auction conducted by Income Tax in July 1990 at an amount of Rs. 23.20 lakhs. Out of this amount, an amount of Rs. 2 lakhs was deposited by him (AP-2) on the date of Auction viz. 25.07.1990 by way of DD‟s against debits amounting to Rs. 60,000/-, 115000/- and 25,000/- from his NRO/NRE accounts maintained with ANZ Grindlays Bank and Bank of Baroda, Mumbai

¶41

FPA-6/BOM/2012

¶42

Page 5 of 29

¶43

respectively. Certificates from the respective banks and/or the bank statements were also produced wherein apart from certifying the withdrawals of the above amounts from the related NRE/NRO accounts of Dhirajlal Thakker (AP-2), it was also stated that these accounts are funded through regular remittances from abroad through regular banking channels. Later, an amount of Rs 21.20 lakhs was paid by the appellant on 01.08.1990 out of the loan of Rs. 24 lakhs credited to the NRO account No 10261 of AP-2 with SBI NRI Branch Tulsiani Chember, Mumbai-21 against security of NRI Bonds, 1988 of AP-2 aggregating to US Dollars 1,60,000/-. Two separate certificates/letters from Deputy General Manager, SBI NRI Branch Bombay were also produced in respect of the said loan account and disbursements there from. One letter is dated 1^st August, 1990 and conveys the sanction of demand loan of Rs. 24,00,000 to the appellant AP-2 against security of NRI Bonds aggregating US $ 1,60,000/-. Further the certificate dated 5^th March, 1993 certifies disbursement of the above loan by way of credit to the NRO account No. 10261 of the appellant and the issue of two bankers‟ cheques for Rs. 21.20 lacs (in the name of Zonal Accounts Officer, CBDT, Mumbai) and for Rs. 1.81 lacs (favoring Superintendent Stamps, Bombay) from the said account. It is also stated in the certificate that as per the RBI‟s Circular No. A.D.(MA Series) No. 2 dated 17.02.1989, NRIs are permitted to obtain loans/advances against the security of NRI bonds for the approved purposes including purchase of residential flat for the residential use of the non-resident bond holders.

¶44

5.4 The said demand loan account of Rs. 24 lakhs was closed by AP-2 pre-maturely on 01.10.1992 by en-cashing the NRI Bonds of a face value of US Dollar $60,000/- with interest @ 9.5% accrued thereon amounting to US Dollars 23,470 which on conversion at the prevailing exchange rate of Rs. 29.45 /US Dollar came to Rs. 24,99,388.90 which was credited into the demand loan account of AP-2. Interest to the FPA-6/BOM/2012 Page 6 of 29

¶45

Page 6 of 29

¶46

demand loan account was paid from time to time by transfer from his NRE and NRO accounts maintained with ANZ Grindlays Bank, MG Road, Mumbai. Thus, it was submitted that the subject property was acquired by AP-2 entirely with his own licit funds and there was no nexus in any manner whatsoever of the said property to the prejudicial funds of the convict, AP-1.

¶47

The competent authority was however not satisfied with the explanation of AP-2 regarding licit source of his funds for acquisition of the subject property, and issued show cause notice dated 3.9.2010 under Section 6(1) of SAFEMA to the appellant (AP-2) as well as to the Convict, AP-1. The address of the AP-1 as indicated in the notice addressed to AP-1 was the same address as that of AP-2. Alongwith the show cause notice, “Reasons to believe” recorded by the Competent Authority as to why it was concluded that the subject property was an illegally acquired property in terms of the provisions of SAFEMA, 1976 and liable for forfeiture, were also annexed.

¶48

The reply to the show cause notice was furnished by the appellant vide letter dated 23.12.1990. The main submissions made in the reply of the appellant vide the said letter were as follows:

¶49

(i) In the judgments/orders (as mentioned at (ii) below), it had been held that when the funds have been brought by the Affected Person (who are/were not either the detenu/convicts) from their own earnings abroad by inward remittance by legal banking channels and in the absence of any direct nexus of the property sought to be forfeited with the funds of the detenu/convict, the SAFEMA was inapplicable. As the subject property had been acquired from

¶50

FPA-6/BOM/2012

¶51

Page 7 of 29

¶52

the appellants licit funds earned abroad, the same could not

¶53

be forfeited under SAFEMA.

¶54

(ii) The respondent lacked jurisdiction to inquire into the details of income earned abroad under SAFEMA, as laid down by the Hon‟ble High Court of Kerala in the case Kannancherry Abdu (dated 24.02.2009 in W.A Nos. 1645, 1658 and 1659) of 2007), duly followed by the Hon‟ble Tribunal in Showkath Ali (FPA No. 12 & 13/MDS/2009 dated 06.09.2010) and by way of binding precedent by the Respondent himself in the case of Banabhai Kalpabhai Patel (dated 09.05.2003 in FPA No. 15,16&17/BOM/2000) and categorical conclusion arrived in the matter of second show cause notice issued in the matter of Aslam Merchant by the Respondent himself vide order no. CA/MUM/III/NDPSA/01/2010-11 dated 08.11.2010. It was contended that the issue of Show Cause Notice was not only arbitrary but also against binding precedent in a similarly situated circumstance. The details brought on record with regard to source of income furnished by the appellant at the time of formation of reasons to believe were ignored despite calling the details prior to issuing notice.

¶55

(iii) Non issue of show cause notice (to the convict) is not procedural mistake as concluded by the respondent against the ratio of the judgment of High Court of Chennai and the order of the Appellate Tribunal while quashing the earlier forfeiture order and remanding the subject matter.

¶56

FPA-6/BOM/2012

¶57

Page 8 of 29

¶58

(iv) The address of Late Vijay Thakkar (AP-1) shown in the show cause notice at the same address as that of the Appellant at Mumbai is totally incorrect as the convict never ever stayed at the address of the Appellant. These facts had been brought to the notice as early as in 2001 but disregarding these facts, the address of AP-1 in the present Show Cause Notice was shown the same as that of AP-2 though there was no material with the Deptt. to take such a view and that the material in this regard should be furnished to the appellant.

¶59

The proceedings resulted in passing of the impugned order dated 30.1.2012 forfeiting the said property.

¶60

The present appeal against the impugned order dated 30.01.2012 has been filed by the present appellant Ms. Neelima Lavana being the wife and legal heir of AP-2, who expired on 03.06.2007. For ease of convenience, the reference to AP-2 in this order also includes the reference to the present appellant Ms. Neelima Lavana. The main grounds of appeal raised by the appellant in the appeal are as follows:-

¶61

A) The impugned order forfeiting the property is per se illegal, void, ab-intio as being lacking in jurisdiction and totally opposed to the binding precedents of the High Court of Kerala, this Hon‟ble Tribunal and the competent authority/respondent‟s own acceptance of interpretation of the binding precedents in the case of Bhanabjai Kalphabhai Patel and Mohd. Aslam Merchant (similarly situated persons).

¶62

B) The Respondent presumed and assumed that the jurisdictional issue is a procedural issue overlooking the judgments of the

¶63

FPA-6/BOM/2012

¶64

Page 9 of 29

¶65

High Court of Chennai and of Mumbai and the earlier forfeiture order of this Tribunal while quashing the order in the instant case. Therefore, the Respondent‟s interpretation as procedural issue is a self serving purpose to cover up bypassing of statutory requirements under Section 6(1) of SAFEMA, 1976.

¶66

C) The appellant further submitted that the Respondent is malafidely misreading that on re-investigation a fresh show cause notice was issued to Aslam Mohamed Merchant and in view of the said principle, a fresh show cause notice was issued in the present case. The Appellant respectfully submits that non issue of show cause notice to convict has not been the issue in Aslam Mohd Merchant case and as per the observation of Respondent in page No. 2 and 3 of the impugned order it was only on re-investigation by him a link was established and a show cause notice was issued. In other words the Respondent is fully aware that it was only on re-investigation, a show cause notice can be issued. However, such lawful procedure was not followed in the instant matter for the simple reason that the reply dated 27.4.2010/3.6.2010 explaining the source of income (called for vide letter dated 9.2.2010) has not been considered let alone re-investigating the matter afresh. The Appellant further submits that the Respondent did not find time to ascertain the last known address of the convict (though available in his own records) at the time of issue of show cause notice such is the respect to law declared, sorry state and standard of so called lawful investigation undertook/required to be taken by the Respondent. The Appellant submits that the issue of show cause notice to the convict at the address of the Appellant is nothing but colourable exercise as he had already decided to forfeit the property of the Appellant by any dubious

¶67

FPA-6/BOM/2012

¶68

Page 10 of 29

¶69

means just because she was not pliable. The Appellant submits that issue of show cause notice without any re-investigation or taking into account of the explanations sought prior to issue of show cause notice is nothing but illegal exercise by him just to ensure the convict and his legal heirs stay away from joining his so called proceedings. On this simple and only ground of faulty illegal notice, the forfeiture order needs to be set aside and quashed.

¶70

D) Each and every amount of investment in the immovable property has been duly brought to the notice of the Competent Authority along with period of such investment with documentary evidence not once but twice while filling replies dt. 10.3.2010, 23.3.2010 and 27.4.2010/3.6.2010 and on all dates of hearing. The Appellant submits that even the Show cause notice, though required under section of 6 of SAMEFA, is silent on this crucial issue vis-a-vis the known source of income of the holder then. The Tribunal and various courts have never hesitated to quash such a case as there were no material for coming to the reasonable belief to issue show cause notice. The Respondent has completely failed to appreciate that subjective satisfaction and reasonable belief are not synonymous but totally different.

¶71

E) The actual import of the judgment of the Kesar Devi and Noor Aga that the initial burden of proof had to be discharged by the respondent at the time of issuing show cause notice and then only the same would shift to the appellant has not been followed while issuing the show cause notice.

¶72

F) The operation of section 8 of SAFEMA, 1976 and the discharge of burden of proof would come into play only when there is

¶73

FPA-6/BOM/2012

¶74

Page 11 of 29

¶75

establishment of direct nexus in the show cause notice and conclusion of the respondent that the appellant did not discharge burden of proof under section 8 is due to ignorance of interpretation of judgment of Apex Court in the case of Aslam Mohd Merchant and Noor Aga and various other judgments rendered earlier.

¶76

G) The impugned order was passed after 2 and half months from the date of the last hearing and it is not known as to how the Respondent could remember all the finer oral submissions in the absence of any detailed hearing note. The delay in passing the order lately without any valid reasons is contrary to advisory issued by the Ministry of Finance, Govt. of India, New Delhi to the all the CESTAT to pass order in any event within one month from the date of hearing.

¶77

H) The respondent‟s observation about the Money laundering activity is nothing but yet another misreading of facts. It may perhaps be applicable to the person who is caught with smuggling activities and indulging in any Foreign Exchange violations. The appellant‟s husband has never ever been involved in any such activities and there is nothing on record that the convict had any connection/nexus with him. Infact till date there is no allegation from any other department that the amounts lying in the NRI bonds which was the source of funds of the appellant‟s husband is tainted money. The Respondent forgot for a moment that in UAE the transactions are in cash mostly and no record need to be kept as per the statutory requirement and that was the import of the judgment of High Court of Kerala and this Tribunal. It is surprising the Respondent who applied the said judgement in favour of Aslam

¶78

FPA-6/BOM/2012

¶79

Page 12 of 29

¶80

Mohd. Merchant and Bhanabhai Kalphabhai Patel has forgotten

¶81

his own stand so soon despite being brought to his notice.

¶82

During the hearing of the appeal on 26.9.16, Shri B.Shesagopalan, Advocate learned counsel for the appellant challenged the impugned order mainly on three grounds as detailed below.

¶83

9.1 Firstly, the impugned order was non-sustainable as the show cause notice dated 03.09.2010 issued under section 6(1) of SAFEMA addressed to both AP-1 and AP-2, with a view to acquire the jurisdiction and overcome the objection on account of which the forfeiture order was set aside by the Tribunals order dated 11.08.2009 in the first round of litigation, was not a valid show cause notice to the convict AP-1. This is for the reason that though addressed to AP-1, the address of AP-1 shown therein is that of AP-2 and no basis for such action was furnished. He submitted that though the convict Late Vijay Kumar Thakkar (AP-1), was a brother of the appellant (AP-2), their businesses were totally separate and AP-1 had never stayed with the appellant (AP-2) during or prior to the period of alleged prejudicial activity by AP-1 in 1985. AP-1 also never stayed with the appellant in the subject premises (which were acquired by AP-2 in July 1990) at any stage till his (AP-1‟s) death in 1997. These facts had been brought the notice of the department way back in 2001 and also in the reply dated 23.09.2010 to the show cause notice. It had specifically been argued by the appellant in the reply that if there was any material with the respondent on the basis of which it was concluded that the convict Late Shri Vijay Kumar Thakkar (AP-1) was staying at the subject premises of the appellant (AP-2) because of which the show cause notice to AP-1 was also issued at the address of the AP-2, to furnish the same to the appellant. However, this aspect has not been commented upon or clarified by the Competent Authority in any manner

¶84

FPA-6/BOM/2012

¶85

Page 13 of 29

¶86

either in the Show Cause Notice and / or „reasons to believe‟ or dealt with in the impugned order and therefore, he argued that the proceedings still suffer from the lack of jurisdiction fact in as much as the valid show cause notice under section 6(1) of SAFEMA was not issued to the convict AP-1.

¶87

He also submitted that the respondent had not furnished any basis or evidence to show that there was any nexus between them (AP-2 and AP-1) or that the subject property had been acquired out of the illicit funds of AP-2. In these circumstances, the show cause notice still suffered from lack of jurisdiction as was held by the Hon‟ble Tribunal in the first round of litigation vide it order dated 11.08.2009,

¶88

9.2 His next submission is that prior to issue of the show cause notice dated 03.09.2010, the respondent vide letter dated 09.02.2010 asked the appellant to explain his legal sources of income along with the supporting documents/papers. The directions in the letter were complied with by the appellant vide the letter dated 27.4.2010/03.06.2010 in which it was inter-alia mentioned that the related documents had already been submitted to the then Competent Authority in the year 2000. The details regarding his business at Abu Dhabi from 1984 onwards along with the financial statements and Accountant‟s report for the period up to 1990 were however furnished once again vide the referred letter. Simultaneously, the details of payment made for acquisition of the subject property by purchase in auction held by Income Tax in July 1990, were also furnished. These details have not at all been considered by the C.A. while issuing the show cause notice dated 03.09.2010 therefore, the „reasons to believe‟ as recorded by the C.A. as attached with the show cause notice dated 03.09.2010 were not at all sustainable.

¶89

FPA-6/BOM/2012

¶90

Page 14 of 29

¶91

9.3 The third limb of his argument is that the subject property had been acquired by AP-2 in public auction conducted by the Income Tax at a price of Rs. 23.20 lakhs and full details for the source of finance of this amount had been furnished in the letter dated 07.04.2010/03.06.2010. The said amount was financed by debit of an amount of Rs. 60,000, 1.15 lakh, Rs. 25,000 and Rs. 1.81 lakh on different dates from his NRE-NRO accounts maintained with various banks, certificates of which given by the concerned Banks were also submitted with the referred letter and Rs. 21.20 lakh was out of a loan amount of Rs. 24 lakhs sanctioned to him against security of NRI bonds aggregating US Dollars 1.60 lakhs. The said loan amount was subsequently acquired by the appellant prematurely by en-cashing FDR‟s (in Dollars) for US Dollars 60,000 by the appellant. These details furnished have not at all been considered by the C.A under the impugned order and therefore, the order was not sustainable on this account also.

¶92

9.4 He has also submitted that the adverse inference drawn by the C.A. in the impugned order on account of the credit entries in his Bank Accounts in the appellant‟s and his firm‟s Bank Account at Abu Dhabi being in cash and not by way of cheque was not correct due to the fact that as per the system prevailing in Abu Dhabi there was no requirement for having day to day transactions necessarily by way of cheque and such transactions in Abu Dhabi were mainly by way of cash only. In this respect, he relied on the judgment of the Hon‟ble Kerala High Court in Kanachari Abdo Vs. Competent Authority in W.A.No 1645/2007 (E) in which case in similar fact situation, it was observed by the Hon‟ble High Court that the matter how the appellant earned money in Dubai was not a matter that can be looked into by the authorities as no law could be enacted regarding the source of income or accounting procedure in Dubai. The Hon‟ble High Court also accepted the evidence by way of NRE Pass Book etc. produced as licit source of income for acquisition of the

¶93

FPA-6/BOM/2012

¶94

Page 15 of 29

¶95

forfeited property in that case and set aside the Competent Authorities‟ order. The ratio of the said judgment was applicable to the present case. Following extract of the judgment was referred in this regard.

¶96

It is true that the burden is on the detenu to prove the source of income and the consideration paid for purchasing the property is not from the illegally gained money. The NRE passbook is sufficient to prove the source of income. The finding of the competent authority as well as the appellate authority was that there was no evidence to show that how they earned money in Dubai as books of accounts in Dubai was not produced. How he earned money in Dubai is not a matter that can be looked into by the authorities as no law can be enacted regarding the source of income or accounting procedure in Dubai. No action has been taken against the detenu under the FERA or FEMA for illegal remittances of money to India. It is the contention of the detenu that there is no sales tax or income tax in Dubai and that he came in 1983 for ever. He was detained in 1984 while he was waiting in the airport. Though he was arrested under the COFEPOSA Act he was acquitted in the criminal case and there is no case against him under the FERA. Customs Act or any other enactment. He has also produced the Certificate from the H.H. The Rule’s Court Government of Dubai, to show that they were doing business in Dubai from 1971 to 1995. In any event, the properties included in the schedule were purchased (other than item 18) during the period the detenu was doing business in Dubai and the earnings were sent through official channel. From the NRE account money was withdrawn and they purchased the properties. We are of the view that the detenu has explained the source of money and it cannot be said that the properties were purchased without accounting for the source.

¶97

(Emphasis supplied)

¶98

9.5 He also relied on the decision of this Appellate Tribunal in the case of A.Sowketh Ali and Suriya Beevi vs. Competent Authority in FPA-1213/MDS/2009 dated 6.9.10 wherein following the ratio of the above referred judgment of the Hon‟ble Kerala High Court, the Tribunal granted relief to the appellant therein. He pointed out that the appellant in that case was also allegedly engaged in the smuggling out of the foreign currency, as was the allegation against the convict AP-1 in the present case. It was submitted that the department had challenged this order in the Bombay High Court but the appeal was rejected by the Hon‟ble High Court. On the above arguments, he requested to set aside the impugned order.

¶99

FPA-6/BOM/2012

¶100

Page 16 of 29

¶101

Responding to the submissions and arguments made on behalf of the appellant. Shri D‟Souza, Joint Commissioner appearing on behalf of the Competent Authority referred to section 22 of the Act relating to the service of notices and orders under SAFEMA and stated that the Show Cause Notice could be issued either by registered post to the person for whom it is intended or to his agent failing which it could also be served by affixing it on a conspicuous placed in the property in relation to which the notice is issued or on some conspicuous part of the premises in which the person to whom it is intended, is known to have last resided or carried on business or personal work for gain.

¶102

10.1 To a query of the Bench as to how the show cause notice to AP-1 was issued at the address of AP-2 in Mumbai and whether the department had any evidence to justify that this address fulfilled the mandate of Section 22 ibid, no satisfactory reply was forthcoming. As regards the alleged non consideration of the reply submitted vide letter dated 27.04.2010/03.06.2010 while issuing the show cause notice, he submitted that along with show cause notice, the „reasons to believe‟ why the subject property was considered as illegally acquired property were also supplied. The „reasons to believe‟ as recorded in the present case are quite detailed and bring out the reasons why Competent Authority came to such a conclusion. According to him, there is no infirmity in the show cause notice and „Reason to believe‟ on the ground of nonconsideration of the said reply while issuing the show cause notice as wrongly contended by the appellant. He next referred to the Section 8 of the SAFEMA and submitted that the burden of proving that the property in question was not illegally acquired property was on the person concerned. The impugned order brings out the detailed reasons why the various contentions put forth by/on behalf of the AP-2 were not accepted which was mainly on the ground that all the major credit entries in the Bank Accounts Number of the appellant maintained with the Bank of

¶103

FPA-6/BOM/2012

¶104

Page 17 of 29

¶105

Middle-East, Dubai were in cash and the period for these entries was contemporaneous to the period when the AP-1 indulged in the smuggling of the foreign exchange out of the country. The impugned order also noted that such credit entries stopped after the period AP-1 was apprehended in 1985 while smuggling foreign exchange abroad. He therefore, submitted that the appellant had not discharged the onus of proving licit acquisition of the property cast upon him in terms of Section 8 of the Act and the impugned order was therefore required to be a upheld and the appeal merited rejection.

¶106

We have perused the case records and also considered the rival contentions. The appellants have raised the preliminary point of lack of jurisdiction fact on account of (i) non issue of a valid show cause notice under Section 6(1) of SAFEMA to AP-1 who was the person convicted of the offence of smuggling of foreign exchange abroad and because of which action against the appellant/AP-2 as „relative‟ was initiated under SAFEMA, and (ii) absence of any evidence to show that there was direct nexus between the prejudicial funds of AP-1 with the subject property.

¶107

In respect of (i) of Para 11 above regarding non-issue of a valid show cause notice under Section 6(1) of SAFEMA 1976 to the convict (AP-1), it is stated by the appellant that though the copy of the show cause notice dated 03.09.2010 was addressed to AP-1 also, the address indicated therein was the address of AP-2 only even though it was brought on the record of the Competent Authority by the appellant during the first round of litigation itself and also in reply to the present Show Cause Notice, that AP-1 had never stayed with the appellant (AP-2) either during or prior to the alleged prejudicial activities of AP-1 in 1985 or at the subject premises at any stage upto the death of AP-1 in 1997. In these circumstances, it is contended that the show cause notice cannot be considered to be a valid show cause notice under Section 6(1) of SAFEMA 1976 to the convict (AP1).

¶108

FPA-6/BOM/2012

¶109

Page 18 of 29

¶110

12.1 It is observed that neither the show cause notice dated 03.09.2010, nor the impugned order gives any reason (s) why such a step (issue of the Notice to AP-1 at the address of AP-2) was taken. The respondent‟s representative is also not in a position to provide any satisfactory reply/reasons for the same. In the oral arguments the respondents have referred to the Section 22 of SAFEMA, 1976 regarding service of notice, however, they are not in a position to substantiate how addressing the show cause notice meant for AP-1 at the address of AP-2 fulfils the mandate under the said section. Considering that the appellant has all through maintained that the businesses of AP-2 and AP-1 were entirely separate and AP-1 had never stayed with AP-2 either at the subject premises or otherwise at any stage and no evidence to the contrary has been produced by the respondents, addressing the Show Cause Notice meant for AP-1 at the address of AP-2 cannot be considered as valid service in terms of Section 22 ibid . Accordingly, the present Show Cause Notice dated 03.09.2010 to A.P-1 issued at the address of AP-2 cannot be considered as a valid show cause notice issued to the main convict (AP-1) in terms of section 6(1) ibid .

¶111

As regards (ii) of Para 11 above regarding lack of jurisdiction fact to show that there was direct nexus between the illicit funds of AP-1 with the property sought to be forfeited, on going through the Show Cause Notice and the „reasons to believe‟ as recorded by the Competent Authority appended thereto, it is seen that apart from several bald statements/assertions therein which may raise the apprehension that illegal funds of AP-1 may have flowed to the bank accounts of AP-2 and consequently also to the purchase of the subject property, there is no concrete evidence/material therein to justify that there were reasons to believe as reached by the Competent Authority that the subject property has been acquired from illicit funds of AP-1. The following assertions from the „reasons to believe‟ may be referred in this connection….

¶112

FPA-6/BOM/2012

¶113

Page 19 of 29

¶114

……. AP-1 was arrested by the customs for smuggling out the huge foreign currency equivalent to Rs. 3,54,080/- in the year 1985, so it is reasonably believed that the smuggled out foreign currency was brought back through the banking channel by adopting the very well accepted way of laundering……..

¶115

…………On examination of various deposits into the accounts maintained by him and his wife, it was noticed that all the deposits were made in cash, and not even a single deposit was made by cheque. It was also noticed that bigger deposits were made in the bank accounts maintained with Bank of Middle East, Dubai, and smaller deposits were made in the account of BCCI, Dubai, which gives the indication that the bank account with the BCCI, Dubai, was the normal business account where small deposits and withdrawals were made and account in the Bank of Middle East was created for laundering of the smuggled foreign currency where huge amounts were deposited in cash with hardly any withdrawals…………

¶116

…..The only worthwhile withdrawals were for parking the funds into more rewarding instruments of India Development Bonds. AP-1 was involved in smuggling of foreign currency out of India during the same period of time which gives the indication that smuggled out foreign currency was deposited in the bank accounts by AP-2 to show them as his legal earning. ……….

¶117

………..It is seen that AP-2 made substantial investments for purchase of NRI 88 Bonds and the payment of the entire amount has been attributed to his bank account No. 565814 with the Middle East Bank, Abu Dhabi. The AP had withdrawn an amount of US$ 97,000 plus UAE Dirhams 3,89,582 from his account with the Middle East Bank, out of which UAE Dirhams 2,68,130 was utilized for purchase of NRI 88 fond for US$ 73,000. The huge amounts accumulated in Bank account of AP- 2 within short span of less than 3 years since opening of account in the Bank remains unexplained………….

¶118

………AP-2’s NRI account was used as a camouflage for laundering of illegal money generated out of illegal activities of AP-1. The very fact of seizure of foreign currency from the possession of the AP-1 gives the indication that the money deposited in Foreign Exchange in different Banks in the UAE by the AP-2 was facilitated by way of unlawful transfer of illegal funds out of India which finally found its way to its way to his bank accounts………..

¶119

………..No reliable evidence was placed on record to show the income of their partnership firm, nor even the books of account maintained by the firm. Since it was a partnership firm, so for the distribution of the income amongst the partner they were required to maintain the books of account to show the income on daily basis………

¶120

……….It is further seen that the huge deposits in the bank were made during the period when AP-1 was engaged in the smuggling of the foreign currency, and it immediately stopped when he was caught by the customs. …………

(emphasis supplied )

FPA-6/BOM/2012

Page 20 of 29

A bare reading of the „reasons to believe‟ and specifically the extracts above shows that unwarranted conclusions were drawn by the competent authority from stray facts without there being any supporting material/evidence to support such conclusions/reasoning. Thus the mere fact that AP-1 was arrested while smuggling out foreign currency abroad is taken as a reasonable ground to infer that the smuggled out foreign currency was brought back through the banking channel by AP2 by adopting the method of laundering. This circumstance is also taken as sufficient indication that the money deposited in different bank accounts of AP-2 in the UAE was facilitated by way of unlawful transfer of illegal funds out of India by AP-1 overlooking the fact that AP-2 was having a fully functional business abroad during the material period from which sufficient profits were made. Further, the deposits in the Bank Accounts of AP-2 being in cash is taken as a ground for treating the amounts deposited therein as unexplained income and inferring that the related account was created for laundering of smuggled out foreign currency. Quite clearly, mere assertions/statements without any supporting evidence cannot be taken as discharge of the obligation on part of the respondent to first show direct nexus of the illicit funds of AP1 to the subject property (of AP-2) when alone the burden for establishing its licit acquisition would be transferred to the accused person(s).

¶125

13.1 In this connection it is further observed that subsequent to the setting aside of the forfeiture order dated 12.01.2000 by the Tribunals order dated 11.08.2009, other than calling for evidence to explain the legal sources of income of the appellant vide letter dated 09.02.2010, no fresh investigations were made by the Competent Authority in the matter. It is also an admitted position and stated so in the impugned order that the present show cause notice was also based on the same facts as involved in the first round of litigation. As mentioned earlier in this order the Tribunal had then found order dated 11.08.2009) that apart from non

¶126

FPA-6/BOM/2012

¶127

Page 21 of 29

¶128

issue of the show cause notice to the convict, there was absence of the jurisdiction fact due to lack of allegation to show nexus of the illicit funds of AP-1 with the subject property. Following extracts from the Tribunal‟s said order dated is referred in this connection.

¶129

“ 18. We, therefore, find that non issue of show cause notice to the convict Shri Vijay Kumar Ratilal Thakkar coupled with the absence in compliance with jurisdiction fact, and there being no allegations whatsoever in the show case notice that the impugned properties were acquired out of the illegal income generated out of the prejudicial activities of the convict goes to the root of the lack of jurisdiction of the Competent Authority to issue show cause notice under SAFEMA, 1976 and in the absence of proper jurisdiction all the subsequent proceedings namely forfeiture of properties vide his order dated 12.01.2000 are vitiated.”

¶130

As there are no new facts brought on record by the department leading to the present show cause notice, we find no grounds to differ from the conclusion as reached by this Tribunal in the first round of litigation that the department has failed to allege/show direct nexus of the illicit funds of AP-1 to the subject property. In this connection it is also noted that the department had challenged the above order of the Tribunal before the Hon‟ble Bombay High Court and the appeal was rejected vide the order dated 11.05.2011 in Criminal Writ Petition no. 426 of 2011 and the Tribunal‟s said order has therefore, become final.

¶131

In view of the discussions and finding in Paras 12 and 13 above and their sub Paras, we find that on account of lack of issue of valid show cause notice to the detenu/convict (AP-1) and for the lack of any evidence to show nexus of the alleged illegal funds of AP-1 with the subject property, the case therefore, still suffers from lack of jurisdiction and the impugned order is liable to be set aside on this preliminary issue itself.

¶132

In view of our finding above regarding the lack of jurisdiction in this case, and the impugned order being liable to be set aside on the

¶133

FPA-6/BOM/2012

¶134

Page 22 of 29

¶135

preliminary issue itself, it is not necessary to go into the other points/issues raised on behalf of appellant during the hearing before this Tribunal. However, considering that this is the second round of litigation and as submissions on these grounds have already been addressed by both sides, we consider it appropriate to go into these issues also and record our findings in respect thereof.

¶136

The next argument of the appellant is that the material furnished by the appellant in response to queries made by the office of the Competent Authority regarding his/her sources of income prior to the issue of the Show Cause Notice dated 03.09.2010, vide the letter dated 27.04.2010/03.06.2010 have not at all been considered by the Competent Authority while issuing the subject show cause notice. The respondents have however, contended that the reply has been duly considered and along with show cause notice a detailed “reasons to believe” had been annexed which sets out the grounds why the Competent Authority formed the „reason to believe‟ that the property in question was an illegally acquired property leading to the issue of the show cause to AP-2 why the said property should not be forfeited. We have gone through the show cause notice and the reasons to believe as appended thereto. We find that the Competent Authority has examined the matter in detail and also furnished the reasons why, in his view, the appellant‟s contentions regarding acquisition of the property from licit sources was not accepted. Considering that the satisfaction of the Competent Authority that the property in question is an illegally acquired property required for the issue of the show cause notice under Section 6(1) of the SAFEMA, 1976 is the subjective satisfaction of the Competent Authority, we are of the view that the show cause notice/reason to believe cannot be faulted on the ground of non-consideration of material furnished by the appellant vide the letter dated 27.04.2010/03.06.2010. However, the question whether the conclusions reached by the

¶137

FPA-6/BOM/2012

¶138

Page 23 of 29

¶139

Competent Authority in the impugned order in this regard are sustainable is considered while examining the third limb of the appellant‟s argument.

¶140

The third limb of the appellant‟s argument is that in their explanation vide the letter dated 27.04.2010/03.06.2010 and the reply to the show case notice they had explained the various sources of income from which the subject property had been acquired and it had been clearly established by them that the property was acquired by AP-2 from his own income earned abroad from licit sources. The underlying facts in support of the appellants explanation in this regard are appearing in Para 5 to Para 5.4 above and are not repeated in its entirety for the sake of brevity.

¶141

17.1 In brief, the appellant‟s contention is that the appellant AP-2 was having a well established and running business by way of a business/partnership firm in the name and style of “M/s India Henna Art Centre” in Abu-Dhabi from the year 1984 onwards in which AP-2, his wife Ms. Neelima Lavana, the present appellant alongwith a local person were the three partners. The Appellant has also produced audited financial statements and accounts of the firm from 1985 to 1988 by an Audit and Accountant firm from which it is seen that substantial profits were made by the firm during this period and there were also substantial withdrawals by AP-2 and his wife Smt. Neelima Lavana, the present appellant, from the said business/partnership firm. Part of their earnings from the said business upto December, 1988 was also invested by them in NRI Bonds in January, 1989 through regular banking channels. The appellant has also produced a certificate dated 20.06.2000 from M/s Kothari Auditors and Accountants, Sharjah, UAE to the above effect.

¶142

FPA-6/BOM/2012

¶143

Page 24 of 29

¶144

17.2 As regards acquisition of the subject property, it is submitted that the said property was acquired at a price of Rs. 23.20 lacs in public auction conducted by the Income Tax Authority on 25.07.1990. While the initial payment of Rs. 2 lacs on the day of auction were met by way of withdrawals from the appellant‟s NRE Bank Accounts which are duly certified by the concerned banks [ANZ Grindlays Bank (Rs. 1,75,000/-) and Bank of Baroda (Rs. 25,000/-)], the main amount to the extent of Rs. 21.20 Lac was paid out of the loan of Rs. 24 lakhs sanctioned by the SBI, NRI Branch, Bombay to the AP-2 against security of NRI bonds held in the name of AP-2 and his wife Smt. Neelima Lavana. It is further contended that the funds for the NRI Bonds in question were from their licit income earned from their aforesaid business/partnership firm in Abu-Dhabi from 1984 onwards. The acquisition of NRI Bonds worth US Dollars 1, 70, 000/- in the name of AP-2 and his wife Smt. Neelima Lavana in 1989, sanction of loan of Rs. 24 lacs against the security of the said NRI Bonds and also the pre-mature encashment of NRI Bonds to the tune of US $ 60,000 alongwith the interest accrued thereon to prematurely terminate the loan account with such receipts is duly certified by the concerned banks.

¶145

The appellant‟s contentions for their licit sources of Income have not been accepted by the Competent Authority mainly on the following grounds:

¶146

(i) Major portion of the substantial entries in the bank accounts of the AP-2 were in cash and that these also were contemporaneous to the period when AP-1 was indulging in smuggling foreign currency from India to abroad and was convicted under the Customs Act and that such credit entries stopped after his detention.

¶147

(ii) The details of the sources of the funds from which the NRI bonds from which the loan of Rs. 24.2 lakhs was got sanctioned from the SBI from

¶148

FPA-6/BOM/2012

¶149

Page 25 of 29

¶150

which the subject property was acquired was not established by the appellant and it was apparently from unexplained sources. In support of his above conclusion, he has referred to the fact that payment of the entire amount to the extent of US Dollars 1,70,000/- has been attributed to the bank account No. 565814 of AP-2 with the Middle East Bank, Abu Dhabi in which the major deposits were in cash.

¶151

The adverse inference drawn in the impugned order regarding AP-2 having not explained the licit sources of income for acquisition of the subject property on account of the fact that the major entries in the bank accounts of the appellant were in cash, overlooks the contention of the appellant that there was no law in Abu-Dhabi/Dubai prohibiting the transactions of business to be in cash, and that cash transactions were the normal mode of transactions there at that time. We also find that this reasoning of the Competent Authority cannot be sustained in view of the ratio of the judgment dated 30.03.2007 of the Hon‟ble Kerala High Court in the case of Kannanchery Abdu versus Competent Authority in WA No. 1645 of 2007 (E). In the said case, the Hon‟ble High Court had observed as under

¶152

“…………At the time of purchase, the consideration shown in the documents is only Rs. 1, 91,700/- excluding the value of the property in item No. 18 is purchased in the year 1984. We will come to the source of income of the detenu for that property later. I has come out in evidence that the detenu went to Dubai in 1966 and started a small business near Sheikh Place. He was known as Dhukan Abdu. PA-3 went to Dubai in 1970 and PA-2 went to Dubai in 1973. The detenu-PA-1 opened a NRE A/c No.C.1075 with State Bank of Travancore, Malappuram Branch in 1976. PA-3 opened NRE A/c. NO.109 with Canara Bank, Changhuvetty. The pass books and bank statements of PAI and PA-3, were produced as Annexures A2 and A3. Their savings bank account were also produced along with it. The total deposits in A.c. No. C. 1075 from 1976 to 1982 comes to Rs. 22 lakhs. In the NRE account of PA-3 the total deposit comes to Rs. 5,66,247.90. All the three brothers were residing together with their families in the same house and most of the properties were purchased together. So during the period from 1976 to 1982 more than Rs. 16 lakhs were remitted in the above bank accounts and the source of income for purchase of properties for the Rs. 2 lakhs (excluding item No. 18 purchased in 1984) was clearly explained. These remittances were made by the detenu PA 1 and PA 3 in the NRE accounts. Which is exempted from the Income Tax and the withdrawals are also shown through Savings Bank

¶153

FPA-6/BOM/2012

¶154

Page 26 of 29

¶155

Account, which clearly show that they are accounted money sent through proper channel and that sufficiently explains the source for purchasing the properties. It is true that the burden is on the detenu to prove the source of income and the consideration paid for purchasing the property is not from the illegally gained money. The NRE passbook is sufficient to prove the source of income. The finding of the competent authority as well as the appellate authority was that there was no evidence to show that how they earned money in Dubai as books of accounts in Dubai was not produced. How he earned money in Dubai is not a matter that can be looked into by the authorities as no law can be enacted regarding the source of income or accounting procedure in Dubai. No action has been taken against the detenu under the FERA or FEMA for illegal remittances of money to India. It is the contention of the detenu that there is no sales tax or income tax in Dubai and that he came in 1983 for ever. He was detained in 1984 while he was waiting in the airport. Though he was arrested under the COFEPOSA Act he was acquitted in the criminal case and there is no case against him under the FERA. Customs Act or any other enactment. He has also produced the Certificate from the H.H. The Rule’s Court Government of Dubai, to show that they were doing business in Dubai from 1971 to 1995. In any event, the properties included in the schedule were purchased (other than item 18) during the period the detenu was doing business in Dubai and the earnings were sent through official channel. From the NRE account money was withdrawn and they purchased the properties. We are of the view that the detenu has explained the source of money and it cannot be said that the properties were purchased without accounting for the source. …………………… (emphasis supplied)

¶156

19.1 Further this Tribunal vide its order dated 6^th September, 2010 in the case of B Showketh Ali and Surya Beevi in FPA No. 12/MDS/2009 and FPA No. 13/MDS/2009 had in somewhat similar circumstances and in a case where the accused was also alleged to have been indulging in smuggling of foreign currency abroad held that the department cannot look into the reasons for acquisition of sources abroad and accepted the appellant‟s explanation for licit acquisition of the property as involved therein on the basis of the debit entries of the appellant‟s NRE Pass Book. It was submitted by the learned Counsel for the appellant that this decision had been upheld by the Hon‟ble Chennai High Court rejecting the appeal filed by the Competent Authority against the said decision. We find that the ratios of the above decisions are squarely applicable to the present case and the Competent Authority cannot look into the details of the sources of fund earned abroad.

¶157

FPA-6/BOM/2012

¶158

Page 27 of 29

¶159

19.2 Moreover, the observation of the Competent Authority in the impugned order that the cash deposits of substantial amounts in the bank account of AP-2 stopped after the apprehension of AP-1 while smuggling foreign currency in abroad in 1985, these observations are not borne out from the copies of the bank accounts in respect of Account no. 0071-565814-095 of AP-2 in Middle East Bank, UAE for the period 1989 to 1993 as produced by the appellant during the course of these proceedings. It is seen from these bank statements that the substantial cash entries in the account have continued through the entire period and till as late as in 1993. The appellant have also produced statements from Kothari Auditors and Accountants for the period 1985 to 1988 showing that the business firm where the appellant and his wife were two of the three partners had made substantial profits during the material period from which the appellant and his wife has also made substantial withdrawals.

¶160

19.3 Yet another observation of the Competent Authority in respect of the investments by the appellant in NRI Bonds is that these were made during the same period of time when the AP-1 was involved in the smuggling of foreign currency out of India during the same period of time. This observation appears to be factually incorrect for AP-1 was convicted for the offence of smuggling foreign currency in 1985 and there is no evidence whatsoever that he was subsequently also involved in such activities. As against the above, the investments in the NRI Bonds/India Development Bonds have been made in 1989 which cannot be said to be the period when AP-1 was involved in the smuggling of foreign currency out of India.

¶161

19.4 On the other hand, we find that the appellant has produced sufficient evidence as referred to in detail in Paras 5.4 and 5.5 above to show that the AP-2 along with his wife Neelima Lavana, legal heir of AP-2 and present appellant were having a regular running business at

¶162

FPA-6/BOM/2012

¶163

Page 28 of 29

¶164

Abu-Dhabi during the material period from 1984 onwards and the appellants derived sufficient income from such business which was also used by them to acquire NRI bonds in January 1989. Further, by utilizing part of such NRI bonds as security, they had obtained the loan of Rs. 24 lakhs from SBI, Bombay from which the bulk of the payments for acquisition of the subject property were made. We therefore find it entirely reasonable to accept the appellant‟s contention that the funds for the acquisition of the subject property came out of licit funds of AP-2.

¶165

For the detailed reasons in Para 19 and its sub Paras, we are therefore, unable to agree with the finding of the Competent Authority in the impugned order that the appellant has failed to discharge the onus to show the licit source for acquisition of subject property and the said finding is required to be set aside. We find that in the present case, the appellant has fully substantiated the claim for acquisition of the subject property from the licit sources of his income. The impugned order is therefore, liable to be set aside on merits also.

¶166

In view of the findings above, the appeal is allowed and the impugned order dated 30.01.2012 is set aside with consequential relief to the appellant. The interim orders in the matter shall stand vacated.

¶167

(Justice Manmohan Singh) Chairman

¶168

(Kaushal Srivastava) Member

¶169

(G.C. Mishra) Member

¶170

New Delhi, 11^th November, 2016

¶171

„K‟

¶172

FPA-6/BOM/2012