Partly allowed

FPA-11/MDS/2012 of T.P. Moideen Koya v/s The Competent Authority, Chennai

ATFP22 Jan 2018FPA-11/MDS/2012

Case brief

AI extract

What is this about?

The Appellate Tribunal for Forfeited Property allowed the appeal against a forfeiture order. The court held that the Competent Authority's rejection of the appellant's explanations was based on mere surmises and lack of proper document examination. The matter was remanded to the Competent Authority for fresh findings.

What did the court decide?

The appeal was allowed by way of remand to the Competent Authority to examine the documents submitted by the appellant and pass a fresh order.

FPA-11/MDS/2012 of T.P. Moideen Koya v/s The… — Pension and Retirement Benefits | ATFP (2018)

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APPELLATE TRIBUNAL FOR FORFEITED PROPERTY NEW DELHI

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Date of Decision: 22^nd January, 2018

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MP-7/MDS/2012 & FPA-11/MDS/2012

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T.P. Moideen Koya

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… Appellant/Applicant

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Versus

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The Competent Authority, Chennai … Respondent

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Advocates/Authorized Representatives who appeared

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For the appellant	: Shri Anuj Kapoor, Advocate
For the respondent	: Shri Ashok Kumar Srivastava, Joint Commissioner
CORAM
SMT. ANANYA RAY	: MEMBER

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JUDGMENT

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MP-7/MDS/2012 & FPA-11/MDS/2012

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The matter was heard on 9^th January, 2018. The learned counsel

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for the appellant Shri Anuj Kapoor, Advocate made the following submissions:

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“ The appellant/ aggrieved person (hereinafter „the AP‟) is aggrieved by the order dated 28.02.2012 passed by the Competent Authority, SAFEM (FOP) Act & NDPS Act, Chennai (hereafter „the CA‟) under section 7(1) of the SAFEM (FOP) Act, 1976 (hereafter „SAFEMA‟). By the said order, the properties of the appellant, as well as his brother have been forfeited to the Central Govt.

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The properties owned by AP in respect of which the CA‟s order dated 28.02.2012 has been passed, along with their cost of acquisition as well as period of investment are as follows:

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Property no. as	Amou	Perio	Purcha
description	nt	d of	se
	Invest	Inves	/Valua
	ed	tment	tion
	(INR)	(fy)	docs

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FPA-11/MDS/2012

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Page 1 of 20

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			(pg, sp¹)
1. H. No. 33/577A, Near Chevayoor Police Station, Calicut	8,00,0 00	1994 -95	364
2. Shopping Complex called Sajna Building	8,10,0 00	1990 -91 to 1995 -96	380
3. Cocunut Garden Re. Sy. No. 117/1A – total 41.85 cents. It is this land on	1,28,4 00	1987 -88 &	213- 215,
which the residential house and commercial complex have been converted.	11,86 8	1988 -89	224- 226, 233- 235 and 242- 244
4. Cocunut Garden Re. Sy. No. 126/1 – total 78.75 cents, Chevayoor Village	3,28,0 37	2000 -01	256- 258
5. Cocunut Garden Re. Sy. No. 239/1A2 – total 55.60 cents, Chevayoor Village	5,26,7 17	1994 -95	269- 271, 282- 284 and 294- 297
6. Cocunut Garden in Re. Sy No. 26, -- _total 1.38 acre, Parambil Village _	1,77,6 07	1994 -95	308- 311
7. Textile shop in Sajna Building _complex _	0	-	-
8. Tata Qualis Car	4,80,0 00	2000 -01	343- 347
9. 84.5 cents of cocunut garden in the name of brother T.P.Abdul Salam	4,40,0 00	FY 2000 _-01 _	-
TOTAL INVESTMENT	37,02, 629	-

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Even though the SCN had over-valued the cost of acquisition of these properties, upon explanation and furnishing the ownership documents of the same, the CA has accepted the valuation and period of investment, as explained by the AP. Nevertheless, the impugned order has fallen in error in coming to the conclusion that all the properties are „illegally acquired properties‟ liable to be forfeited to the Govt. u/s 7 of SAFEMA. It is submitted that the impugned order is perverse and erroneous on the following, among other grounds:

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1. EVEN THOUGH AP IS A PERSON TO WHOM THE ACT APPLIES, HIS PROPERTIES ARE NOT ‘ILLEGALLY ACQUIRED PROPERTIES’ – REF. S. 3(1)(C)(III) OF THE ACT.

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1.1. AP lived in the UAE from 1977 till mid-1994. His wealth earned there was transferred to India through valid and legal channels – either NRE remittances, or validly brought gold sold in India. It is submitted that for a property to be „illegally acquired property‟ as understood under SAFEMA, it should be derived or obtained from or attributable to any activity which is prohibited by or under any law relating to a matter in respect of which Parliament

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FPA-11/MDS/2012

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Page 2 of 20

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has power to make laws. How an NRI earns his income in another country is a matter outside the jurisdiction of the laws of India, so long as no such law is breached.

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1.2. In this regard, the observations of the Madras High Court in Competent Authority v. A. Sowkath Ali, WP No. 2939/2011 (decided on 17.04.2012), on the non-application of s. 3(1)(c)(iii) are relevant, and are reproduced as under:

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“He further referred to the following passages in the judgment of the Division Bench of the Kerala High Court in W.A.No.1645 of 2007(E) dated 24.02.2009 [Kannanchery Abdu v. The Competent Authority under SAFEMA and others], which was relied on by the Tribunal in the impugned order, which are as follows:-

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"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.

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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.

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The appellant has explained the source and since there is no allegation in the show cause notice that he has purchased the car with the illegally acquired money violating the provisions of the Act, we are of the view that the said money is not liable to be forfeited and it has to be released to the appellant."

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1.3. It is reiterated that CA lacks jurisdiction to inquire into the details of income earned abroad under SAFEMA. As long as the income was brought into India upon due disclosure, and upon the payment of the leviable duty/tax thereupon, it cannot come under the ambit of section 3(1)(c).

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2. SCN (PG 167, SP) INVALID

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2.1. It is trite that the initial burden of proof had to be discharged by the CA at the time of issuing show cause notice and only then same would shift to the appellant has not been followed while issuing the show cause notice.

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2.2. The more harsher/draconian the law, the stricter has to be the satisfaction for invoking the provisions of the law. (Ref: Gian Chand v. UOI , DHC – WP(C) 4581/1996)

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2.3. In the present case, the „Reasons Recorded for issuance of the Notice‟ (pg 169, SP) shows the bias of the CA as it is recorded that „his detention under COFEPOSA conclusively proves that he has been indulging in smuggling activities‟. Thus, the mere detention order was treated as equivalent to proof – a perversity that vitiates the SCN and the proceedings initiated thereon.

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2.4. The „Reasons recorded‟ nowhere makes mention of the specific, reliable or relevant material based on which the CA has arrived at the prima facie satisfaction that AP‟s properties are illegally acquired properties. The requirements of section 6 have not been met. The „Reasons Recorded‟ document clearly implies that no action under „s. 18 or otherwise‟ was taken to gather material based on which an assessment of the properties of the AP could have been made. Rather, in a mechanical manner, the issuance of SCN has followed the AP‟s detention order under COFEPOSA, since he had

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FPA-11/MDS/2012 Page 3 of 20

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become, by virtue of that order, a person to whom the SAFEMA applies.

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2.5. In addition, the SCN/‟Reasons Recorded document‟ nowhere states the nexus between the properties covered under the notice, their period of acquisition and the allegation of smuggling against the AP. It is submitted that most of the properties which were subject matter of the SCN were acquired more than7-8 years earlier. Without specifying any basis or time-nexus of the smuggling activity and the properties in question, the SCN in an arbitrary stroke of brush leaves not even a single valuable asset owned by the AP out of its ambit.

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2.6. Here, it is pertinent to reiterate that AP had lived abroad in UAE for 20 years, where no tax is paid, and a person need not maintain any record of his incomes/receivables and his expenses – whatever be his income/turnover, since there is no statutory requirement of that kind. Moreover, transactions are mostly in cash.

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2.7. Ref.: Aslam Merchant, (2008) 14 SCC 186, Fatima Mohd. Amin , (2003) 7 SCC 426, Manpreet Singh Oberoi v. Competent Authority , Delhi, FPA-37/DLI/2015, pronounced on 02.12.2017.

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3. CUSTOMS AUTHORITY’S ORDER EXONERATING THE AP IGNORED

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3.1. The CA, while passing the impugned order, has completely omitted consideration of the Order-in-Original dated 20.11.2006 in which the AP was one of the noticees for having allegedly breached s. 111, Customs Act. In the inquiry under the Customs Act, two persons – Lakshmi NarayanaShetty and C. Kumar, had purportedly made statements u/s 108 of the Customs Act implicating AP. However, both of them later retracted their statements. Pertinently, nothing was seized from the house of AP during the search conducted at his house. Based on the material on record, the Commissioner came to the finding that „there is no evidence on record to prove that T.P.MoideenKoya had collected foreign exchange abroad, purchased gold biscuits and smuggled the same to India… [A]ll the factors are favourable to Moideen Koya. In short, there are some many loose threads‟.

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3.2. Once the AP was exonerated by the Customs Dept, it can be said that the substratum of the case against AP in the SAFEMA proceedings had also been removed. This is despite the non-binding nature of such a order, by virtue of s. 21 of the SAFEMA. (Ref: Gian Chand )

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3.3. However, despite placing reliance on the Order dated 20.11.2006 before the CA, the CA fails to even make a mention of it in the impugned order – implying a clear lack of objectivity and impartiality in appreciating the materials before it. The CA, on the other hand, records in para2 of the order that:

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„there is evidence taken note of by the courts that ShriKoya was indulging in illegal transactions in smuggled gold in large volumes… The volume of transaction in crores of rupees in just two weeks‟ time shows that ShriKoya was a well established, seasoned dealer in smuggled gold.‟

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4. ILLEGAL MANNER OF THE RECORDING OF THE STATEMENT DATED 15.11.2010, AND INCORRECT RELIANCE PLACED THEREON

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4.1. The AP received a notice dated 07.10.2010 from the CA requiring him to appear before the respondent on 15.11.2010 for the purpose of production of his passport, his bank account statements

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FPA-11/MDS/2012 Page 4 of 20

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and his IT returns. When AP complied with the summons, the CA recorded an involuntary and compelled statement as being his. Pertinently, AP is educated only upto 10^th standard, and is not wellversed with any language other than his mother tongue Malayalam. During his statement, however, questions were posed in English and Tamil, and answers were dictated by the CA in English. No attempt was made to explain the questions to the AP in Malayalam – as no person well-versed with Malayalam was present. When the AP objected to the proceedings, he was informed that the statement was being recorded so that the case could get closed. After the complete statement was recorded, as per the requirement of the CA, the AP was coerced into signing the same. This alone was ground enough to discard the statement as being binding as against the AP.

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4.2. It is significant that several of the questions pertained to a period 15-30 years earlier, and hence the AP could not have been expected to have a ready reply for them. In addition, AP was also suffering from high BP and cholesterol and was also a diabetic, further reducing his ability to withstand stressful question of this nature.

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4.3. Violation of principles of natural justice : Pertinently, no personal hearing was granted after the recording of the statement dated 15.11.2010. Not even an opportunity was given to make representations to the CA.

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4.4. In these circumstances, the treatment of the CA of the coerced and compelled statement dated 15.11.2010 as the primary material based on which contradictions and inconsistencies were cleverly drawn with the material furnished by the AP to explain the sources of his wealth, is incorrect and wholly perverse.

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5. ARBITRARY CONSIDERATION OF ONLY PART OF THE SALARY AMOUNT

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5.1. The AP to support the amount of salary he earned from Etisalat furnished the following documents to the CA:

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Termination letter dated 29.08.1994.

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Letter dated 29.08.1994 issued to the Accountant listing out the receivables by AP (including salary and allowances upto 16.08.1994, Over-time as per time card, and Gratuity for period of 1977 to 1994).

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Letter dated 04.03.1992 regarding the salary break-up of APw.e.f. 01.03.1992, – Themonthlytakeaway which included salary and allowance was 3047 dirhams .

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Certificate dated 12.10.2003– showing the period of employment: Feb 1977 upto Aug 1994

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Certificate dated 26.10.2004 issued by Etisalat, having on it the Seal and Signature of the Consul General of India, Dubai, UAE as well as the of the Ministry of Foreign Affairs, UAE,. The certificate states that his last drawn monthly salary was 3047 dirhams and that he was paid his dues including gratuity. This Certificate was got issued upon the CA‟s letter dated 29.09.2004 asking the AP to submit properly authenticated documents in terms of Rule 2 of FERA (A&D) Rules, 1976, and Section 3 of the Diplomatic & Consular and Offices (Oaths & Fees) Act, 1948.

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Since the petitioner did not have a Bank account in UAE, and the payments were made only in cash, because of the cash-culture prevalent there, the CA desired to confirm from Etisalat as to how much salary AP was making during his 17 years of work there. Moreover, due to the lapse of several years, the AP‟s employer was

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FPA-11/MDS/2012

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Page 5 of 20

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unable to supply documentary proof of the salary etc. given to AP during the period of his employment.

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5.2. On the aspect of consideration of salary income alone, the CA has committed grave errors.

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5.2.1. Unfounded inference of salary inflation : Firstly, it has cut the salary income by half, considering only half of it as valid and actual income earned by the AP. This discarding of half of the salary income earned from 1977-1994 is perverse, and without any justification. The reasoning employed by the CA is at paras13.2, 16.3 and 16.4.

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5.3. The reasoning that the salary could not have increased so substantially is in the realm of speculation, and merely needs to be considered to be rejected.

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5.4. Time spent in India : Next, the CA has argued that the salary could not have been as claimed, since each year the AP spent considerable portion of time in India. In this regard, reference is made to the copy of AP and his wife‟s passport for the entire period which had been placed on the record. The tabular representation must be examined as it readily shows the total number of days that AP was in India, and how this tabulation is far from the incorrect calculation arrived at by the CA at pr13.2 of the impugned order.

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5.5. Overtime & Bonus : In addition, the CA has failed to appreciate that a component of salary is also Bonus and Overtime. While Etisalat used to give bonus to its employees 1-2 times a year, AP also used to work overtime, and thus, the annual salary income as depicted in the Cash Flow Statement is inclusive of all these components.

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5.6. Gratuity : In addition, the CA did not consider that after termination, the AP was also given an amount towards Gratuity payment in full and final settlement of his dues. This amount was owing to the period of service rendered from 1977 to 1994. The AP was handicapped from producing documentary evidences in regard to the amount received from time to time as Overtime and Bonus, as well as Gratuity, since no documents were available after a lapse of more than a decade.

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6. ARBITRARY INFLATION OF PERSONAL EXPENDITURE AND REDUCTION OF SAVINGS FROM SALARY

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6.1. The CA has ignored several relevant facts while deducing that total savings from salary during the entire period of 17 years of employment could not have been more than 50% of the salary claimed by the AP.

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A.	Total salary claimed to have	4,03,640
	_earned from 1977to 1994 _	dirhams
B.	Total expenditure incurred on self, and family	49,100dirhams
C.	Total consolidated savings from salary from 1977to 1994 (A-B)	3,54,540dirhams

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6.2. In arriving at the consolidated amount of savings from salary, the CA has committed the following errors:

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6.2.1. Did not consider that AP‟s family moved with him to Ras-alKhaimah in UAE only in 1983.

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6.2.2. AP‟s father-in-law ran brother-in-law ran two grocery shops in Ras-al-Khaimah, and the monthly household supplies would come from there, free of cost. They (AP‟s wife‟s family members) sometimes even used to provide funds.

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6.2.3. During his entire stay in UAE, AP, along with his family (after they relocated) stayed in the residence provided to AP‟s wife‟s

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cousin Parappurath Mohammed – who had been provided this accommodation by his employer company.

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6.2.4. AP‟s company Etisalat provided him free healthcare from him and his family, while his trips to and from India were paid for by Jamal Travels.

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6.2.5. Reliance in this regard is placed on the affidavits filed in appeal of Palakka Parambil Mohd. Kutty Parappurath Mohammed as well as AP‟s own addition additional affidavit.

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7. ARBITRARY REJECTION OF ENTIRE BUSINESS INCOME EARNED

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7.1. The AP furnished the following documents to support the claim of that he was a partner earning profits in a travel agency business by the name of „Jamal Travel Agency‟:

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Certificate affirming that AP joined as partner in the business in 1988, and withdrew from it at the time of his relocation to India. During the tenure of the partnership he had a 25% share in profits earned. Certificate is duly attested having Seal and Signature of the Consul General of India, Dubai, UAE as well as the of the Ministry of Foreign Affairs, UAE.

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Affidavit of Mr. Sainul Abidin as also filed in the appeal), AP‟s erstwhile partner in the firm who (is still part of it) corroborates AP‟s version regarding his status as a partner having 25% share in profits in Jamal Travel Agency. The affidavit also throws light on AP‟s contribution to the business, and the boom that the business saw during the years of AP‟s association with it.

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Brochure of Jamal Travel Agency & Bank statement of 4 months of Jamal Travel Agency – While the former throws light on the growth of the business from its inception in 1988 till 2012, the latter shows (illustratively) the volume of business done in 4 months of 1995.

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Business income as per Cash Flow Statement: The AP earned substantial business income during his years as 25% partner. The investment made in 1987-88 was 20,000 dirhams, and the total earning comes to 4,34,520 dirhams.

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7.2. The CA whimsically rejects the entire business income claimed to have earned by the AP, on the ground that profits were many times the investment made, and thus was not credible.

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7.3. Reasoning so, the CA‟s concludes that funds that are claimed as business income is tainted money. This inference is purely conjectural, and without any basis in fact. As such, it cannot be sustained.

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7.4. It is submitted that as pointed out in the affidavit by AP‟s erstwhile partner Sainul Abidin, it is not merely the amount of investment that is determinative of the profit-potentiality. The CA fails to appreciate that boom the travel/tourism sector in UAE witnessed in the 1990s was massive, and to that end, the AP had contributed his fair bit by getting his relatives and acquaintances as clients for the business. In this regard, reliance is placed on the judgment of this Tribunal in Rup Chand Prasad v. Competent Authority , 178 ITR 292, (point iii and iv of the head note), where the Tribunal recognized that a business that was started with initial investment of only INR 5000/- could give profits that run into lacs.

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7.5. Lastly, the reliance given by the CA on the disclaimed issued by the attesting authority on the Certificate is in completely misunderstanding of the nature of authentication that the concerned authority does. It is submitted that nothing can be inferred from such disclaimer, as it is but certain that no attesting authority would

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FPA-11/MDS/2012

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not assume responsibility about the contents of a certificate or document. All that the attesting authority verifies is the identity of the person, and the actual execution of the document in question.

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7.6. Thus, it is submitted that the rejection by the CA of the business income of 434520 dirhams is erroneous, and cannot be upheld.

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8. ERRONEOUS REJECTION OF INCOME FROM SALE OF JEWELLERY :

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8.1. The AP has claimed two sources of gold/jewellery that he sold, and the sale proceeds of which were used to purchase some of the properties in question–

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8.1.1. Family-gifted gold jewellery : First was gold that had been gifted to AP and his wife. In this regard, AP asserted that he belonged to the Malabar-Muslim community which practiced the tradition of gifting large quantities of gold ornaments by the parents and relatives to the bride at the time of her wedding, and even subsequently on festive/joyous occasions. This gold jewellery remained in India, and was sold from time to time, to raise funds for acquisition of other properties.

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8.1.1.1. AP‟s brothers-in-law Mr. Palakka Parambil Mohd. Kutty and ParapurathMohd., through their affidavits have also corroborated the fact that cash, gold jewellery, and other items were gifted to AP‟s wife and children.

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8.1.1.2. The AP produced proof evidencing sale of such gold jewellery. The period and the value of the sale proceeds are as under:

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	Sold when	Sale Value and mode _transaction _	(INR) of
_1. _	1987-88	23777(cash)
_2. _	1988-89	9906 (cash)
_3. _	1989-90	17675 (cash)
_4. _	1992-93	228000 (chequ	e)
	_Total _	279358

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8.1.2. Imported gold bullion : The second source of gold sold was gold biscuits/bullion that was purchased at UAE by AP out of his savings, and which was imported to India upon payment of the applicable customs duty.

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8.1.2.1. 42 gold biscuits were imported into India, once in August 1992 and then again in May 1994 after due payment of customs duty thereon (the Customs Baggage Receipts for Gold brought in are SP). The receipts for sale of these gold biscuits (total 42 out of 84) in India. All the sale proceeds totaling to INR 20,43,112/- came into the bank account as payment was received via cheque/DD. The rest of the 42 gold biscuits were consumed for the purpose of gifting during functions and family members.

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8.1.2.2. These documents show that AP validly imported the gold bullion from UAE through to India through legal channels. The source of acquisition for the same, in UAE was his personal savings, as is depicted in the Cash Flow Statement.

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8.2. The CA has, without appreciation of these facts, concluded that source of acquisition of jewellery was unexplained. On the other hand, it has completely omitted to consider the proceeds earned from sale of family-gifted jewellery. Thus, the treatment of the such sale proceeds as illegal funds is contrary to the facts and circumstances, and cannot be sustained.

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Page 8 of 20

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9. RENTAL INCOME ALSO REJECTED

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9.1. The rejection of Rental Income is also arbitrary. It is submitted that once the source of acquisition for the immovable properties have been explained, the rental income received therefrom cannot be treated as tainted money. The CA‟s approach was premised on the rejection of business income and sale proceeds of jewellery as illegal funds.

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9.2. The property from which rental income was earned was situated in the Shopping complex located on Sy. No. 117/1A – which has also the residential house built on it. While the land was purchased in FY 1987-88 & 1988-89, the construction of the commercial building was done from FY 1990-91 to 1995-96. The expenditure incurred is depicted in the Cash Flow Statement.

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9.3. The rental income so earned, from FY 1992-93 to 2000-01 is duly depicted in the Cash Flow Statement, and was also disclosed in the IT returns and accepted by the Department. It totals to INR 7,76,539/- . The commercial complex in question was constructed in two stages – ground floor and first floor was completed in FY 94-95, while the second floor was completed in FY 95-96.

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9.4. Several of the fittings and furniture for the complex were brought from UAE, upon paying customs duty on the same. In addition, the AP also earned capital gain out of the sale of a Land property at Civil Station, Calicut. The profit therefrom (INR 66500) was also put disclosed in the IT returns, and increased the corpus of funds to that extent.

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9.5. The cost of acquisition of the properties from which rent was earned was within the paying capacity of the AP at the relevant time, as can be seen from the Cash Flow Statement.

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10. NRE REMITTANCES AND INDIAN SAVINGS A/C DETAILS NOT CONSIDERED:

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10.1. The CA completely omitted to consider the NRE remittances made by the AP from UAE into his Canara Bank NRE A/c No. 19. The bank statement thereof is and it tallies with the cash flow statement furnished by the AP. The tabular description of the remittances was also furnished as per which the remittances total to INR 8,05,025 ~ nearly INR 8 lacs.

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10.2. This amount has been completely missed by the CA, in assessing the legal sources for acquisition of the properties which were the subject matter of the SCN.

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10.3. In addition, the CA has not considered even the balance at relevant times in the Savings Bank A/c No. 254 with Canara Bank. The Passbook for the same for the period of March 1994 to Nov 2000 is.

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11. TOTAL INCOME EXPLAINED FOR ACQUISITION OF PROPERTIES IN QUESTION

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11.1. The income earned in UAE can be clubbed together: Savings from Salary 3,54,540 + Business income 4,34,520 = 789060 dirhams.

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11.1.1. From this, AP made NRE remittances at various times, whichafter conversion into INR by applying the applicable conversion rate totals to INR 8 lacs (A).

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11.1.2. The remainder of the wealth in UAE was more than adequate for the purchase of 42 gold biscuits at two instances, which were imported to India through legal channel, upon payment of customs duty.

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11.1.3. Thus, the sale proceeds of 42 gold biscuits fetched the AP INR 20,43,112/- (B) , while the AP raised cash of INR 51358/- (C) and

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an increased bank balance of INR 2,28,000/- (D) from the sale of family-gifted jewellery.

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11.1.4. In addition, the rental income came to INR 7,76,539/- (E) .

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11.1.5. The total cost of acquisition of all the properties which are subject to the SCN is INR 37,02,629/-, while the explained sources of income for such acquisition comes to approx. INR 38,99,009/- (A + B + C + D + E )

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11.1.6. Thus, the AP successfully explained the sources for the acquisition of the properties in question. The depiction in the Cash Flow Statement with respect to the period of acquisition of each particular property is also consistent with such explanation.

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11.1.7. Lastly, as far as the textile shop in the Shopping Complex is concerned, it was taken over by the AP from his brother Abdul Salam (the appellant in FPA-3/MDS/2014). However, even if the investment for the said textile shop is assumed to be INR 50,000/-, even then the disclosed legal funds of the AP cover the cost of acquisition of all properties in question.

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12. STANDARD OF PROOF: PREPONDERANCE OF PROBABILITY

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12.1. It is submitted that the standard of proof in these proceedings is that of preponderance of probability. It cannot be kept as high as proof of guilt in criminal law, especially because upon issuance of SCN u/s 6, the burden of proof before the CA is the AP to explain the sources of his wealth.

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12.2. It is submitted that the AP in the present case has discharged the said burden. Once that is done, for any fact asserted by the AP to be disbelieved, the CA has to base its view on some material on record.

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12.3. It must be appreciated that the CA, in the discharge of its powers, can take recourse to the entire state machinery for collecting material to refute the explanation of an notice.

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12.4. It is pertinent to note that other than recording the coerced and involuntary statement of the AP, the CA took no steps to gather material based on which it could counter or refute the explanations provided by the AP. Instead, all it did was reject each and every explanation based on mere surmises and speculation. This approach, it is submitted, was highly fallacious.

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12.5. Reliance is placed on the judgment of this Tribunal in Chatur Singh Nagra 186 ITR 83 Mira Rani Majumdar 166 ITR 230 .

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13. ALTERNATIVE ARGUMENT

¶136

13.1. Arguendo, even if the appellate Tribunal does not find any explanation believable, it has the option to remand the matter back for fresh consideration by the CA, considering the right to property of the AP in regard to all his valuable assets is at stake.

¶137

13.2. If the Hon‟ble Tribunal is inclined to foreclose even that option, even then the Tribunal should give effect to the mandate of s. 9, SAFEMA.”

¶138

In response, the learned representative of the appellant Mr. Ashok Kumar Srivastava, Joint Commissioner reiterated the submissions made by them in their written submission dated nil of September, 2017 received in this Tribunal on 18^th September, 2017 broadly as follows:-

¶139

FPA-11/MDS/2012

¶140

Page 10 of 20

¶141

It was submitted by the appellant that:-

¶142

“1.0 Shri T.P. Moideen Koya was detained under the provisions of CÓFEPOSA as per Detention order passed by Govt. of Kerala vide Order NO.65091/SS4/01/0 dated 21.1.2002 At the time of issue of DO, he was absconding, but later he surrendered and was detained at Trivandrum jail from 4^th September, 2002 to 3^rd September, 2003. He thus had completed his full period of detention.

¶143

The appellant had filed several petitions before the Advisory Board and various courts seeking to quash the detention order passed against him. The COFEPOSA Advisory board vide its order dated 16/11/2002 held that there was sufficient cause for continued detention of Moideen Koya. Against this an O.P was filed in the Kerala High Court. The following petitions and SLP were filed by the appellants before the Kerala High Court and Supreme Court against the detention order:

¶144

1.1 Writ petitions against DO :

¶145

i. O.P.No.29561/2002 before the Kerala High Court – dismissed on 11.2.2003 .(Safiya vs Government of Kerala and others, 2003 CriLJ 4580)

¶146

ii. SLP (Criminal) No.1215 of 2003 before Supreme Court – dismissed on 28.7.2003 .

¶147

iii. Writ Petition (Crl.) 69 of 2004 before Supreme Court (2004 Supp(4) SCR 904) – dismissed on 30.9.2004 .

¶148

1.2 While dismissing the SLP, Hon’ble Supreme Court has commented that Shri Koya was deeply involved in smuggling activities related to gold and also in facilitating distribution of tube money . The Hon‟ble Supreme Court further observed that the statement of Shri M. Mohd Mustafa a distant relative and employee of Kunjumon recorded on 19.8.2001 and seized documents showed that the petitioner Moideen Koya had dealt with 290 smuggled gold biscuits worth Rs.1.50 crores. He had transactions worth Rs.18 crores with Kunjumon during the period between 1.8.2001 to 15.8.2001. The relevant paragraphs of Order dated 28.7.2003 of the Hon‟ble Supreme Court are cited below:

¶149

“A careful perusal of the records placed before this Court would show that there are enough materials to show the involvement of the detenu in the smuggling activities. The State Government (Detaining Authority) have considered all the aspects and perused the relevant material documents before issuing the detention order. Such detention order was issued based on the subjective satisfaction as to the necessity of detaining the detenu by invoking the provisions of the COFEPOSA Act. The detenu, therefore, in our opinion, is not entitled to challenge the subjective satisfaction arrived at by the detaining Authority in these proceedings”

¶150

“We are not required to decide whether subjective satisfaction of the Authority is justified or not, yet a perusal of the records would reveal that the Detaining Authority has considered all the relevant aspects borne out from the aforesaid records before issuing the detention order and after arriving at the subjective satisfaction as to the necessity of detaining him by invoking the provisions of the COFEPOSA Act. The seized documents show that the detenu in this case had dealt with 290 smuggled gold biscuits valued

¶151

FPA-11/MDS/2012 Page 11 of 20

¶152

at Rs. 1.5 crores with Kunjumon and had carried out transactions worth Rs. 18 crores during the period 01.08.2001 to 15.08.2001. Mr. Bapu who was involved in the contribution of tube money stated that the detenu is an accomplice of Kunjumon and he had telephoned him at his residence on the No. 370444 appearing in his note book”

¶153

“It is also seen from the counter affidavit filed by the Government of Kerala in this Court that about 9,300 smuggled gold biscuits were transported by Kunjumon as per the documents seized from his residence and out of this the detenu T.P.Moideen Koya had transacted about 290 gold biscuits valued approximately Rs. 1.5 crores. Out of 40 crores of Hawala transactions made by Kunjumon,. the detenu Moideen Koya had transacted about Rs. 18 crores . This, according to the respondent, is very vital evidence establishing their smuggling activities”

¶154

“ On a consideration of the totality of the circumstances, the High Court came to the conclusion that the detenu has violated the provisions of law and his activities are not in the larger national interest and that the Court should be slow to come to the aid of the detenu. We agree with the conclusion arrived at by the High Court .”

¶155

The detention order passed against the appellant has thus been held valid by the Apex Court itself and hence the appellant has rightly been treated as a „person‟ under the Act. The above findings of the Hon‟ble Supreme Court also clearly establish the complicity of Shri. Moideen Koya in the illicit activities carried on by him in association with Shri. Kunjumon. 2.0 The various claims and contentions made by the appellant in the written arguments submitted in the case of Shri.T.P.Moideen Koya are addressed in the following paragraphs.

¶156

3.0 CA lacks jurisdiction to inquire into the details of income earned abroad under SAFEMA :

¶157

3.1 It is submitted that as stated above in Para 1.2 supra, the appellant Shri. Moideen Koya was deeply involved in smuggling activities related to gold and also in facilitating distribution of tube money/hawala. It is also a well known fact that in such hawala transactions, the broker making the payment is usually compensated in the form of smuggled gold and/or by monies brought in through banking channel in the guise of legally earned income and/or gold brought into the country after paying customs duty to give a colour of legal money. Such monies brought into the country in the guise of legal income is also used to make investments as in the appellant‟s case. It is therefore essential that these so called legal sources abroad are required to be established. In the case of the appellant he has claimed hugely inflated sources from salary and business income to explain the sources for the remittances made from Dubai which he failed to establish before the Competent Authority. Further the appellant had also failed to establish that these remittances and amounts obtained from sale of gold were utilized in making the investments in various immovable properties. The Hon‟ble Tribunal is therefore requested to take a holistic view of the facts of the case considering that the appellant has been engaged in smuggling of gold and was involved in tube money dealings and to not place mere reliance on the remittances made through banking channel.

¶158

FPA-11/MDS/2012

¶159

Page 12 of 20

¶160

3.2 Regarding the applicability of Section 3(1)(c)(iii) of SAFEMA to the appellant, It is submitted that the properties under consideration are „illegally acquired property‟ within the meaning of Section 3(1)(c)(iii) of SAFEMA which is stated below :

¶161

“ any property acquired by such person, whether before or after commencement of this Act, wholly or partly out of or by means of any income, earnings or assets the source of which cannot be proved and which cannot be shown to be attributable to any act or thing done in respect of any matter in relation to which Parliament has no power to make laws”.

¶162

This sub-clause has two limbs. The first limb relates to the source which cannot be proved. The second limb relates to the situation where the parliament has no power to make laws and the sources could not have been shown to any Act or thing to which parliament no power has. Both these limbs have to be simultaneously satisfied because of the word “and” in between. In order to understand the second limb of the sub-clause, we can consider an example – winnings from Roulette. The earnings from Roulette is illegal in India but not so if earned in countries in which it is legal. The parliament cannot make any law regulating Roulette outside India. Thus, if a person claims that he had earned money in some form of gambling, he may get out of the second limb of this clause if he is able to show that the source is attributable to an act in relation to which Parliament has no power to make laws. However, if he shows only income abroad without sources, he cannot escape the rigours of this sub-clause. In the present case the person affected has not proved the sources for remittances from abroad. Therefore the properties purchased out of such remittances are clearly hit by Section 3(1)(c)(iii) as it has not been established to what act the monies are attributable to.

¶163

3.3 The Hon‟ble Supreme Court in the case of CIT Vs P Mohanakala in Civil Appeal No.2548 of 2007 dated 15.05.2007 held that “ the doubtful nature of the transaction and the manner in which the sums were found credited in the books of accounts maintained by the assessee have been duly taken into consideration by the authorities below. The transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence ”.

¶164

3.4 The observations of the Hon‟ble ATFP in the case of Kannancherry Abdu & Others in FPA No.38/MDS/98 to FPA No.42/MDS/98 in its order dated 20.1.2001 (Paras 7 to 10) are very relevant to the present case and are stated below :

¶165

“ By virtue of Section 8, the burden of proving that the property is not illegally acquired property is on the persons affected. In terms of Section 3(1)(c)(iii), the person affected has to show that the source of the income earnings or assets are attributable to any act or thing done in respect of any matter in relation to which Parliament has no power to make laws. In other words, the burden of proof was cast on the persons affected to show that they had earnings in Dubai with which they could have acquired the assets in India….”

¶166

FPA-11/MDS/2012

¶167

Page 13 of 20

¶168

“We are unable to accept the contention of the learned counsel that the provisions of SAFEMA are not applicable to the earnings made outside the territories of India… The provisions of the Act are applicable if the money or property acquired outside India is utilized within the territories of India, when Section 3 (1) (c) comes into operation and the person covered by the Act under Section 2(2) have to show that the income, earnings or assets are attributable to any Act or thing done in respect of any matter in relation to which Parliament has no power to make laws”

¶169

“ The mere fact that the money from outside India has come to India through banking channels will not prove that the money has been acquired as contemplated under Section 3(1)(c)(iii). The person affected has not only to establish the source of earning outside India but has also to prove that the said amount has been invested in the property acquired in India.”

¶170

It is also submitted that the above Order of the Hon‟ble Tribunal was confirmed by the Hon‟ble High Court of Kerala in W.P.No‟s 19240, 19386, 19387 & 19388 of 2001. However the Writ Appeal filed against the above judgement in W.A.No‟s 1645, 1658 & 1659 of 2007 were allowed vide common judgment dated 24.2.2009. The SLP filed by this office against the judgement dated 24.2.2009 is currently pending before the Hon‟ble Supreme Court. The judgement dated 17.4.2012 of the Hon‟ble High Court of Madras in the case of Competent Authority v. A.Sowkath Ali (W.P.2939/2011), relied upon by the appellant is also under appeal before the Hon‟ble High Court of Madras in W.A.No.1099/2013.

¶171

4.0 Showcause Notice is Invalid / Section 18 not complied :

¶172

4.1 Regarding the issue of the show cause notice under Section 6(1), It is humbly submitted that the Competent Authority has complied with the requirement of the statute in the present proceedings by following the procedure contemplated in law as per Section 6(1) of the Act. The detention order was received on 28.1.2002. Immediately letters were issued to the Joint Commissioner of Customs and Central Excise, Kozhikode on 18.3.2002 requesting to locate and identify illegally acquired properties. On receiving a reply on 22.7.2002 further correspondences were made. Further letter was also addressed to Commissioner of Income Tax, Kozhikode on 18.3.2002 and report was received from him on 31.1.2003 where in the details of properties in which huge investments were made by Shri T.P. Moideen Koya were furnished. The report from the Income Tax authorities also referred to the sale proceeds of gold imported which was explained as the source for purchase of immovable properties. After carefully considering the background in which the appellant was detained under COFEPOSA and the availability of evidence indicating the possibility for the proceeds of crime to have been deployed in such investments, the Competent Authority issued the notice under Section 6(1). Thus, every requirement of section 18 of SAFEMA has been thoroughly fulfilled before issuing the notice under Section 6(1) giving no room for compliant on non application of mind.

¶173

4.2 The detention order passed by the State Government was received by this office on 28.1.2002 and a notice under Section 6(1) was issued on 22.4.2003 following financial investigation

¶174

FPA-11/MDS/2012

¶175

Page 14 of 20

¶176

reports of Customs and Income Tax Department in respect of following properties:

¶177

S No	Description of property	Amount Invested	Period of Investment
1	Coconut garden in RS No.117/1A, Chevayoor Village measuring 41.85 Cents	1,28,400 11,868	FY 1987-88 FY 1988-89
2	Shopping Complex (Sajna Building)	8,10,000	FY 1990-90 to FY 1995-96
3	House property at 33/577A, Near Chevayoor Police Station, Marikunnu, Kozhikode	8,00,000	FY 1994-95
4	Coconut garden in RS No.239/1A2, Chevayoor Village measuring 55.6 Cents	5,26,717	FY 1994-95
5	Coconut garden in RS No.26 of Parambil Village measuring 1.38 acre	1,77,607	FY 1994-95
6	Coconut garden in RS No.126/1, Chevayoor Village measuring 78.75 Cents	3,28,037	FY 2000-01
7	84.5 cents of coconut garden in the name of brother T.P.Abdul Salam	4,40,000	FY 2000-01
8	Toyota Qualis Car KL-14-B- 3377	4,80,000	FY 2000-01 & 2001-02
9	Textile shop in Sajna Bldg Shopping complex	0	Not Known
	TOTAL	_37,02,629* _

¶178

 Value of properties as per 7(1) order dated 28.2.2012.

¶179

The notice under Section 6(1) was issued after carefully considering the background in which the appellant was detained under COFEPOSA, the huge investments made in various properties against the known sources of income and the availability of evidence indicating the possibility of the proceeds of crime being invested is such investments. The same has been clearly stated in the reasons recorded for issue of notice under Section 6(1). Hence, the allegation is totally denied. The nexus between the illicit source of income and the disproportionate value of the property were clearly ascertained.

¶180

5.0 The Appellant was exonerated in adjudication proceedings of Customs:

¶181

5.1 The contention of the appellant that he was exonerated in the adjudication proceedings before the Collector of Customs and Central Excise is neither relevant nor binding on the Competent Authority on account of the detention of Shri.Moideen Koya being held valid by the Hon‟ble Supreme Court. What is germane to the proceedings before the Competent Authority under SAFEMA is a valid detention order which is neither revoked by the Advisory Board or set-aside by a court of competent jurisdiction, which is not the case here. Further the exoneration of the appellant in the customs case was on account of non examination of one Shri.Kunjumon, the main culprit in the case and not on account of merits or the appellant being found innocent. Moreover, the findings of any other officer or authority under any other law are not conclusive in respect of proceedings under SAFEMA as per Section

¶182

FPA-11/MDS/2012

¶183

Page 15 of 20

¶184

21 of the Act. Therefore the Acquittal of the detenue in the customs proceedings cannot wipe out the order of detention made against him, unless it is revoked or set aside as contemplated by Section 2(2) (b) (i) to (iv) of the Act. As such the proceedings under SAFEMA were made in accordance with the Act.

¶185

6.0 Statement recorded illegally and incorrect reliance placed thereon :

¶186

6.1 The appellant claims that the statement was obtained under compulsion and was not recorded in the language known to him. Shri R. Sugathan, an Assistant of this office accompanied the Competent Authority and assisted him while the statement was recorded from the appellant in Kozhikode. The mother tongue of Shri S. Sugathan is Malayalam. After the statement was typed in the computer, the draft print out was taken out and shown to Sh. Moideen Koya for any suggestions he may like to make. Thereafter the appellant suggested some corrections which in his opinion was the meaning of the sentence which he gave as reply to some of the questions put to him. After incorporating all his suggestions, a fair copy was prepared and signed by Shri Moideen Koya and, the draft was disposed of in his presence. Further, the appellant also signed the statement with a further confirmation/clarification that he understood it.

¶187

6.2 It is submitted that the argument that the appellant did not volunteer the statement and the alleged statement was obtained under compulsion has no merit as the petitioner has been explained what was being asked and he understood what he was stating and also has he signed the statement. The appellant was fully aware of what was written in the statement. It is submitted that the Competent Authority exercised his authority as per the provisions of Section 15 and recorded the statement from the appellant and hence, the statement recorded is part and parcel of the forfeiture proceedings.

¶188

7.0 The Evidences furnished by the appellant were not properly considered by the Competent Authority :

¶189

7.1 The counsel while challenging the Forfeiture order of the Competent Authority under Section 7(1) has stated that the properties put to notice under Section 6(1) were without any sound logic and order of forfeiture was issued without giving due consideration to the evidences produced by Shri.Moideen Koya before Competent Authority during the course of hearings and through additional submissions. In this regard, it is humbly submitted that a very detailed reasoning has been recorded by CA in the 7(1) order for rejecting the claim of Shri Koya. Briefly, it may be apprised that the sources of fund as claimed by Shri Koya were as under:

¶190

i.	Salary in UAE from 1977 to 1994	- 403,640 dirhams
ii.	Share of profits from Jamal Travel Agency
	1988-89 to 1994-95	-343,520 Dirhams
iii.	Sales of jewellery in India (1987-88 to 92-93)	- Rs.2,79,358/-
iv.	Rental income 92-93 to 2000-01	- Rs.7,76,539/-

¶191

7.2 In the Cash Flow statements (CFS) submitted by Shri.Koya, he claimed to have made savings in UAE between 1977 to 1994 which were claimed to have been remitted through banking channels and by legal import of gold and that these funds were utilized for making investments which yielded rental income. This rental income and gold sold in 1987 to 1989 were used to make further investments.

¶192

FPA-11/MDS/2012 Page 16 of 20

¶193

7.3 The huge cash balances in rupees in India on 31^st March of 1997, 1998, 1999 & 2000 were stated to be partly kept in house & given out as loans to friends & relatives. Similarly for the huge cash balances in UAE even after his relocation to India in 1994, it was stated by Shri.Koya to have been kept with his brother in UAE. These loans and transactions were not reflected in the cash flow statement. The cash flow statement was thus full of inaccuracies and is therefore to be treated as a post facto explanation conceived deliberately. During his deposition before the Competent Authority, Shri.Koya admitted that the Cash Flow statement submitted on 8.4.2005 was only a make believe statement based on his memory and did not reflect actual state of affairs. Hence the cash flow statement, which was without a shred of corroborative evidence was rejected by the Competent Authority. Detailed reasons for rejecting the CFS have been recorded by the Competent Authority in Para‟s 12.1, 12.2 & 12.3 of the forfeiture order passed on 28.2.2012.

¶194

7.4 The contention of the appellant that there being no necessity to file income tax returns in Dubai and hence accounts were not maintained will not provide him any relief in the proceedings under SAFEMA as the burden of proof to explain the licit sources of income is cast on him under Section 8 of SAFEMA. The findings of the Hon‟ble Tribunal in Para 10 of its order dated 20.1.2001 the case of Kannancherry Abdu & Others (referred supra) is very much relevant to this issue. The Hon‟ble Tribunal had held that:

¶195

“The burden of proof of the earnings of the appellants in Dubai was squarely cast on them by virtue of Section 8 of the Act. If the appellants failed to discharge the burden cast on them by merely stating that they are unable to adduce any proof owing to the laws existing in Dubai, by which foreigners are prohibited from holding any property in that country, the burden cast on the appellant, cannot be said to have been discharged. The mere fact that the appellants state that money was received from Dubai through banking channels, does not absolve them of the burden cast on them under Section 3(1)(c)(iii) and Section 8”

¶196

8.0 Sources of Funds claimed by the Appellant :

¶197

8.1 Salary : The appellant claimed that he was employed with Etilsat, UAE from 1977 to 1994. A Certificate from Etilsat states salary at time of termination in 1994 @ 3047 Dirhams/month. No details of earlier salary amounts claimed from 1977 onwards were mentioned in that certificate. Though the fact of Shri. Koya‟s employment with Etilsat is supported by the certificate from M/s Etilsat, the claims of salary earned from 1979 were highly Inflated. Shri.Koya had claimed a salary of 20,000 dirhams in each of the 11 years from 1978-79 to 1988-89. There was an increase of 20% in his salary from 1988-89 to 1989-90 and again an increase of 40% from 1990-91 to 1991-92, an increase of 75% in the three year period from 1988-89 to 1991-92.

¶198

Despite such inflated claims of salary, considering the fact that the appellant was employed with M/s Etilsat, 50% of the gross salary claim of Rs.403,640/- dirhams amounting to 201,820 dirhams were estimated to be the savings out of salary, less estimated family expenses available to the appellant for Investment. In the same way 50% of the cash retained in Dubai was treated as FPA-11/MDS/2012 Page 17 of 20

¶199

available for investment. Thus despite all the tall claims of the appellant regarding salary received, 50% of the total salary claimed was estimated as savings, which is very reasonable considering the fact that no evidence of actual salary earned from 1979 to 1993 was produced by the appellant. A detailed finding in this regard has been made by the Competent Authority in Para 16.3 of the forfeiture order dated 28.2.2012.

¶200

8.2 Business Income : The appellant had claimed huge profits out of an investment of 20,000 dirhams made in 1988 with Jamal Travel Agency(JTA) as sleeping partner for 25% interest. Apart from a certificate from M/s Jamal Travel Agency stating the payment of 434,530 dirhams in various years between 1988-89 to 1994-95, no other evidence in the form of bank accounts, partnership deed etc were submitted by the appellant. From the certificate of JTA it was noticed that the appellant is said to have been paid a sum of 42,800 dirhams in 1988-89, the same year in which he is said to have become a partner by investing 20,000 dirhams. Similar hugely inflated returns were shown in the subsequent periods totaling to 434,500 dirhams in the seven year period between 1988-89 to 1994-95. The highly inflated claim of the appellant was thus disbelieved by the Competent Authority.

¶201

8.2.1 Further no evidence on how these moneys were legally brought into the country have not been submitted by the appellant . These transactions/investments relate to the period when FERA was in force and strict regulations were enforced by RBI on import/export of currency. Any payment made or received in foreign currency without the prior permission of RBI was illegal . Any exchange of currency had to be done only through dealers authorized by RBI and that too only on furnishing of declaration and any other information required as mandated under Section 6(5) of FERA.

¶202

“Section 6(5) : An authorised dealer shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declarations and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of, any contravention or evasion of the provisions of this Act or of any rule, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised dealer shall refuse to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person report the matter to the Reserve Bank.”

¶203

Further, as per Section 13 of FERA, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any, prescribed, bring or send into India any foreign exchange or any Indian currency.

¶204

8.2.2 No information/evidence has been furnished by the appellant of having obtained any such permission from RBI or of filing any declaration through any authorized dealer. Without such evidence, it is only to be assumed that the money was brought through illegal means making the money tainted. T he Canara Bank A/c No.254 submitted by the appellant is for the period from 31.3.1992, which is the period during which gold was brought in by the appellant and FPA-11/MDS/2012 Page 18 of 20

¶205

sold in India and hence this account cannot be stated to be the one used for his remittances from UAE. Apart from this account no other account statement was furnished by the appellant, though his cash flow statement mentions of an NRE A/c No.19.

¶206

8.3 Jewellery sold : The appellant claimed that he sold jewellery in India in the years 1987-88 to 1992-93 totalling to Rs.2,29,358/The appellant‟s claim that the jewellery sold were gifts to his wife by his father-in-law, brother-in-law etc while they were in UAE were not supported by any evidence. As the proof produced were only for jewellery sold, the source for acquiring such jewellery therefore remained unexplained.

¶207

Income tax returns for A.Yrs 1993-94 and 1995-96 were filed by the appellant on 12.12.1995 in one day. From the assessment order passed for the A.Yrs 1993-94, it is seen that during the FY 1992-93, the appellant had brought 4899.30 gms of gold into India. The purchase bill dated 3.8.92 for purchase of 2568.8 gms of gold from one Fashion Jewellery, AlKhaimah, UAE was not relied upon by the ITO as the purchase price shown by the appellant was not verifiable.

¶208

From the assessment order passed for the AY 1995-96, it is seen that during the FY 1994-95, the appellant had brought in 4900 gms of gold but no purchase bills were produced. No claim was made before the Income Tax Officer that jewellery belonging his wife was sold in India. Thus the submissions before the ITO that the gold was purchased in UAE is contrary to the claim before the Competent Authority that the gold jewellery gifted to his wife by her family and relatives were brought into India by paying customs duty and then sold.

¶209

Further such huge quantities of gold (estimated to be of a value of Rs.35 lakhs considering the import of 9800 gms of gold in the two years @ Rs.361/gm as admitted by the appellant before the IT authorities) have to be seen in the light of the appellant being accused of dealing with hawala/tube money and in huge quantities of smuggled gold of value of Rs.18 crores in a very short period between 1.8.2001 to 15.8.2001.

¶210

8.4 Rental Income : Detailed findings in this regard are clearly made in paragraphs 16.1 to 16.4 of the forfeiture order dated 28.2.2012. As the legal funds available to the appellant for making investments in immovable properties in India upto 1992-93 were not proved, such property acquired the characteristic of an illegally acquired property. The rental income obtained from such illegally acquired property is therefore, also tainted. Therefore, in assessing the legal funds available to the appellant for the various investments, the rental income claim was rightly ignored.

¶211

From the above submissions it is clear that none of the grounds will stand any judicial scrutiny and hence, it is humbly submitted that the appeal may kindly be dismissed.”

¶212

I have carefully examined the case. The appellants has stressed on

¶213

the point that as per Section 3(1)(c)(iii) of the Act it has very limited FPA-11/MDS/2012 Page 19 of 20

¶214

application to them since all the incomes were earned when the appellant was working abroad. With regard to their utilization in India to which this Act would apply, they have given a detailed cash flow statement. The Competent Authority while discussing the components of salary, business income etc., have gone by his estimates and presumptions which is not based on any documentary evidence. The appellant has also given the details of all the bank accounts in which the money brought from abroad in to India was deposited. It is therefore felt that all the documents submitted by the appellant needs to be examined and clear findings given on those which the forfeiture order does not do. In the interest of justice, I therefore allow the appeal by way of remand to the Competent Authority. The appellant shall place all the documents in the present case before the Adjudicating Authority who shall examine each of them and pass a fresh order.

¶215

(Ananya Ray) Member

¶216

New Delhi, 22^nd January, 2018

¶217

‘K’

¶218

FPA-11/MDS/2012

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Page 20 of 20

FPA-11/MDS/2012 of T.P. Moideen Koya v/s The Competent Authority, Chennai

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FPA-11/MDS/2012 of T.P. Moideen Koya v/s The Competent Authority, Chennai

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