Allowed

FPA-PMLA-187/LKW/2011 of M/s. Parbati Devcon (P) Ltd. v/s The Deputy Director Directorate of Enforcement, Lucknow

ATFP2 Sept 2019FPA-PMLA-187/LKW/2011

Case brief

AI extract

What is this about?

The Tribunal allowed an appeal filed under Section 26 of the PMLA, 2002 against an order of attachment. It held that the attachment was illegal due to lack of specific reasons to believe a nexus existed between the assets and proceeds of crime and quashed the order.

What did the court decide?

The impugned attachment order was set aside and the property was released forthwith.

FPA-PMLA-187/LKW/2011 of M/s. Parbati Devcon (P) Ltd. v/s The Deputy… — Corruption | ATFP (2019)

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APPELLATE TRIBUNAL FOR SAFEMA, FEMA, PMLA, NDPS, PBPT Act AT NEW DELHI

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FPA-PMLA-187/LKW/2011
M/s. Parbati Devcon (P) Ltd.	… Appellant/Applicant
Versus
The Deputy Director
Directorate of Enforcement, Lucknow	… Respondent

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Advocates/Authorized Representatives who appeared

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For the appellant For the respondent	: :	Shri Devesh Poddar, Advocate Shri Nitesh Rana, Advocate

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CORAM JUSTICE MANMOHAN SINGH : CHAIRMAN [

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ORDER

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02.09.2019

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1 . The above said appeal was filed u/s 26 of Prevention of Money Laundering Act, 2002 against the order dated 6^th April, 2011.

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The ld. counsel for the appellant submits that the Hon‟ble Adjudicating Authority has failed to appreciate that the appellant company did not had any investment which can be termed as proceed of crime. The investment made by share holders or loans and advances stands explained and accepted by the income tax department in its regular assessments made on the basis of audited books of accounts.

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He also states that since there was no proceed of crime, the order of attachment passed is illegal. It is also stated by the appellant that Sri Madhu Koda and others against whom proceedings were initiated through

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FPA-PMLA-187/LKW/2011

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Page 1 of 6

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FIR filed by the Vigilance Department had no connection whatsoever with the appellant company, therefore it is not correct if the name of the appellant company is connected with the group of Shri Madhu Koda and others. The Department of Enforcement or Adjudicating Authority has failed to bring on record any “proceed of crime” invested in the appellant company fixed assets, as such, order of attachment passed is not correct.

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In FIR no. 09/01 dated 02/07/2009 was registered at Police Station Nigrani, Ranchi and final report u/s 173 of the CRPC was submitted on 28/01/2010. Vide the said report it was alleged that Sri Madhu Koda Ex Chief Minister of the State of Jharkhand during his tenure in 2005-06 as a chief Minster misused his official position in cognizance of his aide Sri Binod Sinha and amassed assets in excess of his income from legal sources.

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The main proceedings was carried out upon the appellant company was on basis of a statement given by Sri Mrinal Kanti Paul (Director) on 17/02/2010 (date of search) U/s 133A of the Income tax Act wherein it is stated that Sri Mrinal Kanti Paul made a disclosure to the tune of Rs. 1.5 crore for the Financial Year 2008-2009 relevant to Assessment Year-20092010. It was only upon this statement basis, the adjudicating authority held that since the director is not able to explain the source of this surrendered income, the same is considered as proceed of crime and attachment is made.

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As a matter of fact, the original returns filed by the assesses U/s 139 of the Income Tax Act for the relevant assessment year 2008-2009 has been accepted and assessed u/s 143(1) of the IT Act. No further proceeding was initiated by the income tax department on the alleged

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FPA-PMLA-187/LKW/2011

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Page 2 of 6

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statement and disclosure of Rs. 1.5 Crore made in the petitioner company by Sri Mrinal Kanti Paul.

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There was no specific reason to believe recorded by the adjudicating authority that there is any nexus between the alleged proceed of crime and property sought to be attached. Provisions of section 5(1) of the PMLA Act 2002 was not rightly met. It was done only for reason about statement of Sri Mrinal Kanti Paul before the Income Tax Authorities for making a disclosure as undisclosed income which was subsequently not doubted by the Income Tax. As such, adjudicating authority was not justified in confirming the provisional attachment order passed. On the basis of guess work even if the director of the company is unable to explain. It was the duly of the respondent that prima facie, it was a proceed of crime.

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The complete details of the directors in the Form 20B of M/s Creative Fiscal services limited. From financial year 2007-08 to financial year 2010-11, would show that Shri Mrinal Kanti Paul was never appointed as a Director of Creative Fiscal Limited. The foundation of allegation i.e. the link between Shri Mrinal Knati Paul and the mian accused i.e. Sri Madhu Koda, Binod Sinha, Vijay Joshi and their associates is based on he incorrect fact that Shri Paul was a Director of Ms. Creative Fiscal Limited along with Shri Joshi. As mentioned, Shri Paul was never appointed as the Director of Creative Fiscal Limited and, hence, the entire attachment case appears to have been founded on a wrong fact leading to incorrect assumptions. Photo copies of the Form 20B from financial year 2007-08 to financial year 2010-11 are annexed.

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FPA-PMLA-187/LKW/2011

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Page 3 of 6

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In page no. 154 & 155 of the provisional attachment order no. 4 dated 10/11/2010 the name of the companies have been mentioned in which search action u/s 132 of the Incoe Tax Act took place in connection with the accused Sri Mdhu Koda, Binod Sinha, Vijay Joshi and their associates. In this list at Sl. No. 3 name of the petitioner company is mentioned, however, in page no. 155 para 55 wherein list of the companies in control of Binod Sinha and Vijay Joshi is given, there is no whisper of the appellant company.

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The first time the name of the appellant company occurred in the provisional attachment order at page 177 point no. 44, by which the authorities intended to attach the share capital of Rs. 31,00,000/- and current assets worth Rs, 59,24,183/- as on 31/03/2008. The copy of the audited balance sheet is attached and marked as Annexure B. Thereafter adjudicating authority confirmed the provisional attachment of the current assets and the provisional attachment of share capital was vacated.

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The share holders of the appellant company, since its incorporation on 01/01/2008 have always been the members of Paul family and other individual entities/companies (who have nothing to do with the accused) and never has the petitioner company had any transaction with Sri Madhu Koda or Binod Sinha or their associates.

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It can be seen from the balance sheet annexed, the provisional attachment against the current assets as on 31/03/2008 to the tune of Rs. 59,24,183/- consisted of:-

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Cash and Bank Balane- Rs. 31,57,950/-

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Loans & Advances - Rs. 28,87,469/-

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FPA-PMLA-187/LKW/2011

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Page 4 of 6

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Rs. 60,45,419/-

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Less:- Current Liabilities - Rs. 1,21,236

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Rs. 59,24,183/-

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The above cash & bank balance and Loans & Advances stands duly assessed by the Income Tax Department in course of regular assessment u/s 143(1). The cash and bank balance includes income and share application money received from 6 share holders who have no connection of alleged Sri Madhu Koda or Binod Sinha or their associates. The loans and advances include the advances received by the appellant company against sale of Flat. Completer details of the same have been mentioned in the audited accounts copy of which is attached herewith. The same was duly disclosed by the appellant and stands assessed to tax.

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The name of the appellant company was just added in the list on basis of search action carried out by the Income Tax Department in connection with mega search against Sri Madhu Koda. It was upon search that Sri Mrinal Kanti Paul made a statement to disclose Rs. 1.5 crore in the petitioner company. However the same returns for the relevant period stands duly accepted and assessed by the Income Tax Department wherein this disclosure amount of Rs. 1.5 Crore was not included. There is absolutely no proceeding pending before the Income Tax Department of the appellant company for the relevant period till date. It is only on basis of this statement that charges have been alleged to be framed against the appellant company.

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Counsel for the appellant also states that on dated 31.03.2008 current assets as existed had undergone a complete change, as such,

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FPA-PMLA-187/LKW/2011

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Page 5 of 6

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order of attachment does not have any factual basis. The assets as existed on 31^st March, 2008 cannot be subject matter of attachment as on April, 2011.

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The appellant is not chargsheeted under PMLA and no prosecution complaint has been filed by the respondent. The ld. counsel for the respondent states that the statutory period of time of 90 days has already been expired with the meaning of Section 8(3)(a) of the Act..

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Under these circumstances, the impugned order against the appellant is set-aside by allowing the appeal. Consequently P.A.O. is also quashed. The attachment is released forthwith.

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No cost.

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(Justice Manmohan Singh) Chairman

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New Delhi,

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2^nd September, 2019

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„S‟

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FPA-PMLA-187/LKW/2011

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Page 6 of 6

FPA-PMLA-187/LKW/2011 of M/s. Parbati Devcon (P) Ltd. v/s The Deputy Director Directorate of Enforcement, Lucknow

Case brief

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FPA-PMLA-187/LKW/2011 of M/s. Parbati Devcon (P) Ltd. v/s The Deputy Director Directorate of Enforcement, Lucknow

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