Partly allowed

FPA-120/MUM/2019 of Pravinchandra M. Wadecha v. The Competent Authority, Mumbai

ATFP8 Apr 2025FPA-120/MUM/2019

Case brief

AI extract

What is this about?

The Tribunal dissected a forfeiture appeal involving properties and foreign currency seized under SAFEMA. It held that the appellant failed to prove the source of funds for the undervalued Royal Palace flat, ordering its forfeiture, but set aside the forfeiture of the Smit Kinnari flat due to insufficient evidence of illegal acquisition.

What did the court decide?

Impugned order confirmed to the extent of forfeiting Royal Palace flat and foreign currency; order setting aside forfeiture of Smit Kinnari flat allowed.

FPA-120/MUM/2019 of Pravinchandra M. Wadecha Vs. The Competent… — Property and Title | ATFP (2025)

¶1

APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

¶2

FPA-120/MUM/2019

¶3

Pravinchandra M. Wadecha ... Appellant

¶4

Versus The Competent Authority, Mumbai … Respondent

¶5

Advocates/Authorized Representatives who appeared

¶6

For the Appellant	: Mr. Vinod Kumar, Adv.
For the Respondent	: Mr. Aakash Kumar, Adv.
CORAM
SHRI BALESH KUMAR	: MEMBER

¶7

FINAL ORDER 08.04.2025

¶8

This Order disposes of the Appeal No. FPA-120/MUM/2019 filed by Sh. Pravinchandra M. Wadecha u/s 12 (4) of The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA). The Appeal has been filed against the Order No. 05/MUM/AHD/SAFEMA/2019-20 dated 30.09.2019 issued under Section 7 of SAFEMA (Impugned Order) by the Competent Authority, SAFEMA, Mumbai.

¶9

2. On finding by Ld. Competent Authority that following three properties are illegally acquired, the same were forfeited to the Central Government free from all encumbrances vide the Impugned Order;

¶10

(i) Flat at Smit Kinnari Apartment, A Block, 8^th Floor, Navsari Bazar, Surat valued at Rs. 5,00,000/- purchased in 1986. (ii) Flat No. 710, 7^th Floor, Royal Palace, Ghod Dod Road, Surat valued at Rs. 20,17,800/- purchased in 1995.

¶11

(iii) Foreign currency US $ 28,685 - UAE Dirham 400, South Africa Rand 1780, Turkey Yen 90, Israeli Shekel 350, Jordan Dinar 9 and Swiss Franc 20 totally valued at Rs. 16,37,570 was seized on 29.04.2009.

¶12

FPA-120/MUM/2019

¶13

Page 1 of 13

¶14

3. The Appellant was intercepted by the AIU (Customs Officers) at the Chhatrapati Shivaji International Airport, Mumbai on 29.04.2009 with foreign currency of value Rs. 16,37,570/-. The investigation conducted by the Office of the Competent Authority revealed that the Appellant made 13 foreign trips in 2008 and 3 foreign trips in 2009 till his interception. The Appellant could not give reasonable explanation for travelling abroad frequently. The Appellant was detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA). A Show Cause Notice (SCN) dated 24.05.2011 u/s 6 (1) of SAFEMA was issued. The Appellant failed to show his lawful sources of income which could fund his aforementioned three properties. Therefore, the aforementioned properties were forfeited u/s 7 of SAFEMA vide order dated 10.05.2012. On appeal by the Appellant, the Appellate Tribunal for Forfeited Property remanded the matter on 25.04.2014 to the Competent Authority to pass fresh order after considering the documents filed by the Appellant in the Appeal.

¶15

4. The Ld. Competent Authority examined the documents which had been filed by the Appellant before the Appellate Tribunal for Forfeited Property and gave a number of opportunities to the Appellant for personal hearing beginning from 28.04.2015 to 19.06.2019. Ld. Competent Authority on analysis and discussion of the evidence passed the Impugned Order forfeiting again the three aforementioned properties.

¶16

5. Ld. Counsel for the Appellant argued that since the Appellant had the Import Export Code (IEC) for running his business he had to travel abroad frequently. He further argued that in the year 2007 the

¶17

FPA-120/MUM/2019

¶18

Page 2 of 13

¶19

war took place between Israel and Lebanon, when the Appellant withdrew the seized currency from his Israel Bank Account and came back to India. He pleaded that due to the situational exigency, the Appellant forgot to fill Currency Declaration Form (CDF) and to furnish it to the Customs Authority. Ld. Counsel argued that in 2009 the Appellant was going back to deposit the foreign currency in his Israel Bank Account when he was intercepted at Mumbai Airport. He submitted a copy of the Israel Bank Account which shows cash withdrawal of $ 14,950 on 13.11.2007 and $ 10,000 on 27.12.2007 which he claimed to be part of the seized amount.

¶20

6. Ld. Counsel for the Appellant argued that the Flat at Smit Kinnari Apartment was purchased for Rs. 1,19,500/- which was paid for in installments from his income generated through local diamond brokerage and from Rs. 49,000/- which was taken as loan from his wife Ms. Dipikaben P. Wadecha. The loan is reflected in his balance sheet and Income Tax Return (ITR) for A.Y. 1988-89. The second Flat at 710, Royal Palace was purchased for Rs. 6,50,000/- vide DD No. 0156933 dated 30.06.1995 of Bank of Baroda. He also paid Rs. 50,000/- for society maintenance and Rs. 50,500/- for parking facility which are also reflected in ITRs of the relevant years. Ld. Counsel for the Appellant claimed that for the purpose, loan of Rs. 2,00,000/- was obtained from Sh. Dinesh S. Shah his relative, loan of Rs. 2,58,000/from Ms. Dipikaben P. Wadecha (wife), loan of Rs. 1,80,000/- from Pravinchandra M. Wadecha (HUF), loan of Rs. 19,500/- from Bhupendra M. Wadecha (younger brother) and balance amount was from his local diamond brokerage.

¶21

7. Ld. Counsel for the Appellant stated that the Appellant has been earning income over a long period of time as brought out by the ITRs

¶22

FPA-120/MUM/2019

¶23

Page 3 of 13

¶24

which he has filed beginning from 1983-84 to 2010-11. He further argued that the ITRs for his wife Smt. Diptiben P. Wadecha has also been furnished for the years 1995-96 and 1996-97. The ITRs for Pravinchandra Wadecha (HUF) for the years 1996-97 and 2011-12 have also been submitted. Ld. Counsel further argued that the Appellant has submitted copies of the Profit and Loss Account for the year ending 31.03.1996, Copy of the capital account for the year ending 31.03.1996 and balance sheet as on 31.03.1996 which clearly show the unsecured loans and the two Flats. The said three documents for the year ending 31.03.1989 also bring out the unsecured loans given by his wife and the Flat at Smit Kinnari Apartment. Ld. Counsel stated that the statements relating to income and capital brings out that the Appellant has brokerage income varying from Rs. 13,750/- in 1983-84 to Rs. 2,72,289/- in 2011-12. Capital balance has varied for the same period from Rs. 15,000/- to Rs. 11,99,040/-. Ld. Counsel also argued that Smt. Dipikaben Wadecha has given an affidavit on 02.07.2014 of having given loans of Rs. 49,000/- in 1987-88 and Rs. 2,58000/- in 1996-97. She has stated on the affidavit that she has been filing her ITRs, since 198485.

¶25

8. Ld. Counsel for the Appellant also argued that documents relating to immigration visa for South Africa, Copy of IEC code, Affidavit of HUF of giving loan of Rs. 1,80,000/- from HUF to the Appellant, Copy of Hand Written Accounts of HUF, Copy of Share Certificate of Flat at Smit Kinnari Park and of 710 Royal Palace Flat and Copy of Banker’s Cheque of Rs. 6,50,000/- dated 30^th June, 1995 issued in favour of Shailendra Kumar Jain have already been furnished.

¶26

FPA-120/MUM/2019

¶27

Page 4 of 13

¶28

9. Ld. Counsel argued that the first passport of the Appellant was issued on 27.10.1986 and he obtained visa for Belgium on 12.11.1986, however, the Smit Kinnari Flat was obtained in 1986 and before that he had not travelled abroad. Hence, the charge of smuggling to generate funds to acquire the flat cannot stand. Similarly, while he bought the flat at Royal Palace in 1995 his earlier passport had expired in 1991 and he got a new passport on 29.05.1997. Ld. Counsel informed that the Appellant had travelled only six times abroad after obtaining the new passport in 1997. Ld. Counsel reiterated that the income of the Appellant was from diamond brokerage and not smuggling. He pleaded that the Appeal may be allowed.

¶29

10. Ld. Counsel for the Respondent contended that the Appellant does not seem to be educated and does not have technical qualification. Ld. Counsel argued that the Appellant has failed to give any documentary evidence to corroborate his contentions that he had known sources of income, was doing diamond brokerage and was going abroad to do business. Ld. Counsel argued that by virtue of clause (iii) of Section 3 (1) (c) of SAFEMA, the immovable properties of the Appellant can be subjected to the present proceedings. Section 3 (1) (c) (iii) is reproduced as below;

¶30

“1) In this Act, unless the context otherwise requires,

¶31

(c) illegally acquired property, in relation to any person to whom this Act applies, means,

¶32

(iii) any property acquired by such person, whether before or after the 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; or”

¶33

Ld. Counsel argued that in accordance with the said provision and the judgment of the Hon’ble Supreme Court in the matter of Attorney

¶34

FPA-120/MUM/2019

¶35

Page 5 of 13

¶36

General of India and Others vs. Amratlal Prajivandas and others (AIR 1994 2179 SC) the two Flats purchased by the Appellant are subject to the proceedings of SAFEMA and the properties could be forfeited. Ld. Counsel argued that just because he did not travel abroad does not imply that he did not indulge in illegal activities.

¶37

11. Ld. Counsel for the Respondent argued that the Appellant has failed to file ITRs of his wife for the relevant year as to corroborate that she gave loan of Rs. 49,000/- to him. Again, the Appellant failed to submit documentary evidence which is duly authenticated as to reflect capital balance of Rs. 47,223/- at the relevant point in time. Even for his total income of Rs. 64,573/- from 1983-84 to 1986-87, no documentary evidence has been produced. The Appellant has failed to given any details for withdrawal for household expenses. Ld. Counsel contended that the documents other than ITRs have neither any authentication nor any explanation for linking his professed diamond brokerage business with the availability of funds for funding the purchase of the flat at Smit Kinnari valued at Rs. 5,00,000/- which he claimed to have bought for Rs. 1,19,500/-.

¶38

12. Ld. Counsel for the Respondent contended that the Appellant has miserably failed to prove that Flat No. 710, at Royal Palace valued at Rs. 20,17,800/- was purchased by him for Rs. 7,50,550/-. The Appellant has claimed that the amount was generated out of loans and capital balance. Ld. Counsel argued that the Appellant submitted copy of Hand Written Accounts for 1996-97 of Sh. Dineshbhai S. Shah, a relative from whom he claimed to have taken loan of Rs. 2,00,000/-. However, no evidence to corroborate the loans viz the Books of Accounts, ITRs and confirmation letter was presented. In the absence of documents to establish creditworthiness of the lender, the

¶39

FPA-120/MUM/2019

¶40

Page 6 of 13

¶41

claim of the Appellant cannot stand. Ld. Counsel further argued that the loan of Rs. 2,58,000/- from the wife of the Appellant has not been corroborated by authenticated Books of Accounts and adequate numbers of ITRs as to show the accumulation of such amount with the wife. In any case, the source of income has not been explained even for wife. Ld. Counsel also argued that in the failure of Books of Accounts and Income Tax Details of HUF for the previous years mere contention of having received loan of Rs. 1,80,000/- cannot be accepted. Moreover, any affidavit furnished on behalf of HUF cannot be accepted as the Appellant as Karta of the HUF has himself signed the affidavit. Ld. Counsel contended that even for a loan of Rs. 19,500/- from Sh. Bhupendra M. Wadecha merely hand written accounts have been submitted without furnishing authenticated accounts and confirmation letter. Ld. Counsel also cast doubts on the capital balance of Rs. 93,050/- for 1995-96 since the Appellant had merely produced hand written accounts which do not reflect any details for withdrawal for household expenses except Rs. 24,000/- as cash withdrawal without giving the reason thereof. The Appellant claimed to have received gift of Rs. 30,100/- from one Sh. K.T. Patel which without any evidence cannot be accepted and considered.

¶42

13. Ld. Counsel for the Respondent argued that the Appellant has furnished a copy of bankers Draft No. 0156933 for Rs. 6,50,000/- to Sh. Shailendra Jain, the seller of the property, Flat No. 710 at Royal Palace to show the genuineness of the transaction. However, the Appellant did not explain that how this bank draft was issued by Bank of Baroda in as much as whether cash was paid or was there bank transfer. From the perusal of the certificate issued by the Deputy Collector, Stamp Duty Valuation Department, Surat City-1, it is obvious that the impugned property was undervalued at Rs.

¶43

FPA-120/MUM/2019

¶44

Page 7 of 13

¶45

6,50,000/-. The Deputy Collector in Case No. 1/291 decided the value of the impugned property as per Section 32-A of the Stamp Duty Act at Rs. 15,17,800/- as on the date of sale agreement i.e 03.07.1995. The Appellant not only accepted the higher revised value of the property but also paid additional stamp duty. Ld. Counsel argued that the Appellant not only failed to give documentary evidence for his contention that payment of the impugned property at value Rs. 7,50,550/- was made largely from loans but also failed to discharge the onus of burden of proof under Section 8 of SAFEMA to the extent of Rs. 15,17,800/- plus certain other charges with cumulative amount being Rs. 16,77,190/- utilized for purchase of the said property.

¶46

14. Ld. Counsel argued against the contention made by the Appellant that out of the seized foreign currency of value Rs. 16,37,570/-, major portion was the amount of $ 24,950 which was withdrawn from his Israel Bank Account. He contested the claim of the Appellant that the amount was brought to India which he forgot to declare to the Customs at the Airport and which was being taken out of India when he was intercepted. Ld. Counsel argued that the Appellant was a frequent traveler and was familiar with the law. The submission of the Israel Bank Account does not explain the source of his huge deposit of US $ 1,50,000/- in the Account. He argued that it is questionable that why the Appellant failed to declare even though there is no legal restriction on bringing in foreign currency as long as it is declared beyond the threshold amount. It is also surprising that the Appellant kept the amount for two years and again attempted to illegally export the same. Ld. Counsel for the Respondent prayed for dismissing the Appeal.

¶47

FPA-120/MUM/2019

¶48

Page 8 of 13

¶49

15. I have considered the rival submissions and the material on record. It is not disputed that the Appellant completed the period of detention under COFEPOSA and such order of detention has not been revoked either on the report of the Advisory Board or before making a reference to the Board. The order has also not been set aside by a Court of competent jurisdiction.

¶50

16. The seizure of foreign currency of value Rs. 16,37,570/- by the Customs Authority at Mumbai Airport on the eve of the departure of the Appellant clearly establishes that the Appellant was in the process of illegal export of the foreign currency abroad when he was so intercepted. It is a matter of record that the Appellant had travelled abroad frequently. The explanation by the Appellant that he had withdrawn this money from his Israel Bank Account and he forgot to declare it to the Customs Department by filing the Currency Declaration Form on his arrival in India is not convincing. The Appellant has stated that he forgot to fill the CDF because of the tension due to the circumstances under which his departure happened from Israel in the background of Israel and Lebanon war is also not acceptable since he failed to report about the foreign currency to any Authorized Dealer subsequently as well. Furthermore, to have stored the currency in his locker and then attempt to export the same while departing abroad is reflection of his scant regard for the law of the country. It is on record that the Israel Bank account was opened only on 08.11.2006. The Ld. Competent Authority (CA) has correctly rejected the explanations of the Appellant to have withdrawn the said amount from his Israel Bank Account without providing the source of such balance abroad. His failure to make any declaration about the said currency at any stage makes the Appellant liable for the charge of smuggling.

¶51

FPA-120/MUM/2019

¶52

Page 9 of 13

¶53

17. In view of the evidence on record as discussed in the impugned order, it is clear that the impugned property of Flat No. 710 at Royal Palace, Surat, was undervalued at Rs. 6,50,000/- instead of correct value Rs. 15,17,800/-. The Appellant has failed to offer any cogent explanation for the conduct of the said transaction which led to proceedings by the Deputy Collector, Stamp Duty Valuation Department, Surat City-1 culminating in raising of value of the impugned property and payment of additional stamp duty. It is a matter of record as brought out in the impugned order that no adequate evidence has been brought forth by the Appellant to corroborate his explanation of majorly funding the purchase through loans. I have considered the documents submitted by the Appellant initially as well as subsequently. None of these documents is good enough to show that the amounts of loans which the Appellant has claimed to have obtained from his wife, his HUF and his relatives were in fact loaned by them. The accounts are either hand written or merely typed without having been authenticated by an Accountant or having been demonstrated to be part of regular accounts of either the loanee or the loaner.

¶54

18. The relevant portion of Paragraph 43 of the judgment of the

¶55

Hon’ble Supreme Court in the matter of Attorney General of India and Others vs. Amratlal Prajivandas and others (AIR 1994 2179

¶56

SC) is reproduced as follows:

¶57

"The definition of "illegally acquired properties" in Cl. (c) of S. 3(1) of SAFEMA is undoubtedly quite wide. It means and includes "any property acquired by such person, whether before or after the commencement of this Act, wholly or partly out of or by means of any income, earnings or assets derived or obtained from or attributable to any activity prohibited by or under any law for the time being in force relating to any matter in respect of which Parliament has power to make laws" (vide sub clause (i)). Subclauses (ii), (iii) and (iv) of Cl. (c) further widen and elaborate its ambit. The

¶58

FPA-120/MUM/2019

¶59

Page 10 of 13

¶60

definition thus takes in not only the property acquired after the Act but also the property acquired before the Act, whatever be the length of time. Secondly, it takes in property which may have been acquired partly from out of illegal activity in which case, of course, the provision in S.9 would be attracted. Illegal activity is not confined to violations of the laws mentioned in S.2 but all laws which the parliament has power to make. To give an illustration, if a smuggler has acquired some properties by evading tax laws or by committing theft, robbery, dacoity, mis appropriation or any other law in force (which the Parliament has the power to make) all that….. would be liable to be forfeited We can take note of the facts that persons engaged in smuggling and foreign exchange manipulations do not keep regular and proper accounts with respect to such activity or its income or of the assets acquired therefrom. If such person indulges in other illegal activity, the position would be no different. The violation of foreign exchange laws and laws relating to export and import necessarily involves violation of tax laws. Indeed, it is a well- known fact that over the last and few decades, smuggling, foreign exchange violations, tax evasion, drugs and crime have all got mixed-up. Evasion of taxes is integral to such activity. It would be difficult for any authority to say, in the absence of any accounts or other relevant material that among the properties acquired by a smuggler, which of them or which portions of them are attributable to smuggling and foreign exchange violations and which properties or which portions thereof are attributable to violation of other laws (which the Parliament has the power to make). It is probably for this reason that the burden of proving that the properties specified in the show cause notice are not illegally acquired properties is placed upon the person concerned. May be this is a case where a dangerous disease required a radical treatment. Bitter medicine is not bad medicine. In law it is not possible to say that the definition is arbitrary or is couched in unreasonably wide terms."

¶61

19. The Hon’ble Patna High Court in the matter of Shree

¶62

Pushkar Lal Banka Vs. Union of India and Others further affirmed

¶63

in its judgment dated 29.11.1996 (1996 SCC OnLine Pat 513) in

¶64

paragraph 13 the following;

¶65

“The Supreme Court in the case of Attorney General (supra) while upholding the wide definition given to “illegally acquired property” under Section 3 (a) (c) of the said Act has held that the provisions of the SAFEMA are not unreasonable or arbitrary apart from the protection given to it under Section 31 (b) of the said Act. So, the Supreme Court refused to read down any provision of the SAFEMA. The Ld. Judges of the Constitution Bench of the Supreme Court in Attorney General (supra) held that definition of “illegally acquired property” in clause (c) of Section 3 (1) of the SAFEMA cannot be read down to confine it to mere cases of violation of the SAFEMA referred to in Section 2 (2) (a) thereof.”

¶66

FPA-120/MUM/2019

¶67

Page 11 of 13

¶68

20. I agree with the finding of the Ld. CA that the Appellant at best has only furnished details of funding the said property to the extent of Rs. 7,50,550/- and has neither disclosed nor explained that how the true value of the property of Rs. 16,77,190/- was funded. I do not find that the Appellant has discharged the onus cast on him under Section 8 of SAFEMA.

¶69

21. With respect to the Flat at Smit Kinnari Apartment in Surat, the Appellant has claimed that he purchased it in 1986-87 for a consideration of Rs. 1,19,500/-. The Appellant has contended that beside the loan of Rs. 49,000/- taken from his wife, the rest of the amount was paid by him in installments earned through local diamond brokerage. The Ld. CA observed in the impugned order that no ITRs had been filed for A.Y. 1984-85 to 1986-87. Ld. CA further observed that no evidence of having done diamond brokerage was furnished. Moreover, the ITR for wife was also not filed as to show her income for having funded loan of Rs. 49,000/- to the Appellant. I find that the Appellant has subsequently furnished ITR for 1985-86 showing income of Rs. 16,840/- and ITR for 1986-87 showing income of Rs. 19,880/-. The address on the ITRs is of the impugned property i.e. Flat at Smit Kinnari Apartment in Surat. A copy of the affidavit dated 02.07.2014 of his wife has also been furnished. The affidavit states that she had given loans of Rs. 2,58,000/- in the A.Y. 1996-97 and loan of Rs. 49,000/- in the A.Y. 1987-88 to her husband. It is on record that the property was purchased in 1986-87. Unlike the purchase of the property at 710, Royal Palace, for which the Appellant had taken loans from other persons as well, the only loan taken by him for the purchase of the property at Smit Kinnari Apartment was from his wife Smt. Dipikaben M. Wadecha. It is on record that the Appellant had income in 1983-84, 1984-85, 1985-86 and 1986-87 of Rs. 13,750/-, Rs. 14,103/-, Rs.

¶70

FPA-120/MUM/2019

¶71

Page 12 of 13

¶72

16,840/- and Rs. 19,880/- respectively, as declared by him in his ITRs for the relevant years. The question about how such income was generated remains unanswered yet it is a matter of fact that the Appellant was assessed for such incomes in his ITRs. Moreover, unlike the property at Royal Palace, there is no material on record as to show that the Appellant had undervalued the property at Smit Kinnari Apartment for payment of stamp duty. The Appellant has also pleaded that his first passport was issued on 27.10.1986 which has not been shown otherwise. There is no evidence placed as to show that the Appellant was involved in smuggling activities while being in the country during that time. In view of the discussion in this paragraph, I am unable therefore to agree with the finding of the Ld. CA that the property at Smit Kinnari Apartment can be regarded as illegally acquired property.

¶73

22. From the foregoing discussions and analysis, the impugned order is upheld in so far as it declares Flat No. 710, 7^th floor, Royal Palace, Ghod Dod Road, Surat admeasuring 2,335 sq ft. and foreign currency of value Rs. 16,37,570/- as illegally acquired properties and therefore, forfeits the said properties to the Central Government free from all encumbrances. However, the impugned order to the extent that it forfeits Flat at Smit Kinnari Apartment, A Block, 8^th Floor, Navsari Bazar, Surat to the Central Government, is set aside.

¶74

23. The Appeal is accordingly partly allowed .

(Balesh Kumar)

Member

New Delhi

8th April, 2025 ‘ST’

¶79

FPA-120/MUM/2019