Attachment Order By ED Was to Be Quashed Where Likelihood of Concealment or Transfer of Properties Couldn’t Be Proved

Case Details: Smt. Suma Sooraj v. Deputy Director, Directorate of Enforcement - [2023] 155 taxmann.com 298 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• • Justice Munishwar Nath Bhandari, Chairman & V. Anandarajan, Member
  • R.K. Rawal, Adv. for the Appellant.
  • Aditya Singla & Sahil Sharma, Advs. for the Respondent.

Facts of the Case

In the instant case, during the investigation, it was alleged that the appellant was having assets of Rs. 11 crore disproportionate of his known sources of income during the check period from 1-1-2004 to 19-11-2014. Thus, orders of provisional attachment of properties of the appellant were passed for an offence under section 13(1)(d) of the Prevention of Corruption Act, 1988.

The said order was confirmed by the respondent-Adjudicating Authority. The appellant submitted that offence under section 1988 Act was not a scheduled offence in the PMLA, 2002 but was added by notification issued in the year 2009 followed by a further amendment in the year 2013 and since, the check period to determine the alleged offence relates to period when offence under 1988 Act was not a scheduled offence, the respondent could not have attached property.

It was noted that the respondents had failed to show any likelihood of concealment or transfer of properties so as to frustrate the proceeding of confiscation. Further, the property in question was already attached by the Special Court and, thus, there was no likelihood of transfer or concealment of the property

The Appellate Tribunal observed that the relevant date to find out the scheduled offence is the date when one projects tainted property to be untainted or involve oneself in money laundering and not the date of actual commission of predicate offence.

Appellate  Tribunal Held

The Appellate Tribunal held that an order of attachment requires reasons to believe in writing and it should be on the basis of material in possession that a person is in possession of proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner, which may frustrate confiscation of property.

Therefore, the order of attachment passed by the respondent was without application of mind and was to be set aside.