Jewellery Disclosed in ITR Can’t Be Retained Under PMLA Without Proof

Case Details: Mrs. Nikita Trahan v. Deputy Director, Directorate of Enforcement, Mumbai - [2025] 175 taxmann.com 126 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• Justice Munishwar Nath Bhandari, Chairman
• Manu Sharma, Sr. Adv., Ashish Verma, Debopriyo Moulik, Sagar Shetty & Arjun Kakkar, Advs. for the Appellant.
• Chandra Prakash & Abhinav Kumar, Advs. for the Respondent.

Facts of the Case

In the instant case, the appellant’s jewellery was seized during a search and seizure operation on the ground that it was the proceeds of crime. The Adjudicating Authority permitted the retention of the seized jewellery.

The appellant challenged the order on the ground that jewellery was disclosed in the Income Tax Return much prior to the registration of the FIR against the accused, where the appellant was not named as an accused.

It was noted that jewellery was seized, taking it to be a gift from the accused on behalf of the late grandmother, but no material had been produced or submitted by respondents to controvert the evidence produced by the appellant.

Further, respondents were under an obligation to find out whether jewellery disclosed in their Income Tax and Wealth Tax Returns matched jewellery seized by respondents.

Appellate Tribunal Held

The Appellate Tribunal held that since respondents failed to establish that seized jewellery was proceeds of crime and could not supply reasons to retain seized jewellery even after the expiry of the six-year period when the appellant had not been named in the FIR or even the ECIR, respondents were to be directed to release jewellery disclosed in the appellant’s income tax return.