2025 Supreme(Online)(ATFP) 13098

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
V. Anandarajan, Member
MRS. IRQA MUSHTAQ MUSHTAQ PEER – Appellant
Versus
The Deputy Director Directorate of Enforcement Srinagar – Respondent
FPA-PMLA/661/SNR/2014

Under PMLA, the burden of proof is on the person to show legitimate source of attached properties; failure to explain cash deposits and payment sources justifies attachment even if no pending prosecution complaint at time of confirmation.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 3, 5, 5(1), 8, 8(3) - Scheduled Offences - Ranbir Penal Code Sections 120B and 420 corresponding to Indian Penal Code - Burden of proof - Provisional attachment - Reason to believe - Proceeds of crime - Attachment and confirmation - Time limit for filing prosecution complaint - Amendment effect - Failure to discharge burden - Dismissal of appeals.

(B) Burden of proof - Under PMLA, once a notice under Section 8 is issued, the onus is clearly upon the person to prove the legitimate sources of acquisition of the properties. The appellant must indicate the sources of income, earnings or assets out of which he acquired the attached properties and the evidence relied on. Failure to do so justifies confirmation of attachment. (Paras 41, 61)

(C) Reason to believe - Section 5(1) requires the authority to record reasons to believe that proceeds of crime are likely to be concealed, transferred or dealt with. The Provisional Attachment Order discussed the allegations and the basis for apprehension in detail, including location and marketability of properties, which satisfied the requirement. (Para 46)

(D) Time limit for prosecution complaint - Prior to 18.04.2018, there was no time limit under Section 8(3) for filing a prosecution complaint. Hence, confirmation of attachment within 180 days was valid even if no PMLA prosecution was pending at that time. (Para 45, relying on Indra Pal Pandey) (E) Scheduled offences - Offences under the Ranbir Penal Code corresponding to Sections 120B and 420 IPC are covered under Part A of the Schedule to PMLA. No monetary threshold applies for such offences. (Para 48) (F) Proceeds of crime in hands of third party - The mandate of PMLA is to reach proceeds of crime in whosoever’s name they are kept. Transfer of tainted funds from the father to the daughter’s account equally tainted; the daughter failed to discharge the burden of proving legitimate source. (Para 61)

Facts of the case:
The appellant (primary accused) was the former Chairman of the J&K Board of Professional Entrance Examination and was convicted for leaking examination papers for monetary consideration of Rs.60 lakh. His daughter (second appellant) received transfers from his bank account. The Adjudicating Authority confirmed the provisional attachment of three immovable properties and two bank accounts. The appellants challenged the order on grounds of lack of pending PMLA proceedings, inadequate reasons to believe, and legitimate sources from salary and retirement benefits.

Findings of Court:
The Tribunal held that the appellants failed to discharge the burden of proving the legitimate sources for the attached properties. The cash deposits and payments for the properties were not specifically explained with reference to bank account entries. The legal arguments regarding the absence of pending PMLA proceedings at the time of confirmation were rejected as the law prior to 2018 did not require such pendency. The reasons to believe were adequately recorded in the Provisional Attachment Order. The transfer of funds to the daughter’s account was tainted and she could not prove legitimate source.

Issues: (1) Whether the confirmation of provisional attachment was valid in the absence of pending PMLA proceedings at the time? (2) Whether the reasons to believe recorded under Section 5(1) were sufficient? (3) Whether the appellant discharged the burden of proof regarding legitimate sources of the attached properties? (4) Whether the properties constituted proceeds of crime? (5) Whether the transfer to the daughter’s account was also tainted?

Ratio Decidendi: The Tribunal held that under PMLA the burden of proof lies on the person to show the legitimate source of the attached properties. The appellant’s failure to provide specific evidence linking the acquisition to lawful income justified the attachment. The legal requirements for attachment under Section 5 and confirmation under Section 8 were satisfied. The daughter’s appeal also failed as the funds received from her father were proceeds of crime and she could not prove otherwise. Result : Both appeals dismissed. Pending applications disposed of. No order as to costs.