Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(ATFP) 13406

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman
Chandrama Prasad Singh – Appellant
Versus
Deputy Director, Directorate of Enforcement, Patna – Respondent
MP-PMLA-10005/PTN/2022|FPA-PMLA-4981/PTN/2022|MP-PMLA-27/PTN/2024|MP-PMLA-25/PTN/2024|FPA-PMLA-09/PTN/2024|MP-PMLA-30/PTN/2024|MP-PMLA-28/PTN/2024|FPA-PMLA-10/PTN/2024|MP-PMLA-33/PTN/2024|MP-PMLA-31/PTN/2024|FPA-PMLA-11/PTN/2024

Advocates:
For the Appellants/Petitioners: Counsel
For the Respondents: Pankaj Pandey

Confirmation of a provisional attachment order is justified when evidence indicates assets are derived from criminal proceeds and the owners fail to provide verifiable, evidence-backed proof of legitimate income, as tax filings alone are insufficient to substantiate the source of wealth in money laundering cases.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 3, 5, 8 and 50 - Provisional attachment of property - Confirmation of attachment order - Burden of proof to establish legitimate source of income.

(B) Burden of proof concerning proceeds of crime - Where investigation reveals evidence of predicate offences and illegal money circulation, mere reliance on income tax returns without corroborating evidence, invoices, or bank records to prove legitimate sources of income is insufficient to overcome findings of money laundering; mere disclosure in tax filings does not negate acquisition of assets through criminal activity. (Paras 31, 32)

Facts of the case:
The appellants challenged the confirmation of provisional attachment orders issued against various properties alleged to be proceeds of crime generated from illegal land acquisition and extortion. The investigation established a modus operandi involving the use of muscle power and forged documents to acquire properties, which were subsequently projected as untainted. The appellants primarily contested the attachment on the ground that the criminal allegations did not establish the existence of proceeds of crime and referenced prior bail orders to support their claim.

Findings of Court:
The tribunal held that the material collected during the investigation clearly indicated the involvement of the appellants in criminal activities. The appellants failed to substantiate the legitimate source of their income, as the value of the acquired properties significantly exceeded their disclosed income, and they failed to produce documentation corroborating their alleged business activities.

Issues: Whether the provisional attachment of property remains valid when the owners fail to discharge the burden of proving that the assets were acquired from legitimate, untainted sources despite substantial investigative evidence suggesting otherwise.

Ratio Decidendi: The confirmation of an attachment order is appropriate where the investigation provides substantial material indicating that properties are derived from proceeds of crime and the owners fail to provide verifiable proof of legitimate income sources; presenting tax returns without evidence of underlying business operations is insufficient to prove the untainted nature of the property.

Result: Appeals dismissed.

Table of Content
1. factual background involving predicate offences and proceeds of crime. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. appellant plea regarding absence of evidence for money laundering. (Para 8 , 9 , 10 , 11)
3. respondent contention on active involvement in money laundering activities. (Para 12)
4. evidence analysis reveals failure to disclose legitimate income sources. (Para 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34)
5. appellate finding overrides prima facie bail observations based on evidence. (Para 23 , 35 , 36 , 37 , 38)

The batch of appeals have been filed to challenge the order dated 09.9.2022 passed by the Adjudicating Authority confirming the provisional attachment order dated 31.3.2022. It was in reference to the ECIR recorded in furtherance to the FIRs registered against the accused.

2. It is a case where FIRs were registered against the accused on the complainants from time to time. FIR no. 95/2007 was lodged on 14.02.2007 for an offence under section 302 IPC apart from other offences wherein one Anil Kumar Pathak was murdered. The chargesheet was filed against the appellant Chandrama Prasad Singh and others.

3. Another FIR 68/12 dated 28.05.2012 was lodged for the scheduled offence with police station, Ramkrisha Nagar against Chandrama Prasad Singh, Dablu Kumar and many others causing offence under section 147, 148, 149, 385, 354, 379, 323, 307, 504 and 506 IPC. The allegation was that the accused person entered into the house of Pankaj Suman for extortion of Rs. Five lakhs. They had beaten the family of the complainant and snatched the mangalsutra.

3. The ECIR was then recorded followed by investigation where statements under section 50 (2) and 50 (3) of the PMLA Act of 2002 were recorded. The investigation revealed that the accused had acquired tainted money as a result of their criminal activities relating to scheduled offence and acquired movable and immovable properties in their own name or in the name of the family members to camouflage ill-gotten money to project it to be un-tainted.

4. The provisional attachment order was caused finding proceeds of crime to the tune of Rs. 4,04,29,415/- in the hands of the appellant. The modus operandi was revealed by the letter dated 09.10.2013 of the Suprintendent of Police, Economic Offence Unit, Patna, Bihar and another letter dated 19.11.2013 of Sub Divisional Police Officer, Sadar, Patna where it was found that accused along with their family members and related person remained involved in commission of extortion, cheating and in property transaction using forged documents. The appellant Chandrama Prasad Singh and his family members were found habitual offenders.

5. The statement of complainant apart from others were recorded. Santosh Kumar Pathak, the complainant in his statement under section 50 PMLA stated that his brother Anil Kumar Pathak was having acquaintance with Chandrama Prasad Singh who financially helped him in kidney treatment. However, on 07.07.2007, the said Chandrama Prasad Singh demanded and collected the documents of a land purchased by his brother Anil Kumar Pathak. The documents were taken to get the land mutated in their name but intended to grab it and thereafter Anil Kumar Pathak was brutally murdered by gang of Chandrama Prasad Singh. He took signature of Santosh Kumar Pathak on a blank paper. The land was then shown to have been sold to Chandrama Prasad Singh by creating forged documents for which separate FIRs were lodged. The modus operandi of the accused was to first take innocent person into confidence by way of financial help and then to insist to purchase the land in their name and later on to procure the documents by making commitment of mutation etc. and thereafter to take over the land. The accused thus acquired many properties out of their criminal activities.

6. The description of those facts has been given in the impugned order otherwise the appellant Chandrama Prasa

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