Pre-Crime Property Attachment Upheld as Appellant Diverted and Layered Crime Proceeds to Group Cos. | SAFEMA-AT

Case Details: Rakesh Kumar Tandon vs. Deputy Director, Directorate of Enforcement - [2024] 169 taxmann.com 670 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• Munishwar Nath Bhandari, Chairman & Rajesh Malhotra, Member
• Ms Neeha Nagpal & Vishvendra Tomar, Advs for the Appellant.
• Mrinal Kumar, Counsel for ED for the Respondent.

Facts of the Case

In the instant case, the FIR was registered by CBI for offences under Indian Penal Code, 1860. Enforcement Case Information Report (ECIR) was recorded by the ED. The ED found that payment towards execution of contract awarded for supply of RO Machinery in hospitals was siphoned off by transferring to appellant and other group companies which were non-existent / bogus firms under control of appellant.

Later, the ED passed a provisional attachment order attaching properties of the appellant. The Adjudicating Authority passed an order confirming attachment of properties belonging to the appellant.

On appeal, the appellant submitted that property was not acquired or derived out of proceeds of crime as all properties were purchased by the appellants much prior to commission of crime rather few properties, hence, the same could not be attached as proceeds of crime.

Appellate Tribunal Held

The Appellate Tribunal observed that when proceeds out of crime was not available with appellant rather vanished and siphoned off, property of equivalent value was attached and, thus, second limb of definition of proceeds of crime was applied to attach property of equivalent value.

Also, where order of provisional attachment of property of appellant / accused of money laundering was passed on 31-3-2021 and order confirming the same was passed on 6-12-2021, however, intervening period suffered due to Covid 19 and period from 15-3-2020 till 28-2-2022 was eliminated.

The Appellate Tribunal held that the instant appeal was to be dismissed. Also, the appeal challenging the order confirming the attachment of property on ground of limitation under section 5 was to be dismissed.

List of Cases Reviewed

• Judgment of the Apex Court in the case of Suo Moto Petition 03/2020 decided by the order dated 10-1-2022
• Prakash Corporates v. Dee Vee Projects Limited reported in (2022) 5 SCC 112, (para 17)
• Hygro Chemicals Pharmtek Pvt. Limited v. Union of India & Ors. reported in MANU/TL/1003/2023, (para 20), followed

List of Cases Referred to

• Prakash Corporates v. Dee Vee Projects Limited reported (2022) 5 SCC 112 (para 17).