The Madras High Court has held that the nexus between Income of detenue and the acquisition of property must be established under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEM). The Competent Authority under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, challenged the order setting aside the proceedings of the appellant forfeiting the properties of the first
The Madras High Court has held that the nexus between Income of detenue and the acquisition of property must be established under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEM). The Competent Authority under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, challenged the order setting aside the proceedings of the appellant forfeiting the properties of the first respondent on the ground that they were acquired out of the proceeds of illegal activities of her father K.T.M.S. Mohammed, against whom proceedings under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 were launched, The appellant issued a notice under Section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (ACT 13 0f 1976) and was held liable for forfeiture since she was unable to provide details of the sources of acquisition of the funds. The Competent Authority after allowing the first respondent passed an order forfeiting the properties belonging to the first respondent. The Appellate Tribunal while allowing the Appeal in respect of the movable properties dismissed the Appeal in respect of the immovable properties. On appeal before the First Bench of HC in WP No.2825 of 1978, which came to be disposed of on 01.02.1995 and remitted the matter to the Appellate Authority with a direction to decide the same by law. The Appellate Tribunal upon a consideration of the evidence concluded that since the deponents of the affidavits, that were placed before it, could not be cross-examined, their affidavits cannot be taken at their face value and the Appeal was dismissed. It was observed the nexus or the link between the alleged illegal earnings of the detenue and the acquisition of properties by the petitioner has not been made out by the court. It was observed by the HC that to invoke the provisions of Sections 6 and 7, the Competent Authority must establish the jurisdictional fact and should record reasons for the belief that the property would have been acquired using illegal earnings and that reason should disclose the nexus of the link. Justice R Subramanian and Justice K Kumaresh Babu observed that link or nexus is absent rendering the invocation of the power of forfeiture illegal and abstained from interfering with the conclusion of the Writ Court in quashing the proceedings. The HC held that the Writ Court’s conclusions regarding the burden of proof are not in tune with the intendment of the enactment and set aside the observations of the Writ Court regarding the burden of proof. The Writ Appeal was dismissed. Subscribe Taxscan Premium to view the Judgment Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates Be the First to get the Best Join Our email list to get the latest Tax Updates , Special Offers, Events delivered right to your Inbox Subscribe Competent Authority vs Smt. Ayisath Munawara Counsel for Appellant: Mr. R. Sankaranarayanan Counsel for Respondent: Mr. B. Sathishsundar CITATION: 2022 TAXSCAN (HC) 877 Topics Acquisition of PropertyCompetent AuthorityIncomeMadras High CourtWrit Court Related Stories AO cannot Reopen Assessment in absence of Tangible material showing Escapement of Income: ITAT [Read Order] November 13, 2022 Reassessment cannot be invoked when Original Assessment concluded after receipt of Satisfactory Reply on Similar Queries: Bombay HC [Read Order] November 13, 2022 Proper filing of Form 10 manually with Income Tax Return: ITAT grants exemption u/s 11 of Income Tax Act [Read Order] November 13, 2022 GST: CSR-expenditure for Business eligible for ITC, rules AAR [Read Order] November 13, 2022 © 2020 Taxscan About Us | Careers | Advertise Privacy Policy | Contact Us Avoid Ads with Taxscan Annual Subscription @599+GST Subscribe Now
