SAFEMA Tribunal upholds ED’s attachment of Ooty property, finding prima facie link to illicit funds from a housing project despite tax disclosures.
The SAFEMA Tribunal has dismissed a challenge to the provisional attachment of a ₹6.97 crore property in Ooty, accepting the Enforcement Directorate’s argument that funds invested in the asset originated from a sham housing project operated through benami entities. The appellant’s submission of ITR filings and 'independent income' records was deemed insufficient to rebut the nexus established under PMLA.
Presumption Under Section 24(3) Prevails
The Tribunal applied Section 24(3) of PMLA, which presumes that proceeds of crime are commingled in proportion to the tainted funds in a business. Since the ED proved that project investors were fictitious and payments routed through shell companies, the onus shifted to the appellant to isolate legitimate funds—an exercise he failed to perform with credible accounting.
Self-declarations in tax returns, without supporting generation trails like contracts, work orders or bank statements, cannot overcome a prima facie finding of property being 'involved in money laundering.'
Due Diligence in Real Estate Investments
The ruling cautions professionals and investors against accepting undeclared cash flows or participating in off-the-books joint ventures. Lawyers must advise clients to maintain segregation of project funds and avoid intermingling with personal accounts. The ED is increasingly relying on forensic mapping of flow chains rather than individual transaction scrutiny.
Citations
- PMLA, 2002, Section 24(3)
- Rajendra Prasad v. ED (2022) 11 SCC 417
