THE INCOME TAX OFFICER, CIRCLE I (2), KUMBAKONAM & ANR. versus V. MOHAN & ANR.

Citation: [2021] 12 S.C.R. 152 · Decided: 14-12-2021 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 12 S.C.R.
[2021] 12 S.C.R. 152
152
THE INCOME TAX OFFICER, CIRCLE I (2), KUMBAKONAM
& ANR.
v.
V. MOHAN & ANR.
(Civil Appeal Nos. 8592-8593 of 2010)
DECEMBER 14, 2021
[A. M. KHANWILKAR AND SANJIV KHANNA, JJ.]
Smugglers and Foreign Exchange Manipulators (Forfeiture
of Property) Act, 1976: ss. 6(1), (2), 2(2) – Notice of forfeiture –
Illegally acquired property – Claim of the Competent Authority that
the property to be forfeited is that of the convict and ostensibly
held by the relatives of the convict – Issuance of primary notice u/
s. 6(1) upon such convict with copy thereof to his relatives u/s. 6(2)
– Requirement of – Held: Section 6(1) nowhere provides that it is
mandatory to serve the convict or detenu with a primary notice
under that provision whilst initiating action against the relative of
the convict – Section 6(1)posits that notice must be given to the
person who is holding the tainted property and is likely to be affected
by the proposed forfeiture of the property – Person immediately
and directly to be affected is the person who is the recorded owner
of the property and in possession thereof himself or through some
other person on his behalf – Burden of proof u/s. 8 is not to be
discharged by the convict or detenu, but by the person who holds
the illegally acquired property either by himself or through any other
person on his behalf – Thus, it is not mandatory to serve a primary
notice u/s. 6(1) upon such convict with copy thereof to his relatives
u/s. 6(2) – Non-service of such primary notice upon the convict
would not vitiate the entire proceedings initiated only against his
relatives – Order passed by the High Court that the action against
the respondents-relatives of the convict, initiated by the Competent
Authority was vitiated for lack of notice to the convict, set aside.
Allowing the appeals, the Court
HELD: 1.1 Pivot of The Smugglers and Foreign Exchange
Manipulators (Forfeiture of Property) Act, 1976 is to reach the
“illegally acquired properties” of the specified convict/detenu in
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whosoever’s name they are kept or by whosoever they are held,
whatever be the length of time. [Para 32][178-H; 179-A]
1.2 The dispensation under the 1976 Act applies only to
persons specified in Section 2(2) of the Act. Section 2(2)(a) refers
to the category of persons who are convicted under the specified
enactments. Whereas, Section 2(2)(b) refers to persons detained
under the specified detention law. The expression “person” to
whom the 1976 Act applies, has been broadened by including
every person who is a relative of a person referred to in clause
(a) being convict under the specified laws or clause (b) being
detenu under the Conservation of Foreign Exchange and
Prevention of Smuggling Activities Act, 1974. The expression
“relative” has been further elaborated in Explanation 2, of Section
2, so as to expand the scope of taking corrective measures for
reaching up to the illegally acquired properties of a convict or
detenu, as the case may be. Section 2(2)(d) further expands the
sweep so as to include associate of a convict or detenu, as the
case may be; and Section 2(2)(e) takes within its ambit any holder
(the present holder) of any property, which was at any time
previously held by a person referred to in clause (a) or clause
(b), namely, convict or detenu, as the case may be. The objective
and purpose of the enactment is reinforced in the encircling
Explanation 4. The intent is to ensure that the convict/detenu
cannot get away by adopting camouflage or screening, including
legal transfer of properties in the name of his relative, associate
or any other person covered under clause (e) to Section 2(2) of
the Act. This expanded ambit of clauses (c) to (e) is to be
interpreted in the context of the object and purpose of the Act,
but the scope of the Act does not extend to include every property
held by a relative or an associate unless the link and the
connection with the illegal activities of the convict/detenu is
established. For, the Act is only directed to forfeiture of ‘illegally
acquired properties’ of a person falling under clause (a) or clause
(b) of Section 2(2) including their specified properties held by
third party. Independent properties of the relatives and friends
which are not traceable to the illegal activities of the convict/
detenu are neither sought to be forfeited nor are they within the
purview of the Act. [Paras 33, 34, 37, 38][

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