Question
A businessman received Rs. 50 lakhs from his relative
through a gift deed. The relative claims the amount came from "old savings." A PMLA investigation is initiated based on suspicion that the amount is proceeds of narcotics trafficking. Which statements are correct? Statement 1: The gift deed is valid evidence that the property is not proceeds of crime. Statement 2: The relative must explain the source of the old savings under the reverse burden framework. Statement 3: If the relative cannot satisfactorily explain the source, the amount becomes liable for attachment. Statement 4: The businessman is automatically liable for PMLA violations if the relative's source is illicit. Which statements are correct?Solution
Statement 1 is incorrect—gift deed alone cannot override PMLA attachment if proceeds are suspected. Section 24 creates reverse burden—Statement 2 is correct. Non-satisfactory explanation triggers attachment—Statement 3 is correct. Statement 4 is incorrect because the businessman's liability depends on knowledge; mere receipt of property is not automatic liability. Statements 2 and 3 are correct.
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