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    Question

    An individual transferred property through a hawala

    network to avoid tax and regulatory scrutiny. The transfer did not involve proceeds of crime from a scheduled offence, but involved tax evasion. Can PMLA be invoked? Statement 1: PMLA can be invoked because the transaction involved concealment. Statement 2: PMLA requires proceeds of crime from a scheduled offence; mere tax evasion is insufficient. Statement 3: The individual can be prosecuted under tax laws but not under PMLA. Statement 4: If the source of property cannot be explained, it becomes liable for attachment under PMLA. Which statements are correct?
    A Statements 1 and 4 only Correct Answer Incorrect Answer
    B Statements 2 and 3 only Correct Answer Incorrect Answer
    C Statements 2 only Correct Answer Incorrect Answer
    D Statements 3 and 4 only Correct Answer Incorrect Answer
    E All statements are correct Correct Answer Incorrect Answer

    Solution

    PMLA requires proceeds from scheduled offences under Section 2(1)(y)—Statement 2 is correct. Tax evasion alone (unless it falls within scheduled offences) is insufficient—Statement 3 is correct. Statements 1 and 4 are incorrect—PMLA is not applicable to mere tax evasion without nexus to scheduled offences. Statements 2 and 3 are correct.

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