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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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