Income-Tax Relief Does Not Warrant Writ-Stage Quashing of PMLA Attachment: Chhattisgarh HC

Dr. Rahul Agrawal Vs Union of India (Chhattisgarh High Court)

Summary: The Chhattisgarh High Court dismissed a writ petition filed by Dr. Rahul Agrawal and Pacifica Hotels India Private Limited challenging the Provisional Attachment Order (PAO) dated 28.05.2026 issued by the Enforcement Directorate under Section 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA). The PAO concerned the Westin Hotel, Goa, which the ED treated as property connected with alleged proceeds of crime arising from the Chhattisgarh liquor scam. The petitioners sought quashing of the PAO and consequential proceedings under Article 226 of the Constitution.

The petitioners contended that the alleged cash component of Rs.60 Crores used for acquisition of the Hotel had already been examined in income-tax proceedings. Although the assessment order dated 28.09.2021 had treated the amount as unaccounted business income, the CIT(A) subsequently accepted the explanation regarding its source and deleted the addition, and the ITAT upheld that relief. According to the petitioners, the ED could not characterize the same Rs.60 Crores as proceeds of crime without establishing an independent money trail connecting the alleged liquor-scam proceeds with the acquisition of the Hotel.

The petitioners further argued that neither petitioner had been arrayed as an accused in the FIR, prosecution complaints or charge-sheets; that Vijay Kumar Agrawal had ceased to be associated with Pacifica pursuant to the family settlement; and that the ED had relied upon assumptions, statements and numerical coincidence rather than evidence tracing the alleged Rs.110 Crores of proceeds of crime to the Hotel acquisition. They also questioned the sufficiency of the “reason to believe” recorded under Section 5(1) PMLA and raised objections concerning the composition of the Adjudicating Authority.