LAHORE: The Lahore High Court (LHC) has observed that the business community has agitated that the Directorate of Intelligence and Investigation, Inland Revenue [Directorate (I&I)] in the garb of inquiry/ investigation are humiliating the corporate sector and issued notices to the entire board of directors of companies.
According to an order issued by the LHC in the writ petition No 16567 of 2021 (Abdul Saboor versus Federation of Pakistan etc), it was also agitated before the court that the Directorate (I&I) in the garb of inquiry/ investigation were humiliating the petitioners and that in some cases hearing notices were issued to the entire board of directors of companies without specifying as to what was required of them and they were required to wait for long hours outside the offices of the investigating officers.
The writ petition, as well as, the connected writ petitions call into question the action of the Directorate of Intelligence and Investigation, Inland Revenue [Directorate (I&I)] in initiating proceedings against the petitioners under the provisions of the Anti-Money Laundering Act, 2010 (the Act) by issuing call up notices and/ or registering First Information Reports (FIRs) against them. The petitioners accordingly prayed for setting aside the notices and quashing of the FIRs.
It was also alleged that the investigating officers were treating the matter as one of audit under the Income Tax Ordinance and were thus conducting a roving inquiry. There is no substance in this contention. The investigation is being carried out for the offense of money laundering with which the proceeds of crime has a positive correlation.
A person is said to have committed the offence of money laundering if he indulges in any of the matters covered in section 3 of the Act relating to property derived from proceeds of crime through commission of a predicate offence.
Constitutionality of Section 7E of IT Ord, 2001: LHC issues notices to federal, Punjab secretaries and FBR
The offences which have been made predicate in all the cases before this Court stem out of the Income Tax Ordinance. The Directorate (I&I) is the investigating agency, which is part of the FBR and is expected to have expertise in such like matters.
In any event, information gathering during inquiry/ investigation is a legitimate part of the Act to ascertain whether the acquisition of the property by the person concerned is connected with the proceeds of crime/ offence of money laundering.
The LHC’s order stated that the Directorate (I&I) is the “investigating and prosecuting agency” under the Act for the purposes of investigating the offence of money laundering. Even so, it has the necessary expertise, being part of the FBR, to investigate matters underlying the offence of money laundering including the fact that the tax sought to be evaded is 10 million or more.
The offence of money laundering is intrinsically linked to and dependent upon the predicate offence and, therefore, any investigation must necessarily be conducted also in respect of the latter by the investigating officer under the Act.
The LHC’s order said that it is decided that the writ petitions mentioned in Schedule C are allowed and the notices impugned therein are set aside for being without lawful authority and of no legal effect.
The record/ evidence/ information already collected by the Directorate (I&I)/ investigating officer in these cases during investigation can be utilized in case fresh notices are issued.
The Directorate (I&I) and the investigating officers are directed to strictly adhere to the law laid down in judgments reported as Ghulam Hussain Baloch and another v National Accountability Bureau, etc., PLD 2007 Karachi 469 and Ghulam Muhammad Vs Secretary Housing, etc., 2018 CLC 176 during the investigation process, the LHC’s order added.
