Foreign exchange penalty failed where seized entries and statement did not prove prohibited transactions or contravention.

The Tribunal was justified in setting aside the penalty under FERA where the respondent's explanation of the seized entries matched the regular accounting method used in indenting business. The statement relied on by the department did not amount to a confession of contravention, and the documents themselves did not establish payment to or receipt from foreigners in breach of the Act. With no other material showing a prohibited foreign exchange transaction, the High Court found no basis to interfere and held that no question of law arose.

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Issues: Whether the Tribunal was justified in setting aside the penalty imposed for alleged contravention of section 9(1)(a) of the Foreign Exchange Regulation Act, 1973 on the basis of the respondent's statement and the seized documents.

Analysis: The respondent's explanation of the entries in the seized documents was accepted as consistent with the regular accounting method followed in indenting business. The Tribunal found that the statement did not amount to a confession of contravention and that the documents did not establish payment to or receipt from foreigners in violation of the Act. The High Court found no material to dislodge that factual finding and noted that, apart from the entries, there was nothing on record to show any prohibited foreign exchange transaction.

Conclusion: The Tribunal was justified in setting aside the penalty, and no question of law arose for interference.

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