1996 (3) TMI 536 - Board - FEMA

Appellant's penalty reduced to Rs. 10,000 in FERA case

Smt. Shanti Devi Jain Versus Director of Enforcement

Smt. Shanti Devi Jain Versus Director of Enforcement - TMI Issues:1. Imposition of penalty under section 9(1)(a) of FERA, 1973.2. Allegation of contravention regarding receipt of funds from NRE account.3. Denial of contravention and defense of funds received as a gift.4. Consideration of circumstantial evidence in determining contravention.5. Quantum of penalty and considerations for determining the same.Analysis:1. The appeal was filed against the imposition of a penalty of Rs. 60,000 on the appellant for contravention of section 9(1)(a) of FERA, 1973, related to receiving funds from an NRE account. The appellant denied the charge and claimed the funds were received as a gift from a friend of her late husband.2. The appellant contended that the funds were gifted by a friend of her late husband out of love and regard, and she initially hesitated but accepted the gift after assurance that it was unsolicited. She argued that the documents relied upon did not implicate her in the contravention. The order was criticized for directing a penalty deposit without formally imposing the penalty.3. The respondent argued that the denial of payment to the individual had to be considered along with other facts. It was highlighted that the appellant failed to provide evidence of a close family relationship with the individual and that similar payments were made to others. The respondent emphasized the lack of evidence confirming the gift nature of the transaction.4. The adjudicating officer rejected the appellant's claim of a gift, considering the lack of evidence supporting it. The officer inferred that the appellant made a cash payment in exchange for the funds received. The circumstantial evidence of similar transactions and lack of proof of a gift relationship were crucial in this determination.5. The chairman upheld the finding of contravention but reduced the penalty to Rs. 10,000, considering the appellant's widow status, limited income sources, and the singular nature of the transaction. It was noted that the contravention did not undermine the Act's objectives but contributed to foreign exchange reserves. The appellant was directed to be refunded the excess amount deposited as penalty within 45 days.This detailed analysis highlights the key arguments, evidentiary considerations, and the final decision regarding the penalty imposed under FERA, 1973.