1996 (9) TMI 651 - Board - FEMA

Chairman sets aside penalty order due to lack of corroborative evidence and unreliable investigation

Nizamuddin Versus Director of Enforcement

Nizamuddin Versus Director of Enforcement - TMI Issues:1. Imposition of penalty for contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973.2. Validity of confessional statement extracted under coercion.3. Lack of corroborative evidence to support the allegations.4. Reliability of information initiating the investigation.5. Compliance with legal procedures under section 40 of the Act.Analysis:The appeal was filed against an Adjudication Order imposing a penalty for contravention of the Foreign Exchange Regulation Act. The appellant cited personal illness and financial constraints, requesting the appeal's disposal based on submitted documents. The Chairman waived the pre-deposit and proceeded to hear the appeal on its merits without the appellant's physical presence. The appellant challenged the Adjudication Order primarily on the grounds that the findings were solely based on a confessional statement obtained under coercion. The appellant contended that the statement lacked corroboration and referenced previous decisions to support this argument.The respondent argued that the appellant's defense involving Mohd. Aslam was false and not credible. The respondent claimed that the appellant's statement was voluntarily recorded by the competent authority and that the information initiating the case was reliable. The respondent pointed out circumstantial evidence supporting the allegations, such as the appellant's son being employed abroad. The Chairman reviewed the submissions and acknowledged the lack of corroborative evidence to support the allegations solely based on the appellant's statement. The Chairman agreed with the legal position that a person cannot be found guilty solely based on a confessional statement without corroborating evidence.The Chairman noted that the investigation was initiated based on information from the Delhi Zonal office but found a lack of reference to material supporting the reliability of this information. The investigating agency failed to gather additional evidence beyond the confessional statement. Due to the absence of substantial material supporting the information's reliability, the Chairman concluded that the action against the appellant could not be sustained. Consequently, the appeal was allowed, and the impugned order imposing the penalty was set aside.