2019 (8) TMI 266 - AT - FEMA

Tribunal overturns penalties in FERA case due to lack of evidence and invalid notice

Shri A.S. Aneja @ Amarjit Singh Aneja Versus The Special Director, Directorate of Enforcement, Delhi

Shri A.S. Aneja @ Amarjit Singh Aneja Versus The Special Director, Directorate of Enforcement, Delhi - TMI Issues Involved:1. Legality of the penalties imposed for contraventions of Sections 8(1), 9(1)(a), and 9(1)(f)(i) of FERA, 1973.2. Validity of the Show Cause Notice issued on 04.04.2001.3. Legitimacy of the Appellant's confessional statement dated 12.12.1995.4. Impact of judicial precedents on the current case.5. Admissibility and impact of retracted confessional statements in imposing penalties.Detailed Analysis:1. Legality of the penalties imposed for contraventions of Sections 8(1), 9(1)(a), and 9(1)(f)(i) of FERA, 1973:The Appellant was penalized with Rs. 8,00,000 for contravention of Sections 8(1) & 9(1)(a) and Rs. 1,30,00,000 for contravention of Sections 9(1)(f)(i), 8(1) & 9(1)(a) of FERA, 1973. The Appellant argued that the deposits in the NRE accounts were made by the NRI account holder, Mr. V.D. Jaiswal, from his earnings abroad, and not by the Appellant. The Tribunal noted that the Adjudicating Authority failed to consider that prior to the Notification dated 31.07.1995, foreign currency could be deposited in NRE Accounts by power of attorney holders of NRIs. Thus, the necessary ingredients to make out the violations under Sections 8(1), 9(1)(a), and 9(1)(f) of FERA were not established.2. Validity of the Show Cause Notice issued on 04.04.2001:The Show Cause Notice alleged violations of various provisions of FERA and directed the Appellant to show cause why adjudication proceedings should not be initiated. The Tribunal observed that similar Show Cause Notices were quashed by the Delhi High Court in the 'Standard Chartered Bank V/s Directorate of Enforcement & Ors.' case, which held that prior to the circular dated 31.07.1995, there was no clear stipulation that deposits could not be made in NRE accounts by persons other than the NRI account holders. The Tribunal found that the Show Cause Notice in the present case suffered from the same legal infirmities.3. Legitimacy of the Appellant's confessional statement dated 12.12.1995:The Appellant retracted his confessional statement, claiming it was obtained under duress and coercion. The Tribunal noted that the Appellant informed the Enforcement Directorate about his unlawful detention and the coercion used to extract the statement. The Tribunal emphasized that a retracted confession cannot be the sole basis for imposing penalties unless corroborated by independent evidence.4. Impact of judicial precedents on the current case:The Tribunal referenced several judgments, including those by the Delhi High Court and the Supreme Court, which quashed similar Show Cause Notices and adjudication orders. The Tribunal highlighted the consistency in judicial decisions that prior to the 31.07.1995 circular, there was no prohibition on deposits in NRE accounts by persons other than the account holders. These precedents significantly influenced the Tribunal's decision to set aside the penalties imposed on the Appellant.5. Admissibility and impact of retracted confessional statements in imposing penalties:The Tribunal cited the Supreme Court's rulings in 'Vinod Solanki V/s U.O.I.' and 'State (NCT of Delhi) V/s Navjot Sandhu alias Afsan Guru,' which held that retracted confessions must be corroborated by independent evidence to be admissible. The Tribunal found that in the present case, there was no independent evidence corroborating the Appellant's retracted confessional statement. Consequently, the Tribunal concluded that the retracted statement could not be relied upon to impose any penalties on the Appellant.Conclusion:In light of the above analysis, the Tribunal allowed the appeal and set aside the Impugned Order dated 28.04.2006, passed by the Special Director, Directorate of Enforcement. The penalties imposed on the Appellant were annulled, and no costs were awarded.