Unauthenticated foreign documents and no departmental appeal cannot justify FEMA penalty enhancement or contravention findings.

Unauthenticated photocopies of foreign documents could not sustain a finding of contravention under FEMA where their authenticity was doubtful, the documents were untranslated or not understood by the noticees or adjudicating authority, and the foundational facts were not proved by admissible evidence; the statutory presumption under section 39 could not cure that evidentiary gap. The appellate authority also lacked jurisdiction to enhance penalty in the absence of any appeal or cross-objection by the Department, as it could not place the appellants in a worse position without a challenge from the aggrieved side.

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Issues: (i) Whether the proceedings could be sustained on the basis of unauthenticated photocopies of foreign documents and the presumption under section 39 of FEMA; (ii) Whether the appellate authority could enhance the penalty in the absence of any appeal or cross-objection by the Department.

Issue (i): Whether the proceedings could be sustained on the basis of unauthenticated photocopies of foreign documents and the presumption under section 39 of FEMA.

Analysis: The material relied upon by the Department consisted of photocopies said to have been received from outside India, but their authenticity was doubted even by the Department itself. The record showed that no satisfactory authentication was forthcoming, and the documents were in a language not understood by the noticees or the adjudicating authority. In such circumstances, the statutory presumption could not be invoked to fill the gap in proof, particularly when the foundational facts necessary to support the alleged contravention were not established by admissible evidence.

Conclusion: The finding of contravention could not be sustained on the basis of such material and is set aside in favour of the assessee.

Issue (ii): Whether the appellate authority could enhance the penalty in the absence of any appeal or cross-objection by the Department.

Analysis: Enhancement of the penalty was made without any appeal by the aggrieved side. The appellate authority could not, on its own, place the appellants in a worse position than under the original adjudication in the absence of a challenge by the Department. The enhancement was therefore beyond jurisdiction and contrary to settled appellate principles.

Conclusion: The enhancement of penalty was illegal and unsustainable and is set aside in favour of the assessee.

Final Conclusion: The impugned appellate order and the original adjudication order were quashed, and all the appeals were allowed.

Ratio Decidendi: Unauthenticated foreign documents cannot, by themselves, sustain a finding of contravention where the statutory presumption is not properly attracted, and an appellate authority cannot enhance a penalty in the absence of an appeal or cross-objection by the aggrieved side.

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