2001 (7) TMI 1331 - AT - FEMA

Appeal Dismissed: Chairperson Upholds Penalty for Violating Foreign Exchange Regulation Act Due to Lack of Evidence.

Rohit Jain Versus Assistant Director, Enforcement Directorate

The Chairperson dismissed the appeal, affirming the Adjudication Order that imposed a penalty for contravening the Foreign Exchange Regulation Act, 1973. ... - Issues:Appeal against Adjudication Order imposing penalty for contravening Foreign Exchange Regulation Act, 1973 by receiving a gift cheque from a person resident outside India.Analysis:The case involved an appeal against an Adjudication Order penalizing the appellant for contravening the provisions of the Foreign Exchange Regulation Act, 1973 by receiving a gift cheque from a person resident outside India. The appellant received a cheque of Rs. 2 lakhs from Shri Sumeer Mahajan, purportedly as a gift after paying a premium of Rs. 24,000. The appellant, Shri Rohit Jain, was one of the recipients of such gift cheques disbursed by Shri Sumeer Mahajan, totaling around Rs. 7 crores. The charge against Shri Jain was that he made a payment of Rs. 2,24,000 to Shri Mahajan without any RBI exemption, contravening section 9(1)(a) of the Act. Shri Jain denied the charge, claiming the gift was out of love and affection. However, the Adjudicating Officer decided the case ex parte, imposing a penalty of Rs. 15,000, which was challenged in the appeal.The appellant's counsel contended that there was no evidence of compensatory payments made by the appellant, citing a FERA Board's Order in support. On the other hand, the respondent argued that Shri Mahajan's statement, voluntarily made, incriminated the appellant. Referring to a Supreme Court judgment, the respondent asserted that a retracted confession can be used as evidence if voluntary or corroborated. The respondent maintained that the appellant's case was not covered by the FERA Board's order due to the timing of the gifts, and defended the legality of the impugned order.Upon careful consideration of the submissions and evidence, the Chairperson noted that the Act of 1991 applied to remittances made after its commencement, which did not cover the gifts in this case made before the Act's start date. The Chairperson acknowledged the legal validity of gifts to unrelated persons but emphasized that a gift with consideration is a sham. The statement of Shri Mahajan, indicating premium payments for gift cheques, was crucial evidence. The absence of evidence to prove no consideration was paid by the appellant, coupled with Shri Mahajan's absence in the proceedings, led to the dismissal of the appeal. The Chairperson highlighted the quasi-judicial nature of adjudication proceedings and the necessity for evidence-based findings, citing legal precedents to support the decision.In conclusion, finding no illegality or infirmity in the impugned order, the Chairperson dismissed the appeal as lacking substance and merit.