Pakistani citizen's FEMA penalty reduced after purchasing property without RBI permission under Regulations 2000

The Appellate Tribunal SAFEMA, New Delhi allowed the appeal of a Pakistani citizen who purchased immovable properties in Dehradun without RBI permission under FEMA Regulations 2000. The Tribunal considered the appellant's naturalization background, long-term visa grant, and that no absolute bar existed on Pakistani property acquisition - only permission requirement. While acknowledging ignorance of law is no defense, the Tribunal found the initial penalty of Rs. 3,00,000 already paid was sufficient to meet justice ends. The additional penalty of Rs. 4,50,000 imposed by the adjudicating authority and upheld by Special Director of Enforcement (Appeals) was set aside as unjustified.

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Issues:
Violation of Regulation 7 of the Foreign Exchange Management (Acquisition and Transfer of Immovable Property In India) Regulations, 2000.
Imposition of penalties under FEMA, 1999.
Grant of citizenship and naturalization under the Citizenship Act, 1955.
Consideration of relief in the case based on legal intricacies and circumstances.
Applicability of penalties based on mens rea and intention.
Judicial discretion in imposing penalties for statutory obligations.

Analysis:
The judgment involves a case where the appellant, a citizen of Pakistan, purchased immovable properties in India without obtaining necessary permissions as required under Regulation 7 of the Foreign Exchange Management Regulations. The appeal arose from the imposition of penalties for contravention of FEMA regulations. The appellant's acquisition of properties without RBI approval led to a complaint and subsequent adjudication proceedings, resulting in penalties totaling Rs. 7,50,000. The appellant's appeal challenged the imposition of a further penalty of Rs. 4,50,000 by the Adjudicating Authority, which was upheld by the Special Director (Appeals).

The appellant argued that he and his family were granted Indian citizenship and naturalization, emphasizing their background of seeking asylum due to persecution in Pakistan. The appellant contended that the properties were purchased using funds earned in India and with the help of relatives, asserting no violation involving foreign exchange. Additionally, the appellant highlighted his compliance with the initial penalty and raised concerns regarding the imposition of additional penalties, citing legal principles and case laws supporting his case.

On the other hand, the respondent contested the appellant's contentions, emphasizing the appellant's citizenship status at the time of property acquisition and the Adjudicating Authority's reasonable decision to impose penalties. The respondent argued that ignorance of the law is not a defense and supported the penalty imposition upheld by the Special Director (Appeals).

The Tribunal, after considering the facts and arguments presented, granted relief to the appellant. The Tribunal acknowledged the appellant's circumstances, including the grant of citizenship and the absence of a complete prohibition on property acquisition by Pakistani citizens. While recognizing that ignorance of the law is not a defense, the Tribunal found that the penalties imposed were not justified based on the appellant's compliance with the initial penalty and the objectives of FEMA, 1999. Consequently, the Tribunal set aside the further penalty of Rs. 4,50,000, allowing the appeal and providing relief to the appellant.

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