2024 (10) TMI 394 - AT - FEMA

Tribunal Confirms FEMA Violation via Phone Records, Reduces Penalty to Rs. 1,50,000/- After Adjustments.

D. SelvaKumar Versus Special Director Directorate of Enforcement

The Tribunal upheld the contravention of Section 3(c) of FEMA, determining that the appellant received payments from a person outside India, supported by ... Contravention of Section 3(c) of FEMA - allegations have been made against the appellant for receipt of the payments from various persons as per the instruction of one Abdulla of Abu Dhabi, a person residing outside India without general or special permission of RBI - main argument of the appellant is in reference to the retracted statement relied by the Adjudicating Authority in passing the order - HELD THAT:- We do not find that the impugned order has been passed solely based on the retraced statement. The printout of the mobile owned by the appellant was corroborative evidence to show that appellant was not only having relation with Abdulla but was having frequent conversation with him. It was also that no books of accounts of gold business were found during the search thus the statement of the appellant about his gold business remained without substance. Finding overall evidence on the record, the Special Director (Appeals), while maintaining the finding on contravention of section 3(c) of FEMA, the amount of penalty was reduced from Rs. 7,00,000/- to Rs. 5,00,000/-. After going through the record, we find, evidence to prove contravention of Section 3(c) of FEMA. The appellant could not prove his gold business and reason to call Abdulla of Abu Dhabi frequently and other material however we intend to reduce the amount of penalty from Rs. 5,00,000/-to Rs. 1,50,000/-. The appellant has already deposited Rs. 1,00,000/- towards pre deposit and Rs. 50,000/- are still lying with the ED after the confiscation of sum Rs. 4,00,000/-out of Rs. 4,50,000/-thus the amount lying with the ED should be taken towards the deposition of penalty amount and with the aforesaid appeal is partly allowed. Issues:Challenge to orders passed by Special Director (Appeals) and Adjudicating officer regarding contravention of Section 3(c) of FEMA and imposition of penalty.Analysis:The appellant challenged the orders passed by the Special Director (Appeals) and the Adjudicating officer, alleging contravention of Section 3(c) of FEMA for receiving payments without RBI permission. The penalty was initially set at Rs. 7,00,000/-, reduced to Rs. 5,00,000/- on appeal. The appellant argued lack of evidence to prove the receipt of funds from a person outside India. The reliance on retracted statements was contested, citing legal precedents against their use.The appellant referenced various judgments to support the argument against reliance on retracted statements. It was highlighted that the burden of proof lay with the department, which failed to produce substantial evidence beyond the retracted statements. The appellant also mentioned the confiscation of funds and deposit made to satisfy the penalty amount imposed by the Special Director (Appeals).The respondent contested the appeal, supporting the orders of the Adjudicating Authority and the Special Director (Appeals). Detailed arguments were presented, emphasizing the reliance on corroborative evidence rather than solely on retracted statements. The respondent urged the dismissal of the appeal based on the material available to support the orders.Upon considering the submissions of both parties, the Tribunal examined the allegations of contravention of Section 3(c) of FEMA. The appellant's argument regarding the retracted statements was analyzed in light of the evidence found during searches at business premises and statements of other individuals involved. The Tribunal noted the appellant's admission of receiving payments under instructions from a person residing outside India, supported by phone records showing frequent communication with the said individual.The Tribunal found evidence to prove the contravention of Section 3(c) of FEMA, despite the appellant's inability to substantiate his gold business and reasons for contacting the individual from Abu Dhabi. The penalty amount was reduced from Rs. 5,00,000/- to Rs. 1,50,000/-, considering the deposit made towards the penalty and funds confiscated. The remaining amount with the Enforcement Directorate was directed to be adjusted towards the penalty, resulting in a partial allowance of the appeal.