AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2009 (12) TMI 519
X X X X Extracts X X X X
X X X X Extracts X X X X
....order. The issue raised in these petitions is with regard to the deposits in foreign currency made by power of attorney holders of Non-Resident Indians in whose names the Non-Resident External (NRE) Accounts stood. The question that arises for consideration is - whether, even for the period prior to 31-7-1995, such deposits in foreign currency needed to be made, necessarily, by the Non-Resident Indian account holder, in person? 2. This issue arises in the backdrop of show-cause notices against the petitioner banks issued by the Enforcement Directorate alleging violation of the provisions of section 6(4) and section 6(5) of the Foreign Exchange Regulation Act, 1973 ('FERA'). 3. These writ petitions were filed challenging the show-cause....
X X X X Extracts X X X X
X X X X Extracts X X X X
....002 as also the show-cause notice stand set aside. This writ petition stands disposed of." 5. Thereafter, a review petition was filed by the Union of India on the ground that there was a 'communication gap' and that proper instructions had not been conveyed to the counsel and that the position was otherwise. The said review petition was dismissed by a detailed order on 16-1-2009. Aggrieved with the said order, the Union of India preferred an appeal, being entitled Union of India v. Citi Bank [LPA No. 117 of 2009] before a Division Bench of this Court. The said appeal was decided by virtue of the judgment dated 26-3-2009 upholding the decision and order of the Single Judge. Consequently, on the basis of the said Division Bench decision....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he scrutiny of the NRE accounts conducted by the Reserve Bank, serious irregularities have been noticed in the operations on these accounts, particularly in regard to affording credits of proceeds of foreign currency/bank notes. Authorised dealers are advised to follow scrupulously the following instructions while permitting credits representing proceeds of foreign currency/bank notes and travellers cheques (TCs) to NRE accounts and operations on these accounts by resident power of attorney holders; (i)The account should be opened by the non-resident account holder himself and not by the holder of power of attorney in India on behalf of a non-resident. (ii) The credits representing proceeds of foreign currency travellers cheques/forei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....holder himself and the' - have been inserted by way of amendment. Considering the said circular dated 31-7-1995 and the said amendment introduced in the Exchange Control Manual subsequently, the Division Bench came to the following conclusion :- "It is apparent from the bare reading of the circular dated 31st July, 1995 that authorized dealers have been advised to scrupulously follow the instructions given therein while permitting credits representing proceeds of foreign currency, bank notes and travellers cheques to NRE accounts and operations on these accounts and operations on these accounts by resident power of attorney holders. The amended instructions provide that the account should be opened by the non-resident account holder hims....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lly stood, had a typographical error inasmuch as the word "not" had been left out from the expression "NRE account could not be made by persons...". However, that lacuna was corrected by the Division Bench by an order dated 31-7-2009 and, consequently, the expression is to be read as including the word "not". 10. So, the position insofar as the said order of the Division Bench is concerned, is very clear and, that is, that prior to 31-7-1995 there was no requirement that the deposits in NRE accounts could not be made by persons other than the NRE accounts holders themselves. For the subsequent period, that is after 31-7-1995, it is not in dispute that such deposits could only be made by the account holder himself, in person. 11. In th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion orders, the petitioners, have the alternative remedy of filing appeals under section 19 of the Foreign Exchange Amendment Act, 1999. 15. Insofar as the aforesaid two submissions made by Mr. Chandhiok are concerned, we are of the view that the Division Bench in Citi Bank (supra), had considered all aspects of the matter before it rendered its decision. Even at the sake of repetition, we may point out that the Division Bench specifically set out the provisions of the circular as well as the amended and unamended provisions of paragraph 13B.22 and then came to conclusion, that it did. It is obvious that the said Division Bench did not regard the circular or the amendment as being merely clarificatory. We, therefore, feel that the issue....