TaxTMI 
TaxTMI 
2014 (5) TMI 863
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....luja alleging that he had made payments totalling Rs.1.18 crores to Mr. Arvind Shah @ Subhash Ganatra, a person resident in India, without any special or general permission of the Reserve Bank of India ('RBI') acting on the instructions of his brother Dr. Rajinder Singh Saluja of the United Kingdom, a person resident outside India, and thereby contravened Section 9 (1) (d) of Foreign Exchange Regulation Act, 1973 ('FERA'). SCN-I was also issued to Mr. Arvind Shah for receiving the aforementioned payment and to Mr. Raj Kumar Kedia for aiding and abetting Mr. A.S. Saluja in making the aforementioned payment. 4. SCN-I came to be issued as a result of the officers of the ED, acting on an intelligence input, searching the residential premises of Mr. A.S. Saluja at E-32, Greater Kailash-I, New Delhi on 15th August 1997 and seizing Rs.1.18 crores, one bunch of loose sheets containing 29 pages and one currency note of Rs.50 from the pocket of the shirt of Mr. A.S. Saluja. During the search, Mr. Arvind Shah @ Subhash Ganatra was found present in the premises. His search led to the seizure of 6 pages of loose sheets. It is stated that from the seized documents, as well as ....
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....ust 1997. The telephone number of Mr. Gopalani was also given. Mr. Saluja disclosed that he had received payment equivalent to USD 50,000 from Mr. Rajiv Gopalani relating to the said entry which was reflected in the rear of page 27. He also explained that the entries of USD 33600+25000+15000 written against 'Rajiv' at page 26 of the documents seized from his residence also related to Mr. Rajiv Gopalani. 8. SCN-I proceeded to set out the explanation given by Mr. Shah in his statement under Section 40 FERA. Mr. Shah stated that he was a permanent resident of London. He was approached by one Mr. Amar Nath in London in the third week of July 1997 and offered an air ticket to India and back plus GBP 4000 to act as a carrier for receiving an amount of Rs.1.18 crores from Mr. Saluja and pass it to the person whose details were to be informed to him later. Mr. Shah agreed to the said proposal and came to India on 14th August 1997. He checked in to Hotel Centre Point, Kasturba Gandhi Marg, New Delhi under the assumed name of Arvind Shah as advised by Mr. Amar Nath. He then telephoned Mr. Saluja who later visited him in the hotel room. On 15th August 1997, at about 4 pm, Mr. Shah ....
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....here were entries in page 14 which were explained by Mr. Saluja. In terms of the said entries, he had received Rs.2 lakhs on 24th July 1997 from Mr. R.P. Chauhan on the instructions of one Dr. Lal of Australia. The entries in page 6 showed that during 1996-97 he had paid a sum of Rs.3,35,000 to his aunt Api Chodhary, a resident of Australia, as consideration for receipt of USD 10,700 equivalent to Australian Dollars 12,850 by his son Rajiv who was studying in Australia. SCN-III was accordingly issued on 14th August 1998 to Mr. Saluja for making payments totalling to Rs.3,97,495 to persons in India as per instructions of persons resident outside India. SCN-III also stated that Mr. Saluja had received payments of Rs.2 lakhs on 24th July 1997 on instructions of Dr. Lal of Australia without any general or special exemption from the RBI in contravention of Section 9 (1) (b) and Section 9 (1) (d) FERA. The SCN-III was issued to Mr. R.P.Chauhan for paying Rs.2 lakhs on 24th July 1997 to Mr. Saluja on the instructions of Dr. Lal of Australia without any general or special exemption from the RBI in contravention of the provisions of Section 9 (1) (d) FERA. 13. SCN-IV was issued on 14th A....
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....recorded on 3rd September 1997. It was found that as many as 7 calls had been made between 10th February and 6th March 1997 by Mr. Kedia from his office to Mr. Saluja. The details of the STD calls made from Mr. Kedia's telephone were obtained from the Department of Calcutta Telephones, Calcutta. They confirmed that the said telephone was in the name of M/s. Lugo Traders of 3-B, Lal Bazar Street, 5th Floor, Room No.6, Calcutta. The said calls were analysed. It was found that the calls were made at the telephone numbers installed at the residence of Mr. Saluja. From the entries made in the telephone diary and the loose note sheets it was clearly established that Mr. Saluja had a close nexus with the telephone numbers installed at the residence of Mr. Kedia. However, Mr. Kedia in his affidavit dated 24th July 2001 gave an explanation that the telephone installed at his residence and the telephone numbers were used by visitors, guests and family members who resided with him. Mr. Kedia denied any connection with Mr. Saluja. 18. The nexus between the noticees Mr. Saluja and Mr. Shah was evident from the further call details. There was also a nexus between the telephone of Mr. Kedi....
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....e time of filing of the bail application by Mr. Saluja which had also been rejected. Secondly, the SD concluded that Mr. Saluja acted at the behest of his brother Dr. R.S.Saluja and that the Indian currency seized was liable to confiscation under Section 63 FERA. 21. As regards the statement of Mr. Saluja made on 16th August 1997, the SD held it to be voluntary and true and that its retraction was not valid. The SD discussed the detailed entries in the loose sheets and concluded that Mr. Saluja had contravened Section 8 (1) and Section 9 (1) (f) (i) FERA. As regards Mr. Shah, he was held to have contravened Section 9(1) (b) FERA and was held liable to penalty under Section 50 FERA. 22. As regards Mr. Gopalani, the SD discussed his replies to the questions and his refusal to make any statement or give any explanation to the entries made in the loose sheets seized from Mr. Saluja. The hand writing expert also confirmed that the writing on page 19 of the loose sheet was that of Mr. Gopalani. No queries were raised on the report of the hand writing expert. The noticee also did not ask for the expert to be cross-examined. The SD proceeded to impose the penalty of Rs.10 lakhs on Mr....
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....sum in Indian currency of the GBP supposed to have been delivered abroad did not explain how the amount was arrived at with reference to the prevalent exchange rate. Mr. Narang pointed out that summons was issued to Mr. Saluja to appear at 1 am when he was picked up much earlier and was in custody throughout. This also showed that the paper work associated with the arrest and the recording of his statement was unreliable. Relying on the decisions in Noor Aga v. State of Punjab 2008 [3] JCC [Narcotics] 135, Vinod Solanki v. Union of India (2008) 16 SCC 537, Union of India v. Bal Mukund (2009) 12 SCC 161, Francis Stanly v. Intelligence Officer, Narcotic Control Bureau 2007 [1] JCC [Narcotics] 1, Abid Malik v. Union of India 2009 [3] JCC 2012 and Vinod Kumar Sahadev v. Union of India 2009 [4] JCC 2636 Mr. Narang submitted that in the present case it would be unsafe to place any reliance on the so-called confessional statement made by Mr. Saluja under Section 40 FERA. 26. Appearing on behalf of Mr. Rajiv Gopalani, Mr. Anindya Malhotra, learned counsel, submitted that the entire case against Mr. Gopalani hinged upon the so-called confessional statement of Mr. Saluja under Section 40 ....
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....ted that there was a presumption as to the genuineness of the documents recovered during the raid of the residential and office premises of Mr. Saluja. The statement of Mr. Saluja under Section 40 FERA 29. The ED has placed considerable reliance on the statement made by Mr. Saluja under Section 40 FERA. Apart from the fact that a sum of Rs.1.18 crores was recovered from the residence of Mr. Saluja, there were also loose sheets containing numerous entries. The said entries were explained in great detail by Mr. Saluja in his aforementioned statement, which he then retracted alleging that it was made under threat of coercion and torture. The two questions that arise are, firstly, whether it could be said that the said statement was voluntary and, secondly, could it be said to be truthful? 30. As regards the voluntariness of the statement, the question that then arises is whether the retraction of the said statement by Mr. Saluja was for valid reasons? In his cross-examination Mr. K.C. Abraham of the ED detailed the manner in which the ED elicited information from Mr. Saluja during interrogation. Mr. Abraham stated: "After going through the documents I went to the room wher....
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....g his wife and son to the office and arrest his son unless he did not make a statement as per my dictation and that his son was actually brought to the office in order to pressurise Mr. Saluja to make a statement as required by me. I did not know whether his son had made nay entry in the reception register when he came to our office. In fact somebody in the office told me after the arrest that his son was present in the office otherwise I was going to inform by telephone to his family about arrest of Shri Saluja. It is wrong to suggest that I interrogated on 15th night. As already stated I came to office on 16th morning at about 9.30 am. He never complained of his chest pain while I was interrogating him. I cannot say whether he complained of his chest pain to anybody before my arrival." 33. As far as Mr. Saluja's retraction statement is concerned, it reads as under: "I was taken away at midnight on 15.8.1997 in their car I was interrogated all night in the morning I had heart/chest pain for nearly 2 hours I kept on asking for doctor no one came. I was on the table lying down for all that time. The statements were taken under threat and I was even hit twice on the 16th af....
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....he maker of the statement. It could not have been fabricated by the officers who recorded the said statement. The AT which confirmed the AO also noted that the persons in charge of TTPL had in great detail explained the functioning of TTPL and the statements were made in their own hand writing and in a language known to them. 35.4 The Supreme Court dismissed the appeal filed by TTPL. It referred to the earlier decision in KTMS Mohd. v. Union of India (1992) 3 SCC 178 where it was held as under: "34. We think it is not necessary to recapitulate and recite all the decisions on this legal aspect. But suffice to say that the core of all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Custom Authorities or the officers of Enforcement under the relevant provisions of the respective Acts is a sine qua non to act on it for any purpose and if the statement appears to have been obtained by any inducement, threat, coercion or by any improper means that statement must be rejected brevi manu. At the same time, it is to be noted that merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obt....
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.... Noor Aga was in the context of the statements made by suspects detained under the Narcotic Drugs and Psychotropic Substances Act 1985 ('NDPS Act'). The question examined in that case was whether a statement recorded by a customs officer under Section 108 of the Customs Act 1972 could be relied upon for the purposes of the proceedings under the NDPS Act. That question was answered in the negative. There was no occasion for the Supreme Court in Noor Aga to consider the effect of a retracted statement under Section 40 FERA. Discussion of Mr. Saluja's case 37. There can be no doubt that a retracted statement under Section 40 FERA, cannot form the sole basis for determining whether the maker of such a statement is guilty of contravening any of the provisions of FERA. It shall have to be corroborated by other independent evidence. In determining whether such a retracted statement can be relied upon, it will have to be examined whether the statement could be said to have been made voluntarily. 38. In the present case, the statement made by Mr. Saluja contains a wealth of details on the transactions undertaken by him at the behest of either his brother Dr. R.S Saluja or o....
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.... the STD calls exchanged between Mr. Saluja, Mr. Kedia and Mr. Shah. The fact that the foreign exchange may not have been recovered from the residence of Mr. Saluja does not weaken the case of the ED. According to the ED, the Indian currency paid to Mr. Saluja was for delivery of foreign exchange abroad. As noted in the AO, the details of the foreign bank accounts were available in the documents seized from the residence of Mr. Saluja. 42. In the considered view of the Court, the case against Mr. Saluja stood established by his retracted statement under Section 40 FERA, corroborated by the documentary evidence recovered from his residence. 43. As regards the penalties imposed on Mr. Saluja they cannot be said to be unreasonable given the amount involved. In the circumstances, this Court is not persuaded to interfere with the impugned order of the AT as far as the appeal of Mr. Saluja is concerned. The case of Mr. Gopalani 44. Turning to the appeal of Mr. Rajiv Gopalani, as noticed in the AO, all incriminating evidence was put to Mr. Gopalani and he declined to make a statement. When asked why he had not explained the transactions, he stated that he was not replying as a....