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2015 (10) TMI 264
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....ising Chartered Accountant. When the appellant in the first miscellaneous appeal was holding office as the Chairman and Managing Director of the Tamil Nadu Minerals Limited, which is a 100% export oriented unit, wholly owned by the State of Tamil Nadu, a raid was conducted at the premises bearing door No.M-26, 10th Street, 'M' Block, Anna Nagar, Chennai. During the raid, foreign currencies to the extent of US$ 5061, S$ 527 and 210 Malaysian ringgits were recovered. 4. When the raid was going on, the Chartered Accountant of the appellant in the first miscellaneous appeal, who is the appellant in the next appeal, came to the same premises. From a briefcase that he was carrying, foreign currencies to the extent of US$ 5014 were recovered. 5. After recording statements under Section 40 from both the appellants as well as another person by name Ms.Seethalakshmi Nagaraj, show cause notices were issued to the appellants, on 21.8.1996, calling upon them to show cause as to why adjudication proceedings under Section 41 of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as the FERA) should not be held against them. Simultaneously, the Directorate of Enforcement a....
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....araj (as regards holding the currency as owner thereof and handing a part of it to the appellant for deposit in the FCNR account of the appellant brother-in-law), is not a plausible one ? (iv) Whether the second respondent Tribunal is right in ignoring the statements recorded from the said Seethalakshmi Nagaraj under Section 40 of the Foreign Exchange Regulation Act, 1973 and her claim for the currencies before the Income Tax Authorities which are evidence in themselves to show that she was the only owner of the currencies and she had not lost her proprietary control over the same ? (v) Is the second respondent Tribunal right in ignoring the statements recorded from the appellant under Section 40 of FERA in which he has clearly explained the circumstances under which the currencies came to be found, including the version of it being owned and possessed by Smt. Seethalakshmi Nagaraj at all times ? (vi) Is the second respondent Tribunal right in finding that it was for the appellants to prove the urgency of the matter for handing over foreign exchange to the appellants despite the fact that she (Smt.Seethalakshmi Nagaraj) had sufficient opportunity for deposit of currencies ....
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....pellant in the second miscellaneous appeal, at the time when the premises was being raided. In the statement recorded from the appellant in the first miscellaneous appeal under Section 40, he claimed that the premises that was raided belonged to his mother and that those foreign currencies were actually entrusted by a family friend by name Mrs.Seethalakshmi Nagaraj to his mother, who was the owner of the premises, for safe custody. This statement recorded from the appellant in the first miscellaneous appeal was also corroborated by Mrs.Seethalakshmi Nagaraj in a statement independently recorded from her under Section 40. 11. In so far as the appellant in the second miscellaneous appeal is concerned, he took a position that the foreign currencies recovered from his briefcase also belonged to Mrs.Seethalakshmi Nagaraj and that he was entrusted with those currencies for making a deposit. In other words, the stand taken by the appellants in both these appeals right from the beginning was that those currencies recovered from the premises and recovered from the briefcase belonged to one Mrs.Seethalakshmi Nagaraj. 12. It is not known whether Mrs.Seethalakshmi Nagaraj accounted for this ....
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....or borrowed from nor sold nor otherwise transferred this money. The premises from where the currencies were recovered, did not also belong to him, but to his mother. 15. Hence, the learned Senior Counsel for the appellants submits that after the issue has been settled by a Division Bench of this Court in T.C.(A). No.150 of 2004 by a judgment dated 3.9.2007 with regard to the ownership of the money, the appellants cannot be held guilty of contravention of Section 8(1). 16. We have carefully considered the above submissions. 17. At the outset, it should be pointed out that any conclusion reached by an authority under the Income Tax Act, 1961, need not necessarily lead to a finding that a person cannot be prosecuted under the FERA, 1973 or the FEMA, 1999. The Income Tax Act, 1961 is a peculiar piece of legislation where there Department of Income Tax is not concerned about the method, by which, one earns money. Even if a person is engaged in a business prohibited by law, the Department of Income Tax would not hesitate to collect tax. No income is a tainted income in so far as the Income Tax Law is concerned. The moment it is proved that a person has earned income whether by rightfu....
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....to be answered against the appellants. Question of law (ii) : 21. Coming to the second question of law, the contention of Mr.B. Kumar, learned Senior Counsel for the appellants is that in the criminal prosecution, the appellant in the first miscellaneous appeal filed a petition for discharge. The petition for discharge was dismissed by the Trial Court. As against the dismissal of the petition for discharge, the appellant in the first miscellaneous appeal filed a revision in Crl.R.C.No.1094 of 2010. This revision was allowed by this Court by a final order dated 7.2.2012. This order appear to have attained finality. 22. Therefore, the contention of Mr.B.Kumar, learned Senior Counsel for the appellants is that once the prosecution under Section 8(1) of the FERA, 1973 had been quashed, the orders of adjudication for contravention of the very same section cannot stand in the eye of law. In other words, the contention is that it is not permissible for an adjudicating authority to say that the appellants had contravened Section 8(1) of the Act, when the Criminal Court had declared that there was no contravention. 23. But, in response to the above contention, Mr.M.Dhandapani, learned S....