TaxTMI 
TaxTMI 
2018 (4) TMI 1342
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....n terms of Notification No. G.S.R. 702 (E) dated 16.09.2015 and G.S.R. 701 (E) dated 16.09.2015 issued by the Ministry of Finance (Department of Revenue), Government of India, vide order dated 15.06.2017, seized balance amount to the tune of Rs. 2,21,43,125/- (equivalent to GBP 2,69,677/-) in respect of Savings Bank account number 008490700001612 held by Shri Ashwani Kumar Mehra, the appellant in appeal no. 01/2018, (PAN No. AAHPM8959M) standing with YES Bank, Chattarpur Branch, New Delhi vide Seizing Order No. HIU/S.O.- 2/37A/2017/AD (AHK) dated 15.06.2017. The said seizure was effected on the reason to believe that foreign exchange worth GBP 2,69,677/- (worth Rs. 2,21,43,125/- as on 14.06.2017) was suspected to be held outside India in contravention of Section 4 of the FEMA, 1999. It is alleged that, acting upon an information that Shri Ashwani Kumar Mehra s/o late Shri Devi Dass Mehra, had stakes/interests in various offshore entities in contravention of the provisions of the FEMA, enquiries were made with Reserve Bank of India to ascertain whether Shri Ashwani Kumar Mehra and C.No. Appl/DLH/CUS/ED Petition/02/2017 made any application regarding any overseas investments and w....
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....by the Ministry of Finance (Department of Revenue), Government of India, vide order dated 15.06.2017, seized balance amount to the tune of Rs. 5,01,215.55/- in respect of various bank account(s)/deposit(s) as detailed below held by Shri Navin Mehra, Appellant in appeal no. 04/2018, standing with various Banks, vide Seizing Order No. HIU/S.O.- 4/37A.2017/AD (AHK) dated 15.06.2017. The said seizure was effected on the reason to believe that foreign exchange worth GBP 2,97,070 (worth Rs. 2,43,92,538 as on 14.06.2017) was suspected to be held outside India in contravention of Section 4 of the FEMA, 1999. The details of amount/type of A/c and name of the banks are as below: - S.No. Balance Amount available (Rs.) Type of Account Name of Bank 1 1,26,713.39 FDR A/c Oriental Bank of Commerce 2 1,27,452.63 FDR A/c Oriental Bank of Commerce 3 5,126.00 FDR A/c Oriental Bank of Commerce 4 10,169.00 FDR A/c Oriental Bank of Commerce 5 5,258.00 FDR A/c Oriental Bank of Commerce 6 78,572.00 FDR A/c Oriental Bank of Commerce 7 28,571.53 SB A/c Oriental Bank of Commerce 8 29,542.00 SB A/c Cana....
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.... provisions of the FEMA, enquiries were made with the Reserve Bank of India to ascertain whether Mrs. Shalini Mehra had made any application regarding any overseas investments and whether she figures in the Overseas Investment Database maintained by the Reserve Bank of India. The Reserve Bank of India vide their letter dated 24.11.2016 replied that the name of Mrs. Shalini Mehra does not figure in their Overseas Investment Database. Enquiries were also made with the Income Tax Department and Income Tax Department vide their letter 21.02.2017 provided the Income Tax Returns of Mrs. Shalini Mehra from Assessment Year 2009-10 to Assessment Year 2016-17. 7. The aforesaid freezing orders were passed against the appellants. The said orders of freeze were confirmed by Competent Authority, i.e. The Commissioner of Customs by his order Nos. (1) ED/02/2017 dated 8/12/2017 against Ashwani Kumar Mehra (2) ED/1/2017 against Shri Deepak Mehra, (3) ED/4/2017 against Shri Navin Mehra and (4) ED/3/2017 against Smt. Shalini Mehra. 8. The Appellant in the appeal no. 1/2018 challenged the order passed by the Respondent and of Competent Authority before the Hon"ble High Court of Delhi in wr....
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....e India without prior approval of the Reserve Bank. Individuals will also be able to open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the scheme without prior approval of Reserve Bank. The foreign currency account may be used for putting through all transactions connected with or arising from remittances eligible under this scheme. 3.3 It is further clarified that the facility under the scheme is in addition to those already available for private travel, business travel, gift remittances, donations, studies, medical treatment etc as described in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000. (Annexure B). 3.4 The remittance facility under the scheme is not available for the following: i) Remittance for any purpose specifically prohibited under Schedule- I (like purchase of lottery/sweep stakes, tickets proscribed magazines etc) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000. (Annexure B). ii) Remittances made directly or indirectly to Bhutan, Nepal, Mauritius or Pakistan. iii....
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....ttances are made in accordance with the instructions contained herein. 5. Reporting of the transactions The remittances made under this Scheme will be reported in the R-Return in the normal course. The ADs may also prepare and keep on record dummy Form A2, in respect of remittances exceeding USD 5000. Authorised Dealers may arrange to furnish on a quarterly basis, information on the number of applicants and total amount remitted to the Chief General Manager, External Payment Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai-400001. 6. Necessary amendments to the relevant Foreign Exchange Management Regulations, 2000 as also the relevant Notifications, issued under FEMA, 1999 are being issued separately. 7. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned. 8. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999). Yours faithfully, Grace Koshie Chief General Manager Encls.: As above 13. The Reserve Bank has also issued ....
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....00005. 4. The above instructions do not restrict the freedom of resident individual from investing in permissible capital account transactions under the Scheme. 5. Reserve Bank has issued a press release in this regard, a copy of which is enclosed for the guidance of the Authorised Dealers. 6. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned. 7. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999). Yours faithfully, Grace Koshie Chief General Manager The RBI circular dated 26.9.2007 to be extracted. RBI/2007-08/146 A.P. (DIR Series) Circular No. 9 September 26, 2007 To, All Category - I Authorised Dealer Banks Madam/Sir, Liberalised Remittance Scheme for Resident Individuals- Enhancement of limit from USD 100,000 to USD 200,000. Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to A.P. (DIR Series) Circular No. 51 dated May 8, 2007 on the Liberalised Remittance Scheme for ....
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....ave remitted foreign exchange abroad through its bankers, the authorised dealer under foreign exchange, M/s Citibank (authorised dealer), South Extension Part I, New Delhi. They opened an account abroad in which the remittance was credited, purchasing the shares of M/s. Stoneybay International Ltd and M/s. Maxhill Holdings Ltd, including buy back and loans to such companies between the said period, which as per law. It is not denied by the respondent that Citi Bank is the authorised dealer of RBI. 16. On 15th June, 2017 the Income Tax Department initiated inquiries who did not find any fault with the transactions made by them. However the respondent while exercising of powers under section 37A(4) of FEMA, passed an interim order dated 15.06.2017 seizing the balance lying n the saving accounts of the appellant in appeal no. 1/2018 with YES Bank, Chattarpur branch, New Delhi to the tune of Rs. 2,21,43,1251/-, allegedly equivalent to GBP 269677 as on 14.06.2017. The said order was confirmed by order dt. 8.12.2017 by the Competent Authority. Similar orders were passed against the other appellants. 17. It was the case of the respondent at the time of passing the order that as per ....
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.... by RBI to Indian residents to conduct all the transactions of all types without any requirement of prior/post permission of RBI, therefore, there is no violation of FEMA. 22. There is no denial from either sides that Section 37A of FEMA came on the statute book on 14/05/2015 i.e. much after the transactions and could not be applied retrospectively, thus prerequisites for application of section 37A of FEMA for passing an order under the said section are not fulfilled, even otherwise, the basic material in possession of the officer; his reasons to believe (which already exist in writing as per Section 37-A of FEMA) have not been served nor any valid reasons are stated as the findings as to the violation of Section 4 of 1 FEMA have not been supplied, nor the communications with RBI and even the appellant had already repatriated the amounts as contemplated under section 37A (4) of FEMA,99 by which the freeze order deserves to be vacated. 23. After hearing both parties separately, on 8.12.2017 Competent Authority confirmed the freeze order and passed the impugned order which is the subject matter of the present appeals. 24. It is not in dispute that the appellants availed the ....
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....he respondent. The Appellant had opened an account abroad in which the remittance was credited, purchasing the shares of M/s. Stoneybay International Ltd and M/s. Maxhill Holdings Ltd, including buy back and loans to such companies between the period 3/2/2010 to 8/1/2013. 30. As mentioned the transactions had been made between the period 2010 to 2013 and section 37A (1) of FEMA came on statute book on 14/05/2015, hence no order could be passed against the Appellant u/s 37(A)(1) by retrospectively applying Section 37(A) of FEMA, 99. 31. The Ld. Competent Authority has held that section 37A of FEMA, though incorporated on the Statute Book on 14.5.2015 could be applied retrospectively as there was no such bar for applying said section retrospectively, ignoring that such section having penal consequences cannot apply retrospectively. There is no saving clause. The relevant period in the matter is 2010-13 which is not denied by the counsel appearing on behalf of respondent. 32. The said finding is contrary to settle law laid down by the Supreme Court judgment, in the case of CIT v. Vatika Township (P) Ltd., (2015) 1 SCC 1, at page 21. See para 27-35 : General princi....
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....es or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later. 30. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators" object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provis....
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....r in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a Preamble, and also the word "declared" as well as the word "enacted"." But the use of the words "it is declared" is not conclusive that the Act is declaratory for these words may, at times, be used to introduced new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is "to explain" an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language "shall be deemed always to have meant" is declaratory, and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-amended provision was clear and ....
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....and (3^rd Edn.) and reiterated in several decisions of this Court as well as English courts is that "all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only."" (emphasis supplied) 36. In CIT v. Scindia Steam Navigation Co. Ltd.14, this Court held that as the liability to pay tax is computed according to the law in force at the beginning of the assessment year i.e. the first day of April, any change in law affecting tax liability after that date though made during the currency of the assessment year, unless specifically made retrospective, does not apply to the assessment for that year..." 33. It is not denied by Mr. Rana that in the impugned order the issue of benefit of the scheme and ....
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....r to seize equivalent value. 40. Section 37A of FEMA, is reproduced below: - "...37A. Special provisions relating to assets held outside India in contravention of section 4.-(1) Upon receipt of any information or otherwise, if the Authorised Officer prescribed by the Central Government has reason to believe that any foreign exchange, foreign security, or any immovable property, situated outside India, is suspected to have been held in contravention of section 4, he may after recording the reasons in writing, by an order, seize value equivalent, situated within India, of such foreign exchange, foreign security or immovable property: Provided that no such seizure shall be made in case where the aggregate value of such foreign exchange, foreign security or any immovable property, situated outside India, is less than the value as may be prescribed. (2) The order of seizure along with relevant material shall be placed before the Competent Authority, appointed by the Central Government, who shall be an officer not below the rank of Joint Secretary to the Government of India by the Authorised Officer within a period of thirty days from the date of such seizure. (3) The Compete....
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....ange had been brought back to India. The argument were rejected merely on the reasons that no formal application was filed as envisaged u/s 37A(4) of FEMA, 99 and that there was no proof that same foreign exchange or immovable property has been brought back to India, a conclusion was passed in haste on the face of it as it has come on record of the case that the amount was brought back to India. 45. Had the respondent passed the order for valid reasons of believe after examining the fact and serving a copy thereof to the appellants, the entire position of the matter would have been different. The result of the impugned order might have been different. 46. Section 37A envisages material and reasons to be recorded in writing, however copies of the same was not provided to the appellant. Copy of reasons to believe not served even upto the stage of deciding the appeal. Admittedly no copy was served. This issue has been decided from time to time. We are of the view atleast conducting the searches the appellant is entitled to receive the copy thereof. (i) In P.P Abdullah Vs. Competent Authority 2007 2 SCC 510 para 7 to 8 wherein it has been held by the Apex Court that reas....
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....cquires a right to the return of the same forthwith. It is true that Sub-section (8) does not in terms provide that the Commissioner's approval or the recorded reasons on which it might be based should be communicated to the concerned person but in our view since the person concerned is bound to be materially prejudiced in the enforcement of his right to have such books and documents returned to him by being kept ignorant about the factum of fulfillment of either of the conditions it is obligatory upon the Revenue to communicate the Commissioner's approval as also the recorded reasons to the person concerned. In the absence of such communication the Commissioner's decision according his approval will not become effective." (iii). In the case of C.B. Gautam vs. Union of India (1993(1) SCC 78), a Constitution Bench of the Hon'ble Supreme Court of India held that the reasons to be recorded in writing shall not only be incorporated in the order but also shall be communicated to the affected parties. The relevant extract from the judgement is as under: "Sec. 269UD(1), in express terminology, provides that the appropriate authority may make an order for the purcha....
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....FEMA, 99 which had been repealed from Statue Book by way of amendment w.e.f. 14.05.2015. 49. Section 6(3)(d) is also not applicable to the facts of this case as there is no violation of circulars, Section 37A and Section 4 of the Act. Section 6(3) (d) is already repealed on 14.05.2015. It is wrongly held that it is still in operation. Even otherwise in view of the Section 37A, the appellants have brought back the entire amount of remittance, the benefit of Section 37A(4) could have been granted even if the said provision could have applied retrospective dates. 50. In para 9 in the impugned order it is incorrectly held to that Appellant in his statement had stated that he do not obtain or apply for permission or approval, neither before or subsequently from RBI without appreciation that there was general permission to this effect by RBI as admittedly all the transactions were done by the appellant through authorised dealer as per schedule of RBI. If the scheme is read, it is clear that the transaction could be done through authorised dealer. The appellant has applied all prescribed forms which were annexed to the said scheme through authorised dealers. The allegation of con....
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.... 276 of 2008, Delhi High Court, decided on 24.04.2014, whereby it was held that the denial of right to cross examine the witnesses would cause prejudice to the accused as statements of witnesses are not substantive evidence in themselves. It was held in the said judgement that delay is not a ground for disallowing the opportunity to cross examine witnesses. The court laid down that: "18. The impugned order of the AO fails to discuss this aspect although it has noticed the submission of learned counsel for the appellants that the said statements had been retracted as they had been given under threat and coercion. In order to determine whether the claim of the appellants that they were subjected to torture, threat and coercion was a credible one, the SD sought to have permitted the appellants to cross-examine the officers of the ED who recorded the statements. As regards Prem Singh, his statement is stated to have been recorded by A.K. Narang, Assistant Director. The statement of Rajendra Singh was recorded by Devender Malhotra. Neither of these officers was tendered for cross-examination. In the considered view of the Court, in the context of the specific allegation that th....
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.... Hon'ble Supreme Court of India in Khem Chand Vs. Union of India AIR 1958 SC 300 has defined the meaning of the term "reasonable opportunity" to include an opportunity to defined by cross-examining the witnesses produced against the accused. The Hon'ble court held that: "To summarize: the reasonable opportunity envisaged by the provision under consideration includes- (a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based; (b) An opportunity to defend himself by cross-examining the witnesses produced against him and by examining himself or any other witnesses in support of his defense; and finally (c ) An opportunity to make his representation as to why the proposed punishment should not be inflicted on him." iv). The Hon"ble Supreme Court of India in Ayubkhan Noorkhan Pathan Vs. The State of Maharashtra & Ors. Decided on 08.11.2012, Civil Appeal No. 7728 of 2012, after relying upon various authoritative judgments, has observed that cross-examination is an integral part and parcel of the Principles of Natur....
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....ct as also the principles of natural justice demand that the maker of the report should be examined, save and except in cases where the facts are admitted or the witnesses are not available for cross-examination or similar situation. The High Court in its impugned judgment proceeded to consider the issue on a technical plea, namely, no prejudice has been caused to the appellant by such non-examination. If the basic principles of law have not been complied with or there has been a gross violation of the principles of natural justice, the High Court should have exercised its jurisdiction of judicial review." (ix). The Hon"ble Supreme Court of India in New India Assurance Company Ltd., v. Nusli Neville Wadia & Anr., AIR 2008 SC 876, while considering a case under the Public Premises (Eviction of Unauthorised Occu pants) Act, 1971, held that though the statute may not provide for cross-examination, the same being a part of Principles of Natural Justice should be held to be an indefeasible right. It was held as follows:- "If some facts are to be proved by the landlord, indisputably the occupant should get an opportunity to cross-examine. The witness who intends to prove the ....