TaxTMI 
TaxTMI 
2019 (8) TMI 266
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....l. 3. The brief facts are that the Show Cause Notice dated 04.04.2001, issued by the Special Director, Directorate of Enforcement (hereinafter referred to as the "Show Cause Notice") would show that during the year 1993, the Appellant alongwith Mr. M.K. Jain, Mr. Umesh Mehendiratta and Mr. S.K. Mittal, opened NRE Accounts in various Banks in New Delhi, including American Express Bank, Bank of America, CitiBank, Standard Chartered Bank, Deutsche Bank, Hong Kong Bank and ANZ Grindlays Bank, in the name of one Mr. V.D. Jaiswal who is a Non Resident of India (NRI) and thereafter operated the said Accounts on the strength of "Mandates" or "Power of Attorney". 3.1. The Mandatees would, in association with other persons, purchase foreign exchange from unauthorized markets in India and then deposit the same in the aforementioned NRE accounts. Thereafter, the Forex so deposited was utilized by the Mandatees to give Pay Orders/ Drafts/ Managers Cheques to persons resident in India, by camouflaging the same as "gifts", in order to enable the latter to avail benefits of the Immunity Scheme, 1992. As a consideration for providing the "gifts", the Mandatees demanded payment in the form of ....
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....ocuments being relied upon by the Respondent in support of their allegations. The Appellant also denied all allegations leveled against him and further reiterated his stand of his confessional statement having been given under coercion and undue influence. Despite the request of the Appellant to be served with the copies of the Relied upon documents, he has till date not been served with copies of the relied upon documents. On 16.02.2004 and 16.05.2005, the Appellant sent further replies to the Show Cause Notice, specifically denying each and every allegation against him and denied the allegations of violations of provisions of FERA and requested to drop proceedings against him. 8. It is not denied on behalf of respondent that in the Writ Petition being W.P. (C) No. 7144 of 2002, titled "Standard Chartered Bank V/s Directorate of Enforcement & Ors." (hereinafter referred to as the "Writ Petition"), Standard Chartered Bank, which is one of the Co- Noticees of the Show Cause Notice, challenged the same before the Hon"ble high Court of Delhi and by Judgment dated 18.12.2009, the Hon"ble High Court of Delhi allowed the Writ Petition and quashed the Show Cause Notice dated 04.04.2....
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....reaffirmed the view as mentioned above, whilst holding as follows: - "5. Similar show cause notices were issued to several banks and persons by the department and a number of writ petitions were filed before this Court to decide the issue "Whether show cause notices were valid show cause notices or not. A Single Bench of this Court in Citi Bank v. Union of India, in R.P No. 213/2007 in WP(C) No. 1211/2005, decided on 16th January, 2009, observed that prior to 31st July, 1995, when Reserve Bank of India had issued a clarificatory circular, there was no clear-cut stipulation that deposits/credits could not be made in the NRE accounts of NRI account holders in the absence of the account holders themselves. For the first time it was expressly provided by the Reserve Bank of India that the deposits were to be made by NRIs in person. This Court, therefore, disposed of the Writ Petition on 19th April, 2007, and Review Petition was dismissed on 16th January, 2009. Against the order of Single Bench of this Court dated 19th April, 2009, an LPA was preferred, being L.P.A No. 117 of 2009, Union of India v. Citi Bank, N.A, before the Division Bench. The Division Bench....
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.... to be passed, however, this Court made it clear that the same would not be implemented. The logic behind this was obvious and, that is, the same were subject to any orders that would be passed in the present writ petitions. In view of the fact that we consider that the issue raised in these writ petitions stands covered by the decision of the Division Bench in Union of India v. Citi Bank, N.A (supra), we feel that no useful purpose would be served by relegating the petitioners to seek their alternative remedy of appeal under Section 90 of the FEMA, particularly, because, according to us, that would not, now, be an equally efficacious remedy. In view of the foregoing discussion, these writ petitions are allowed. The show cause notices and the consequent adjudication orders are set aside. There shall be no order as to costs. 6. The show cause notice served upon the present appellant is one of the several show cause notices served by the Department upon the different banks. In another show cause notice of similar nature, the Adjudicating Authority passed an order that bank was not liable for penalty and penalty was imposed only on NRI while in the present case penalty was im....
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....5, there had been no requirement clearly pointing out that deposits in NRI accounts could not be made by a person other than the NRI account holder themselves." 15. By Judgment dated 15.09.2014 in case titled "S.K. Mittal V/s The Director, Enforcement Directorate", the Hon"ble High Court of Delhi whilst considering a pari materia case, held as follows: - "6. The ED issued a Memorandum dated 23rd April 2002 to the Appellant, Mr. Sethi, Mr. Mendiratta and AMEX Bank. As far as the Appellant is concerned, it is not in dispute that the said Memorandum was ultimately dispatched on the last date of the sunset period, i.e. 30th May 2002 and received on 31st May 2002. The allegation in the Memorandum was that the NRE Account of Mr. Sethi was misused by the Appellant and Mr. Mendiratta and that the Appellant in association with Mr. Mendiratta "used to arrange inward remittances from various persons outside India other than the A/c Holder Sh. Subhash Sethi himself and the said inward remittances have been credited into the said NRE A/c time to time in the year 1993; that Sh. S.K. Mittal in association with the said Sh. Umesh Mendiratta made disbursements to various persons through....
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....change deposited in the NRE Accounts of Mr. V.D. Jaiswal were deposited by the Appellant, whereas in fact the deposits of foreign exchange in the said Accounts were made by Mr. V.D. Jaiswal from his earnings abroad. 18. It is a matter of record which is not disputed by the respondent that by Order dated 29.01.1999, the Assessing Officer (Income Tax Department) assessed Mr. V.D. Jaiswal for the block period 1987-88 to 1997- 98, holding his undisclosed income at Rs. 7,87,270/- (Rupees Seven Lakhs Eighty Seven Thousand Two Hundred and Seventy Only). The said Order was challenged in Appeal by Mr. V.D. Jaiswal before the CIT (Appeals)- XXVIII, New Delhi. 19. By Order dated 30.03.2001, the CIT (Appeals) partly allowed the aforementioned Appeal and ultimately enhanced the income assessed, by making an addition of the deposits made to the NRE Accounts amounting to Rs. 29,56,18,340/- (Rupees Twenty nine Crores Fifty Six Lakhs Eighteen Thousand Three Hundred and Forty Only) as undisclosed income for the block period 1987-88 to 1997- 98. 20. The said Order was challenged by Mr. V.D. Jaiswal before the Income Tax Appellate Tribunal vide Appeal being IT (SS) No. 220/(Del)/2001 title....
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....m and the same have till date not been challenged by the Respondent before the Appellate authorities. The present proceedings, which are based on factually parallel route, atleast all the said orders and facts ought to have been considered in the impugned at the time of passing the order. 24. As far as repatriation of statement after two days, it is settled law that a retracted confession can never be the basis of any penalty to be imposed upon a person, unless substantially corroborated by independent sources. The Hon"ble Apex Court in the case of "Vinod Solanki V/s U.O.I." reported as JT 2009 (1) SC 1 held as follows: - "22. It is a trite law that evidences brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidences, which would lend adequate assurance to the court that it may seek to rely thereupon. We are not oblivious of some decisions of this Court wherein reliance has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judg....