TaxTMI 
TaxTMI 
2024 (9) TMI 557
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....es were searched by the officers of Enforcement Directorate on 29.01.2011.As a result of the search, the following Indian and foreign currencies were seized: S.No. Details of premises searched Date of search Seizure details 1. Business premises of M/s JJ Impex at No.106 1st Floor, Embassy Chambers, 6/4, Vital Mallya Road. Bangalore-560001 29.01.2011 Indian Currency (IC) of Rs.55 Lakhs and a green coloured file with documents. 2. Residential premises of Shri Nirmal Kumar Singhania No:410,10th cross, 5th Main, HIG Colony, RMV II Stage, Bangalore 560094 29.01.2011 Indian Currency (IC) Rs.87,50,000/-Foreign Currency (FC) US$6800, S $15100,Euro500,HK$12100,A$1000, UAEDH3350 & documents. 3. The appellant, Shri Nirmal Kumar Singhania, who was present at his residential premises was summoned and examined on 29.01.2011 under Section 37(3) of Foreign Exchange Management Act (FEMA),1999 and in his statement recorded on 29.01.2011, inter alia stated that he is a citizen of India holding Indian Passport No. E- 9223596 dated 8.7.2004 valid upto 7.7.2014; that he resides with his wife Smt. Suman Singhania, sons Shri Kunal Singhania and Karan Singhania, and h....
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....umber T-4/01-B7/2012-13 dated 20/07/2012 was issued by Adjudicating Authority to the appellant herein, interalia, asking him to show cause as to why adjudication proceedings as contemplated under section 13 of FEMA should not be held against him for the above said contraventions. Having considered the detailed explanation provided on behalf of the appellant Shri NirmalKumar Singhania, during the course of the adjudication proceedings, and the documents relied upon in support thereof, the Ld. Adjudicating Authority under FEMA, 1999 vide its order dated 30.09.2013, imposed the following penalties upon the appellant: (a) a penalty of Rs. 30 lakhs for having committed contravention of the provisions of section 3(c) of FEMA, 1999. (b) a penalty of Rs. 2,00,000/- for having committed contravention of the provisions of section 3(a) of FEMA,1999. (c) a penalty of Rs. 3,00,000/- for having committed contraventions of the provisions of section 8 of FEMA, 1999 read with Regulation No. 6A of the Foreign Exchange Management (Realisation. Repatriation & Surrender of Foreign Exchange) Regulations, 2000. (d) Further, in exercise of powers conferred upon him, und....
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....also gave their respective statements and documents in support of possession of foreign currency. The copy of flight tickets, passport, visa and cash memo of purchase of foreign currency were also provided to officers of the Directorate. However, the Directorate, deliberately and malafidely, did not carry out any enquiries with the dealers of foreign exchange. The impugned order has been passed without application of judicial mind and the adjudicating authority has merely acted as post office of the Complainant. 10. With regard to Indian currency of Rs. 1,42,50,000/- seized from the business premises and residence of the Appellant on 29.01.2011, the same is sought to be explained as advances received by the wife, namely, Smt. Suman Singhania, and two sons, namely, Karan and Kunal Singhania of the appellant, as well as business cash of M/s J.J. Impex in which the appellant, his wife and two sons were partners. It is claimed that two agreements to sell dated 14.01.2011 were executed between his wife, Mrs. Suman Singhania, and one Mr. Bhim Singh in respect of two properties located at Venkatala Yelahanka Municipality, Bangalore whereby she received a sum of Rs. 40,00,000/- (Rs. 20,....
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.... 14. The appellant contends that ingredients of section 3(a), 3(c) of FEMA are not met in the present case, and as such, the same have been wrongly invoked. Section 3(a) and 3(c) of FEMA have been invoked to penalize the appellant. However, there is no corroborative evidence or link to show as to how appellant received or made any payment to or by any person resident outside India which is the basic requirement of section 3(a) and 3(c) of FEMA. 15. Without prejudice to the above, it is contended that even if the allegations of the complaint are taken on its face value, then also there is no contravention of section 3(a) and 3(c) of FEMA. The facts recorded in Para 4 of the impugned order are sufficient to establish that the Shri Anil Tody was in India on 25th January 2011 and is alleged to have called appellant from Mumbai. It is alleged in para 5 of the impugned order that one person who was aged about 30 years came to appellant at his premises, in a Bangalore and handed over Rs.30 lakhs in Indian currency on behalf of Sh. Anil Tody. It is well settled that unless the amount is directly received from abroad by the person living in India the same cannot be termed as contraventio....
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....15, a person can only hold US $ 2000 foreign currency notes. Hence the Appellant was in gross violation of the provisions of this rule and possession of the said money was not justified by the Appellant. 21. As regards the subsequent retraction of the aforesaid statement made by Appellant vide the reply to Show Cause Notices, it contended that in the case of K.I. Pavunny Vs. Assistant Collector (HQ), Central Excise Collectorate, Cochin MANU/SC/2070/1997 (order dated 03.02.1997), the Hon'ble Supreme Court has held that mere bald retraction won't absolve the burden of proof from the accused, when it is corroborated from the other evidences. Hence, in view of above facts it is submitted that the charges against the appellant under section 3(b) and 3(c) are well established. 22. Further, the respondents have placed strong reliance on the findings recorded in paragraphs 16.01 to 16.12 of the impugned order. The text of the aforesaid paragraphs is reproduced below for ready reference: "FINDINGS AND ORDER: - 16.1 I have carefully gone through the entire records of the case including the complaint dated 12/07/2012 filed by the Assistant Director. Directorate....
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.... Impex Bangalore, which is engaged in local trading of Iron Ore by purchasing lumps and crushed Iron Ore from the mines and supplying the same to the manufactures of sponge iron. When required to explain the source and the reasons for keeping Indian currency of Rs 87.5 lakhs at his residential premises, Shri Nirmal Kumar Singhania stated that out of Rs.87,50,000/-, an amount of Rs.30,00,000/- belonged to his friend Shri Anil Tody. who is residing in Hong Kong and that Rs. 57,50,000/-belonged to him. With reference to the other amount of Rs. 57.50 lakhs, Shri Nirmal Kumar Singhania. inter alia, stated as under: - "As regards the source of my above mentioned amount of Rs.57,50,000/-, this amount was kept by me at my house for business purposes as there are times when crushed iron ore would be readily available for purchase if the settlement would be made on cash basis. By purchasing the crushed iron ore on cash basis would be highly profitable for me, as the sellers would want immediate cash along with cheque for equivalent amount for their business purposes. I would utilize this money for settlement in cash and upon realization of the cheque cash would be returned. For exam....
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.... would subsequently collect the same from Shri Nirmal Kumar Singhania as soon as the latter reached Bangalore: that he agreed to help him and gave the said Anil Tody a serial number of a ten rupee note: that the said Anil Tody also informed Shri Nirmal Kumar Singhania that the person who would be delivering the amount would ask for the ten rupee note for identification purpose and only thereafter the money would be delivered to him; that two days later i.e., on 28-01-2011, he received phone call on his office telephone number and the person who called enquired from him whether he (Nirmal Kumar Singhania) was expecting any amount from Hong Kong and that he answered in affirmative and then said person asked for his address, which he (Nirmal Kumar Singhania) gave to the said person; that after about an hour a person who was aged about 30 years called on him at his office and informed him that he came to deliver to Shri Nirmal Kumar Singhania an amount of Rs. 30 lakhs as per the arrangements made by Shri Anil Tody of Hong Kong and asked him to show him the particular ten rupee note for identification: that as Anil Tody had already instructed him to receive the said amount of Rs. 30 lak....
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.... the cash balance of the M/s. J.J Impex. He also produced a certificate dated 08-02-2011 from M/s GL Kothari & Company, Chartered Accountants, certifying that his firm M/s JJ Impex was having cash balance of Rs. 42,53,701/- as on 28-01-2011, that Shri Karan Singhania was having a cash balance of Rs. 26,36,365/- as on 28-01- 2011, which included Rs. 25,00,000/- received as advance towards sale of property and that Shri Kunal Singhania is having a cash balance of Rs. 26,08,333/- as on 28-01-2011 as per Books of Account, which included Rs. 25 lakhs received as advance towards sale of property and that Smt. Suman Singhania was having a cash balance of Rs. 40,56,955/- as on 28-01-2011, which included Rs. 40 lakhs received as advance towards sale of property. 16.7 I also find that the Noticee appeared before the Assistant Director. Directorate of Enforcement on 03/05/2012 and gave a statement on oath. I find that he could not give any satisfactory explanation regarding the contradictions and discrepancies that are manifest in the documents that were furnished by him in support of the seized currencies. As already pointed out by me, the Noticee had in his initial statement claime....
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....r coerced into writing the statement the way he deposed. 16.8 I find that as regards the foreign exchange seized from his residence the charges against the Noticee are that he had purchased a total foreign exchange of US $ 6200 from persons other than authorized dealer in foreign exchange without any general or special permission from Reserve Bank of India and further that he acquired various amounts of foreign currencies aggregating to HK $ 12100, S$ 15100, A$ 1000, Euro 500, US $ 600 and UAE Dhs 3350 by way of prize money from various games played by him in many Casinos in Macau and brought the said foreign exchange so received, on his return to India on 06-03-2010 and failed to surrender the same to an authorised person within 180 days from the date of his return to India. I find from the statement dated 29/01/2011 of the Noticee that he had stated that he had made six trips abroad to countries namely Srilanka, Thailand, Hong Kong, Dubai, Singapore & Australia: that for undertaking the said trips he used to purchase foreign exchange from different money changers and local market; that the above said currencies are the unspent balances of the foreign currencies, which he....
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....ready been alleged to have been involved in the contraventions of the provisions of FEMA in the complaint dated 12/07/2012 filed by the Assistant Director under section 16 (3) of FEMA itself. There is no alteration to this issue in the corrigendum. All that the corrigendum seeks to incorporate is to give specific opportunity to the Noticee to show cause as to why the seized Indian currency and foreign exchange, being involved in the contraventions of FEMA, as alleged in the said complaint filed by the Assistant Director of Enforcement itself, should not be confiscated to the Central Government in terms of section 13 (2) of FEMA. Principles of natural justice too have been followed by giving the Noticee sufficient time to reply to the corrigendum and also by giving another opportunity to be heard in person at his request on 30/08/2013, on which date the Noticee and his lawyer appeared and made submissions. Hence, I do not find any infirmity in the corrigendum dated 02/07/2013 issued to the Noticee, as there is no incorporation of any additional contravening against the Noticee and in view of scrupulous following up of principle of natural justice. I, therefore, reject the contention....
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....for having committed contraventions of the provisions of section 8 of FEMA read with Regulation No. 6A of the Foreign Exchange Management (Realisation. Repatriation & Surrender of Foreign Exchange) Regulations, 2000. iv. I am of the view that given the facts and circumstances of this case. the penalty thus imposed would not serve the interest of justice and hence, in terms of powers conferred upon under section 13 (2) of FEMA, I order confiscation of the Indian currencies totallingto Rs. 1,42,50,000/-, foreign currencies of US$ 6,800, Hong Kong $ 12.100. Singapore Dollars 15100, Australian Dollars 1000, Euro 500, and UAE Dirhams 3350, that were seized from his premises on 29/01/2011 under panchanamas, being the amounts involved in the contraventions mentioned above, to the Central Government." 16.13 Aforesaid penalty amount imposed on Noticee should be deposited by him with the Deputy Director, Directorate of Enforcement, 3rd Floor, 'B' Block, BMTC. Shanthinagar TTMC, K.H. Road, Bangalore - 560 027 by means of demand draft drawn in favour of "The Drawing and Disbursing Officer, Directorate of Enforcement, Bangalore", payable at Bangalore within 45 days fro....
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....n as he received money on behalf of Sh. Anil Tody, a person resident in Hong Kong, without general or special permission from RBI. 26. As for the remaining amount of Rs. 57,50,000/-, it he explained that the same represents cashkept by him for business purposes for settlement of payments in cash. He explained that he and his family members are partners in M/s J.J Impex Bangalore, which is engaged in local trading of iron ore, i.e., purchase of lumps and crushed iron ore from the mines and supplying the same to the manufacturers of sponge iron. He stated that the amount of Rs.57,50,000/-was kept by him at his house for business purposes as there are times when crushed iron ore would be readily available for purchase, if the settlement would be made on cash basis. The sellers would want immediate cash along with cheque for equivalent amount for their business purposes. He would settle in cash and upon realization of the cheque, cash would be returned. He also illustrated his contention with an example. He submitted that if a metric ton costs Rs. 1,700/- in the market, the seller would be prepared to sell it at Rs. Rs. 1,500/- to 1,600/- per MT on immediate payment by cash along wi....
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....ssions, we do not find any merit in the same. We note that in para 9 to11 of the impugned order, the Ld. Joint Director has pointed out a number of discrepancies in the so-called agreements to sell and fabrication of said agreements is not ruled out. We find that very cogent issues have been raised therein for which no explanations are forthcoming from the appellant's side. Further, there is nothing to show that the transactions for the sale of land as claimed by the appellant materialized as balance payments were not received till date and no seale deeds were executed in favour of vendees. It cannot be believed that any vendeewill give huge part- payment in cash. The said vendees have not filed their claims in any court or before ED. It is also not explained whether the so-called advances were refunded to the intending buyers after the sale transactions failed to fructify. Even the very contention that four different and almost identical transactions were entered into within a span of 10 days for sale four immovable properties owned by the members of his family are not credible to say the least especially as the appellant had failed to advance any such explanation in his earli....