AI Drafter 
TaxTMI 
TaxTMI 
1999 (11) TMI 907
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....ntained in the remaining SCNs. After consideration of the evidence in respect of each charge, the learned Adjudicating Officer held the appellant guilty of the charges contained in SCNs I, II, III & IV though for the lesser amounts which, in his opinion, could be substantiated by evidence. Accordingly, he had also imposed penalties of lesser amounts than those under the previous adjudication order. Feeling aggrieved by the penalties imposed under the present adjudication order, the appellant has again come up in appeal before this Board. 2. It is seen that while remanding the cases for fresh adjudication, this Board directed that the amount of Rs. 14,200 deposited by the appellant by way of pre-deposit would be retained by the respondents. Shri Madhu Patel submitted that the appellant's financial condition has become worse as he had already been dismissed from service. He, therefore, pleaded that the appellant be not directed to deposit any further amount, particularly in view of the fact that the total amount of penalties imposed under the fresh adjudication order is much less than under the previous order. In the circumstances, I am satisfied that the requirement of pre-deposi....
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.... he along with the appellant reached his office at about 10.00 PM and he was served with summons at 10.30 PM. In view thereof, it cannot be disputed that the appellant's statement of 19-3-1988 was recorded during late night of 18/19-3-1988 when he was in the custody of Enforcement Officers. The mental state of the appellant can be easily appreciated from the fact that he left behind his wife who had fainted during the search though according to the evidence of Subramanian, her medical condition was not serious. Subramanian stated that after recording the statement on 18-3-1988 for some time he allowed the appellant to go home and asked him to come again on 19th which he did and his statement was, thus, recorded on 19-3-1988 when he voluntarily appeared before the Enforcement Officers. A perusal of the appellant's statement on 18-3-1988 shows that the same fully incriminates him as to the contravention of the provisions of the Act. He has also admitted recovery of foreign exchange from his premises. In view thereof, it cannot be believed that the Chief Enforcement Officer would allow the appellant to be at large merely on the promise that he would return next day for making further ....
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.... by whom. The material collected in pursuance of exercise of the powers under section 40 is admissible as evidence as the investigation in the case of section 40 being formal proceedings instituted with the issue of summon and such proceedings being deemed to be judicial proceedings by virtue of sub-section (4) of section 40. 8. In the present case after the search was concluded at 9.15 PM or thereabout on 18-3-1988, the appellant was taken to the office of the Chief Enforcement Officer. The Chief Enforcement Officer, Shri Subramanian, during his cross-examination states that he served summons on the appellant at 10.30 PM. The appellant was admittedly interrogated thereafter in the office of the Chief Enforcement Officer. Obviously enough, there was no question of requiring the attendance of the appellant by issuing summons to him as he was already present and available to the Enforcement Officers for interrogation. In view thereof, in my opinion, the appellant's statement of 18-3-1988 cannot be treated as a statement under section 40, notwithstanding the fact that in the beginning of the statement, the appellant records that he had received the summons and was appearing in resp....
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....ntly clear that the statement was recorded almost throughout the night of 18/19-3-1988. 11. It is further seen that the statement of 18-3-1988 ends with the explanation on page 31 of the seized documents. The statement of 19-3-1988 starts with the words 'in continuation of my statement dated 18-3-1988'. Thus, there is a gap of time between the two statements. In the statement of 19-3-1988, the appellant identifies Shantilal Jain as the person from whom the appellant used to illegally purchase foreign currency. Apparently he was shown Shantilal's statement in which he denied having sold any foreign currency to the appellant. The appellant controverts Shantilal's denial. Curiously enough, he also states that he has given his 'counter confirmation in writing in the relevant portion of the statement of Shantilal given on 9-3-1988', thus, negativing the effect of the evidence of an accomplice which was going in his favour. It is, thus, clear that the appellant continued to be detained in the office of the Enforcement Directorate up to 19-3-1988 when he was arrested and produced before the Holiday Magistrate on 20-3-1988. The Chief Enforcement Officer made an attempt to deny the sugge....
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....India and their residence in Bombay, that the incriminating portions of the appellant's statement, at least to that extent, are false. 14. There is yet another aspect of the appellant's statements to be taken into consideration. As I have earlier held, these statements can at best be treated as statements under section 39 of the Act and not under section 40. In view thereof, these statements by themselves cannot assume the status of admissible evidence. Whatever has been stated therein has to be proved by the department by independent evidence in regard to the material particulars constituting the offences as alleged. There is no evidence in this regard. 15. The second ground on which the appellant has impugned the findings of the learned Adjudicating Officer is that the department has not been able to prove, by admissible and reliable evidence, that the foreign exchange and the incriminating documents had been recovered from the appellant's possession and that they belonged to him. On the basis of the depositions made, during cross-examination, by the panch witnesses and the officers who had conducted the search, the appellant had brought out several points to show that the ....
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....ith her for quite long time for about 25 to 30 minutes". He also deposed "during the time we were attending to her, the search was going on." When I was attending to Mrs. Iyer, the officer showed me the foreign exchange, showing one gold biscuit and one note book and some loose papers. I cannot say from where these things were found. D.K. Shetty of the search team also deposed about the appellant's wife's illness and that Smt. Kharkar was attending to her. He states that Mr. Kharkar was present all through the search but this has been denied by Khatkar. All the witnesses during cross-examination deposed that a third person was present in the house after the search party had already entered the house and he was allowed to go merely after his personal search. It is not known whether any Panchmana of his personal search was prepared. If not, why not? It is also surprising that even the identity of that person was not ascertained by the search party. The place from where foreign currency and seized documents were recovered had not been recorded in the Panchnama. During cross-examination, the Chief Enforcement Officer and Shetty gave varying versions. Shetty's version that the recovery ....
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....documents. Those documents by themselves do not make out any case of contravention of any of the provisions of the Act as alleged. In view of the fact that the recovery of those documents has not been conclusively proved from the exclusive possession of the appellant, the documents cannot be connected with the appellant. In fact, the deficiencies in and deviations from the well-known procedures of the search as noted herein before are fatal to the department's case. 19. The reasons discussed herein before are adequate to set aside the impugned order. However, since the appellant has also challenged the specific findings in respect of various charges under the six SCNs that were issued to the appellant, I consider it appropriate to deal with those findings. 20. The charge under SCN I is that the appellant purchased the foreign exchange specified therein (that had been seized) in violation of the provisions of section 8(1) and (2). The evidence relied on in support of the charge is the appellant's statement of 18-3-1988 and 19-3-1988 and the Panchnama. The mere recovery of foreign exchange, if it is from the exclusive possession of a person, can be the basis of a charge of acqu....
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....bay. The Chief Enforcement Officer was again confronted with these particulars during his cross-examination also, but the department did not controvert the assertion. The particulars of these persons are self-evidencing and if not controverted, will have to be accepted. In view thereof, the charge of contravention of section 9(1)(a) cannot be substantiated as it is based on wrong assumption of factual position as to the residence of the concerned persons. 23. The charge under SCN IV is that of contravention of section 9(1)(a) on the allegation that the appellant made various payment totalling Rs. 21,785 to various persons in India on or on behalf of Subramaniam, I.S. Raj and T.A. Raman, persons resident in Dubai. As already observed while examining the charge under SCN III that there is no evidence of Subramaniam, I.S. Raj and T.A. Raman being persons resident in Dubai and further that there is no evidence that they had instructed the appellant to make the alleged payments and that the alleged payments had in fact been made, the findings are lacking in substantiating essential ingredients of the charge and are liable to be set aside. 24. The charge under SCN V is that of cont....