TaxTMI 
TaxTMI 
2014 (5) TMI 1240
X X X X Extracts X X X X
X X X X Extracts X X X X
....itted that this appeal has been transfer by the Appellate Board to this Tribunal and it is to be heard in pursuance of section 49(5)(b) of FEMA, 1999. He further submitted that for disposal of this appeal on merits and etc. a W.P. No. 21392/2010 (GM- Res) was filed in the Hon'ble High Court of Karnataka at Bangalore and vide order dated 28-7-2010 the Hon'ble High Court directed this Tribunal to decide the instant appeal on merits and in accordance with law, if not already disposed of as early as possible but not later than limit of six months from the date of receipt of the order. The said order of the Hon'ble High court was received on 10-09-2010 in this Tribunal and the matter was heard by this Tribunal and order was reserved vide its order dated 29-5-2012, i.e., after the expiry of six months. The order was not delivered by the Bench which reserved the order and the Bench was changed as the then Hon'ble Member was retired. Thereafter, this matter was listed before this Bench on 18-9-2013 after a long delay and the Ld. Counsel for the appellant requested for the adjournment and the matter was adjourned on that date for the preparation of the case and was fixed on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dhan, Legal Consultant appeared on behalf of the respondent. Heard Ld. Counsel and Ld. ALA. The Ld. Counsel for the appellant has filed certain photocopies of the documents which have not been denied by the ALA. The documents are taken on record. The counsel for the appellant also submitted photocopies of certain judgments in support of his arguments. They have further submitted that directions of the Hon'ble High Court came to the knowledge of this bench only on the day i.e. 26-2-2014 on which the hearing began and the matter has been heard expeditiously. After concluding the arguments they want to file written arguments within a week's time. The written arguments on behalf of both the parties may be filed within a week's time. After concluding the arguments, the matter is reserved for orders". 4. The relevant facts for deciding the appeal are that a show cause notice (in short SCN) vide Memo No. T 4/33 M/92 dated 16-9-1992 was issued to S/Shri Prakash kumar ishwarlal-(Prop. Of M/s. Vijay Agencies)/K.Kunhi Abdulla and N.M. Shah. Shri Prakash Kumar Ishwarlal (in short appellant)/is a person resident of India and he was charged vide SCN for the contravention of Sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve of Kanhangad, Kerala, who was introduced to him by one Adbulla of Nileshwar whom he had been knowing for the last 4 years; he (Abdulla) was an agent doing pepper business; (iv) the said Adbulla informed him that Shri Abdul Salam was running a super market in Abu Dhabi; (v) that the said Abdul Salam asked him whether it was possible for him to make payments to persons in India as per his (Abdul Salam's) instructions from Abu Dhabi; the amounts would be given to him (the appellant) by way of cash, cheques and drafts; (vi) the amounts in cash and encashment proceeds of cheques and drafts through his accounts, were to be given to the persons sent by said Abdulla of Nileshwar, who would come to his shop; (vii) he was offered a commission of Rs. 100/- per 1 lakh of rupees, which would be paid by the said Abdulla; he agreed to that proposal; (viii) the telephone No. of Abdul Salam as given by him was 009712-720526 and 729459 (Adbu Dhabi); he had given his telephone No. 34487 to the said Shri Abdul Salam; (ix) after reaching Abdu Dhabi, Sh. Abdul Salam informed him that a person by name Hameed having Telephone No. 3098653 would contact him from Bombay and inform him as to how much a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lam of Abu Dhabi; that the account figuring as follows at the bottom of the sheet related to the payments made by him to Shri Abdulla and his men during September, 1991, as per the instructions of Shri Abdul Salam of Abu Dhabi:- 140 156.5 In this 140 means Rs. 1,40,000/- 160 456.5 20 476.5 All the figures are in thousands 130 606.5 143.5 750 that the above figures represented the amounts given by him to Shri Abdulla and his men, paid out of the amount of Rs. 22 lakhs received by him during September, 1991, as per the instructions of the said Shri Abdul Salam of Abu Dhabi and that the amounts mentioned were in thousands; that in the same sheet, he had written the names of some persons and their phone numbers to whom amounts were to be paid as per the instructions of Shri Abdul Salam of Abu Dhabi; that Mahesh having phone number 25908, made a payment of Rs. 20,000/- to a party in Kanhangad; that Rs. 50,000/- was to be paid to Rasheed of Cannonore with telephone number 64601; that an amount of Rs. 1 lakh was to be paid to M.A. Aisabi having telephone number 69603, Can....
X X X X Extracts X X X X
X X X X Extracts X X X X
....seen any person by name Suresh Kumar; that there were regular deposits of drafts drawn on various banks in Mangalore; that the amounts of realization were withdrawn by cheques; he had been meeting Shri Prakash Kumar of M/s S.N. Traders occasionally; that one of Prakash Kumar's employees by name Lokesh brought a cheque for Rs. 1,10,000 for encashment; that he had identified Shri Lokesh as the person who had regularly been visiting his bank; that he had also identified Shri Prakash Kumar as a person whom he had met few times in his bank and Prakash Kumar introduced himself as a person from S.N. Traders. 9. Shri R. Dhanabalan, Branch Manager, TMBL, Mangalore in his statement dated 29-9-1991 (given under summons), inter alia, stated that M/s Vijay Agencies, was a proprietory concern having a current account bearing No. 964 in his bank; and Shri Prakash Kumar Ishwar Lal, the proprietor of the firm; that M/s Taj Enterprises was a propreitory concern, the proprietor being K. Kunhi Abdulla of Bamboo Bazar, Mangalore having an account No. 1065 in his bank; that M/s Azad Traders was also a proprietory concern having account No. 1154 with the Bank, introduced to the Bank by Shri Prakas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ement Officer, Bangalore, inter alia stated that he was employed by Shri Prakash Kumar Ishwarlal (appellant) from 1988; Shri Prakash Kumar Ishwarlal had been giving him a number of drafts for depositing the same in the bank accounts of M/s S.N. Traders in Federal Bank, M/s Vijay Agencies in TNBL, M/s International Spices in TMBL, M/s Taj Enterprises and M/s Azad Traders in TNBL; that Shri Prakash Kumar Ishwarlal would sign the cheques of M/s Vijay Agencies as Prakash Kumar of M/s S.N. Traders as Suresh Kumar, of M/s Azad Traders as Mithesh and of Taj Enterprises as Rajesh Shetty; that he (Lokesh) would take the cheques to the banks; withdraw amounts and hand over the same to Prakashkumar; that shri K. Abdulla of Nileshwar would come to Prakashkumar's office alongwith some persons and take the amounts to Kerala; that M/s International Spices, started in his name in 1989 as the proprietor, was actually owned by Prakash Kumar; that he (Lokesh) had never invested any amount in the firm; that on 26-09-1991, Prakash Kumar Ishwarlal had given him four cheques for withdrawing Rs. 2 lakhs and Rs. 3 lakhs from the account of M/s Taj Enterprises and Rs. 2 lakhs and Rs. 3 lakhs from the ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Traders), from 1990 till date as instructed by Abdul Salam of Abu Dhabi, which were withdrawn from that account and paid to K. Abdulla; that the current account in the name of M/s Taj Enterprises was opened on 22-12-1990 by Shri K. Abdulla of Nileshwar; that he introduced Abdulla to the Bank (to open the said account) and signed the account opening from in Gujarati; that he was shown the bank statement of M/s Taj Enterprises; that there was no firm by name M/s Taj Enterprises at Bamboo Bazar, Mangalore; that huge amounts were being deposited in that account since December, 1990 onwards by TT (telegraphic transfer) which were regularly withdrawn by cheques; that as already stated by him, shri Hameed of Bombay, on instructions from Abdul Salam of Abu Dhabi, had been remitting amounts from Bombay through the current account of M/s Taj Enterprises with Bombay Branch of TMBL; that the cheques of M/s Taj Enterprises were signed by him as Rajesh Shetty on the basis of power of attorney given by Shri Abdulla; that he had sent Lokesh for enchasing the cheques signed by him and handed over the amounts received, to the said Abdulla of Nileshwar, as instructed by Abdul Salam of Abu Dhabi; that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ffice; that Prakash Kumar had also given a statement in that connection; that he was asked by Prakash Kumar to meet K. Abdulla of Nileshwar who would be visiting his office late in that morning and to go to TMBL, Mangalore and encash the cheque for Rs. 10 lakhs and give the amount to Shri Abdulla; that Prakash Kumar Ishwarlal had given him a cheque which he took to Prakash Kumar's office, where he met the said Shri K.Abdulla and alongwith him proceeded to TMBL and presented the cheque for Rs. 10 lakhs, already endorsed on the reverse; that the manager of the bank informed him that only Rs. 2 lakhs was available in the bank and the balance could be collected later; that accordingly, he met the cashier at the counter and received Rs. 2,03,000/-; that he came out of the bank and met the said K. Abdulla, who was waiting outside; Abdulla told him, the balance amount could be deposited in fixed deposits and also gave a set of forms, which were handed over by him (Pradeep Kumar) to the Manager that he gave Rs 2 lakhs to Shri Abdulla and kept with him the balance of Rs. 3,000/- which was surrendered by him alongwith the statement. 14. In his further statement dated 28-9-1991 given u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s were the trunk call bills dated 01-09-1991 of his telephone no. 34487, relating to trunk calls made by him during the months of July and August, 1991; that on that ABU meant Abu Dhabi, PTU meant Puttur, KRK meant Karkala, KSZ meant Kasarkode, KNG meant Kanhangad and NLS meant Nileshwar etc.; that the telephone numbers at Kanhangad and Nileshwar were connected with K.Abdulla about whom he had already explained; that Shri Abdul Salam informed him over phone that phone number 2551 belonged to K.A. Kareem of Kanhangad; that whenever Abdulla received amounts, he would given accounts to K.A. Kareem of Kanhangad on his telephone number 2551, for which calls were booked from Prakash Kumars telephone. 17. Alongwith his letter dated 30-9-1991, the Manager, TMBL, Mangalore, furnished Xerox copies of the cheques drawn by M/s Azad Traders, M/s Taj Enterprises and M/s International Spice, etc. alongwith copies of other bank documents. Likewise, alongwith his letter dated 23-11-1991, the Manager of the same bank had furnished the power of attorney in original given by M.s Taj Enterprises in favour of Shri Rajesh Sehtty etc., alongwith certain other bank documents. It is seen that most of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gned order has observed that from the foregoing, it may be seen that Prakash Kumar Ishwarlal of Mangalore and Shri Kunhi Abdulla of Nileshwar were engaged in the receipt and distribution of compensatory payments in India as per the instructions of one Abdul Salam of Abdu Dhabi. 20. Details of amounts received and distributed by shri Prakash Kumar Ishwarlal from these bank accounts are as under:- SI. No Bank Account No. Credit (receipts) Rs. Disbursements In Rs. Balance Seized by Enforcement Directorate 1. Current Account No. 318 in the name of M/s S.N. Traders with the Feberal Bank, Mangalore. (According to Sh. Prakash Kumar Ishwarlal, all the deposits/withdrawals in this account from 1990 onwards represent compensatory payment transactions) 1,61,43,308/- 1,60,17,616/- 15,692/- 2. Current Account No. 1065 in the name of M/s Taj Enterprises with the TMBL, Bangalore. (All the amounts deposited/withdrawn from Jan., 1991 onwards represent compensatory payments receipts/ distribution) 7,64,16,119/- 7,53,24,807 91,312/- 3. Current Account No.974 in the name of M/s Vijay Agencies with the TMBL, Mangalore 1,75,74,752/- 173,20,801 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso observed that Shri N.M. Sbah of Bombay had abetted Shri Prakash Kumar Ishwarlal, in making payments of Rs. 1 lakh to Abdul Sattar of Cannnore and Rs. 25,000/- to Shri Rasheed of Cannanore. He has observed from the above that it appear; that by receiving and making payments in the aforesaid manner, the said Shri Prakash Kumar Bhwarial and K. Kunhi Abdulla had contravened the provisions of Section 9(1)(b) and 9(1)(d) of-the FERA and Shri N.M Shah had contravened the provisions of Section 9(1)(d) read with Section 64(2) of the FERA and had thereby rendered themselves liable to be proceeded against in terms of section 50 of the FERA. 23. Vide the memorandum referred to in para 4 Shri Prakash Kumar Ishwarlal, K Kunhi Abdulla and N.M. Shah were required to show cause in writing within 30 days from the date of receipt of the memorandum, as to why Adjudication proceedings as contemplated in section 51 of the FERA should not be held against them for the aforesaid contraventions and Shri Prakash Kumar Ishwarlal and K. Kunhi Abdulla were further required to show cause in writing to the Special Director as to why the following amounts should not be confiscated to the Central Government ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an, Manager, TMBL. 4. Statements dated 27-9-1991 of Shri Lokesh and Shri Pradeep Kumar Ishwarlal. 5. Documents seized from the residence of Shri Kunhi Abdulla and shop premises of M/s Super Traders. 6. Statement dated 28-9-1991 of Shri K.K. Aboobacker. 7. Statement dated 17-02-1992 and 03-03-1992 of Shri Kunhi Abdulla. 8. Statement dated 04-03-1992 of Shri K.A. Kareem. 9. Statement dated 29-9-1991 of Shri M. Rasheed. 10. Statement dated 08-10-1991 of Shri Abdul Sathar 11. Statement dated 18-12-1991 of Shri N.M. Shah. 12. Statement dated 27-09-1991 of Shri V. Sambasivan, Manager, TNBL, Bombay. 13. Current Account No.318 of M/s S.N. Traders with the Federal Bank, Mangalore. 14. Current Account No.1065 in the name of M/s Taj Enterprises, No. 974 in the name of M/s Vijay Agencies, No. 1154 of M/s Azad Traders and No.790 of M/s International Spices with the TMBL, Mangalore. 15. Current Account Nos. T-33 of M/s Taj Enterprises, No.A-71 of M/s Azad Traders and No. V-44 of M/s Vijay Agencies with the TMBL, Bombay. 25. No reply to the show cause notice was made, therefore, it was decided to hold adjudication proceedi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3) with the TMBL, Bombay. 13. Rs. 720.00 Being the balance blocked in the account of M/s Azad Traders (account No.A.71) with the TMBL, Bombay 14. Rs. 5,085.00 Being the balance blocked in the account No. V.44 of M/s Vijay Agencies with the TMBL, Bombay. Aggrieved by the impugned order, imposing the aforesaid penalties and confiscating the above mentioned amounts the appellant has filed the instant appeal before this Tribunal. 26. I have heard the Ld. counsel for the appellant and Ld. ALA for the respondent, considered the writing submissions filed by the parties and carefully perused the records. 27. The points of determination in the instant appeal is as to whether the appellant Shri Prakash Kumar Ishwarlal had contravened section 9(1)(b) and section 9(1)(d) of FERA and as to whether the amounts confiscated by the impugned order as specified in-the preceding paragraph are liable to be confiscated or not and the penalties imposed commensurate with the contraventions and are reasonable or not. 28. Ld. counsel for the appellant has submitted-that the Ld. Special Director vide the impugned order has exonerated Sh. N.M. Shah from the charges of abetment an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ccused, which had been reiterated, cannot be used for the purpose of corroborations of another retracted statement. This is the settled principle as reiterated by the Hon'ble Supreme Court of India in the decision Haroon Haji -1968 S.C. page 682. (b) In any event, since the said person could not be made available for the purpose of cross-examination, the said statement cannot be used. If it is done, it would violate the principles of natural justice. (c) The said Kunhi Abdulla had also retracted the statement; therefore it is one of weakest form of evidence by itself. (d) When the Adjudicating authority had exonerated him by not taking any action, the statement alone cannot be used. It is one thing to say if a person has violated the act and another to come to the conclusion if a penalty is to be imposed. That penalty has been imposed on the basis that he died and has no relatives and if finding should be rendered if he had violated the Act." 29. The Ld. counsel for the appellant has further contended that the statement of the appellant is corroborated with the statement of other co-noticees is illegal and not sustainable. The statement of the co-a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion has been denied as such the statement could not be used in any proceeding, the Ld. counsel has relied on the ratio decidendi in the case of Shahid Balwa v. Directorate of Enforcement [LPA No. 79 of 2013, dated 29-5-2013]: In the said case of Shahid Balwa (supra) the Hon'ble Court has observed in paragraph 29 thereof as under:- "The legal position that would follow is that normally if the credibility of a person who has testified or given some information is in doubt or if the version or the statement of the person who has testified is in dispute normally right to cross-examination would be inevitable. If some real prejudice is caused to the complainant, the right to cross-examine witnesses may be denied. No doubt, it is not possible to lay down any rigid rules as to when in compliance of principles of natural justice opportunity to cross-examination should be given. Everything depends on the subject matter. In the application of the concept of fair play there has to be flexibility. The application of the principles of natural justice depends on the facts and circumstances of each case." 31. Contradicting the submissions of the Ld counsel for the-appellant that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roceedings if it appears to the Court that the confession was obtained under circumstances mentioned in the Section. This section will also apply only to a confession made by a person who was at that time an accused person. On 27-9-1972, the appellant was not an accused person. Adjudication proceedings are not criminal proceedings, though they may be quasi criminal in nature. Hence the applicability of Section 24 of the Evidence Act also has to be negative. 11. Therefore, the principles governing the admissibility of a confession of an accused person and the manner in which a retracted confession is to be dealt with by a Court of law, cannot be applied to the instant case. The principle that a retracted confession though it is not on a par with evidence of an accomplice or such other tainted evidence, requires corroboration to satisfy the conscience of the Court that the statement is true, will not apply to the statement recorded under the provisions of the Act. 12. However, this does not mean that such a statement can be freely relied on like any other piece of evidence in adjudication proceedings under the Act. It is true that whenever a statement is challenged ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gned order and in view of the discussions in the preceding paragraphs, it reveals that the statement of the appellant has been recorded in his own hand writing and is in detail which has been corroborated. The contention of the Ld. counsel for the appellant that the statement of the appellant has been obtained under coercion and adoption of unlawfull method is not believable. But where such statement recorded in own hand writing corroborated by other statement and documents which appears adequate to prove the information understood by and seen in the statement given by the appellant even alleged to be under coercion and other unlawful methods, should not be rejected. Such statement under coercion and other unlawful methods would be the statement of true facts if corroborated by other independent statements. A statement of evidence under coercion may be lie but it may not be always lie and the test as to whether such statement is lie or true can also be adjudged by the corroboration or non-corroboration of such statement by other independent statements and other documentary evidences. In this case the existence of accounts in the name of Ms. S.N.Traders, Azad Traders and others as d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was made on 28-9-1991 appears to be proved. Further more it appears from the statement of the appellant that he was not arrested on 26-9-1991 or on 27-9-1991. 34. The letter dated 27-9-1991 of TMBL reveals that the person who encashed the bearer cheque of Rs. 10,00,000/- was paid Rs. 2,03,000/- in cash and for the balance amount he had submitted 5 sets of fixed deposit opening forms. Shri Pradcep Kumar Ishwar Lal brother of the appellant has admitted having received a sum of Rs. 2,03,000/- from the cashier and when he came out of the bank he met Shri Abdulla who was waiting outside; that he gave Rs,2,00,000 to Shri Abdulla and kept with him the balance of Rs. 3,000/- which was surrendered by him along with the statement. The statement of Shri Pradeep Kumar Ishwar Lal that he received Rs. 2,03,000/- from cashier corroborates the facts in the said letter dated 27-9-1991 of TMBL that Rs. 2,03,000/- was paid to the person who encashed the bearer cheque of Rs. 10,00,000/-. The documents i.e. slip of papers, seized from the appellant may be presumed to be in the hand writing of the appellant till the contrary is proved in view of section 72 of the FERA. Since the fact that said slip o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s figure of 500 is written. Shri M. Rasheed was traced with reference to this telephone number. In his statement dated 29-9-1995, Sh. Rasheed inter alia stated that his relative K.P. Nazar is working in Abu Dhabi; that he requested him to give him some amount as loan and Nazar informed him that he had arranged to send some amount; that on 18-9-1991, one Prakashbhai from Managalore contacted and informed him to contact one Nitin Bhai staying at room No.406 of Hotel Kamla International, Cannano to receive Rs. 25,000/- from him and the balance amount of Rs. 25,000/- would be arranged to be paid in a week's time; that accordingly he received Rs. 25,000/- from the said Nithin Bhai as per the instructions of Nazar of Abhu Dhabi and the balance of Rs. 25,000/- is yet to be received. The above mentioned deposition of shri M. Rasheed and Abdul Sathar revealing the name of shri Nithin Bhai are further corroborated by Shri N.M. Shah who in his statement dated 18-12-1991 has admitted as follows:- "I met shri Prakash Kumar Ishwarwal. He gave me an amount of Rs. 1,25,000/- (Rs. One lakh twenty five thousand only) and asked me to hand over an amount of Rs. 25,000/- to one Shri M. Ras....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o reveals calls having been made to Abu Dhabi, Kasargod etc. while making of these calls from the P telephone installed at the premises of M/s Vijay Agencies of which the appellant Sh. Prakash Kumar Ishwarlal is the proprietor, in itself, does not lead to any conclusion but when this is read alongwith the statement of Shri Prakash Kumar Ishwarlal, appellant then this piece of documents further confirms and corroborates the following deposition made by the appellant:- Shri Abdul Salam had given me his telephone no. as 720526 and 729459. Shri Abdul Salam had also given me a telephone no. 2551 of Shri Ab Julia of Nileshwar (Kasargod District). The phone 2551 belongs to Shri karim and that Karim has given this phone for use of Abdulla." Shri Kareem in his statement dated 4-3-1992 confirmed that Shri Kunhi Abdulla used to get/make calls from his shop telephone number 2551. The telephone bill shows frequent calls having been made at telephone number 2551 and to Abu Dhabi at 720526 and 729459. 37. The Ld. Adjudicating Officer in the impugned order has observed that the transcripts of the accounts of Taj Enterprises, Mahesh Traders, Azad Traders and S.N. Traders clearly shows that....