TaxTMI 
TaxTMI 
2025 (5) TMI 1139
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.... due to insufficient records. No Penalty. 3 Contravention u/s 3(b) of FEMA, 1999, for an amount of USD 22000 Rs. 10,000/- Further, in exercise of the power conferred under section 13(2) of FEMA, 1999, Adjudicating Authority, ordered for the confiscation of the assorted foreign currency equivalent to Rs. 3,30,82,775.28 (Rupees Three Crore Thirty Lacs Eighty-Two Thousand Seven Hundred Seventy-Five and Twenty-Eight Paise) seized by the Income Tax Authorities and which was taken over by the Directorate of Enforcement u/s 37 of FEMA, 1999, r.w.s. 132A of Income Tax Act, 1961. The confiscation of foreign currency was ordered to be appropriated to the Central Government. 2. As per the facts of the case, the complaint was filed before the Adjudicating Authority, u/s 16(3) of the Foreign Exchange Management Act, 1999 (herein after referred to as 'FEMA, 1999'), in F. No. T-3/26/HYZO/2014, dated 22.03.2018 by the Assistant Director, Directorate of Enforcement, Hyderabad, and in the said complaint, the Complainant, inter alia, has stated as follows: The Additional Director of Income Tax (Inv.), Unit II Hyderabad, vide letter dated 06.03.2014 informed that they have seized for....
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....charitable trust by International Outreach, in 1983-84, which is registered with FCRA and said International Outreach has bank accounts with Andhra Bank, IDBI Bank, SBI & HDFC Bank. In 1984-85, he founded Kings Temple Church and he is the Senior Pastor of the Church since then. Kings Temple Church is not registered under FCRA. The funds are received locally and it holds bank accounts with HDFC Bank & ICICI Bank and the Kings Temple Church is functioning under the supervision of International Outreach, which have several branches all over Andhra Pradesh. It has a Bible School, Children's Home, Limitless Love Foundation etc. He lived in USA during 2000 to 2004. Presently, he is living in India, but travelling widely to minister in Churches, Conferences and seminars. He is a US Green Card holder since 2004 and is married to Merlyn Patta, who assists him in all his work. They have two children namely Steven Patta and Dborah Patta. He established a Religious Trust by name Samuel Patta Foundation registered u/s 25 of the Companies Act. Funds are received into this foundation locally. People from India and abroad drop their offerings in the Hundi placed in the church in Hyderabad and othe....
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....cy equivalent to USD 22,000/- to one Mr. Cody, representative of M/s Television Broadcasting Legacy Atlanta, USA, for editing, broadcasting and production of his program on World Network Channel in USA and that M/s Television Broadcasting Legacy issued a receipt for the payment for USD 22,000/-, a copy of which was seized by the Income Tax Department. Mr. Cody was an employee of M/s Television Broadcasting Legacy, USA and that he paid to Mr. Cody, the equivalent in Indian Currency, when he visited India. During the course of investigation, additional information was received from the Deputy Director of Income Tax (Inv.), Unit II(3), Hyderabad, regarding the foreign accounts in UAE, transactions relating to foreign currencies and the copies of seized diary. Shri Samuel Rajkumar Patta was summoned again and his statement was recorded u/s 37 of the FEMA, 1999, on 20.08.2014. In his statement Shri Samuel Rajkumar Patta stated that the deposits in UAE bank accounts are from living World Christian Centre, Chicago, USA and also Honorarium payments received for his preaching in Seminars in UAE. The UAE bank accounts are the joint accounts in the name of his wife and himself. The ackn....
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.... the extant regulations, Mr. Samuel Rajkumar may retain abroad balances available in these foreign accounts as on the date of his return. However, the amounts that have been deposited into the said accounts subsequent to his becoming person resident in India, ought to be repatriated to India and surrendered to the authorized person within 180 days. However, Mr. Samuel Rajkumar, in whose foreign currency bank accounts balances of AED 1,28,145.84 & USD 2,32,065.52 are available, (equivalent to about Rs. 1,62,60,573/-), failed to repatriate the same and surrender to the authorized person within the prescribed period. c) Mr. Samuel Rajkumar Patta, a person resident in India has paid Indian currency equivalent to USD 22,000 to Mr. Cody of USA, a person resident outside India, when Mr. Cody visited India in June 2013, towards services rendered by Television Broadcast Legacy, USA for broadcasting his preaching. Though, Samuel Rajkumar Patta has contended in his statement dated 22.05.2014 that major portion of the seized foreign currencies were received as offerings since August, 2013, no evidence whatsoever has been submitted by him. On the contrary, he had in his statement da....
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....ravention of the provisions of Section 3(b) of the FEMA, 1999. After receiving the show cause notice, noticee (herein appellant) filed written reply dated 09.06.2018 to the Adjudicating Authority, wherein he stated that the notice is against the facts on record. It was contended that the violations of provisions of Sec. 3(a) of FEMA, 1999, alleged against him is not correct. The amounts were received in hundies located at the church temple, which is run under the charitable trust i.e. International Outreach Charitable Trust from the foreigners, who attend the meetings held by the trust. Trust is registered under Foreign Currency Regulation Act, 1976. Thus the trust is governed by Ministry of Home Affairs and not by the Reserve Bank of India. The said foreign currency equivalent to Rs. 3,30,82,775.28 was seized by the Income Tax Department and the same is proposed to be confiscated by the Directorate of Enforcement, which is improper and illegal, as their trust is registered under FRCA. It is also contested that the said Foreign Currency was seized by the IT officials on the ground that the books of accounts for the amounts received were not maintained and the said amounts were n....
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.... foreign country. Hence, repatriation and surrender of foreign currency is not applicable to him, as he is a resident outside India. Further, it is submitted that the Show Cause Notice does not allege of any misuse of funds received from the person resident outside India. In such circumstances imposition of penalty is not warranted. The Noticee in his reply had stated that with regard to the contravention in the case of giving Indian currency to a person resident outside India is only a technical breach, as the amount involved is very minimal, and hence, the maximum penalty that can be imposed is Rs. 2 Lakhs only as per Section 13(1) of FEMA, 1999. It is also contended that the impugned show cause notice is barred by limitation in terms of powers conferred to the officers of Enforcement Directorate like the powers conferred on Income Tax authorities under the Income Tax Act, 1961 in respect of Sub- Section 3 of Section 36 of FEMA, 1999. Thus, he requested to drop further proceedings in the impugned notice and take a lenient view. After going through the material on record and the reply filed by the appellant, Learned Adjudicating Authority imposed the penalty on the appellant....
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....1999, without appreciating the true facts and reply filed by him. The above said Foreign Exchange equivalent to Indian currency of Rs 3,30,82,775.28 was in fact received as donation and offerings from delegates, who had come to India during the period from August, 2013 to February, 2014 and the same were kept safe in the Hundis. The said Foreign Exchange was received/accepted in the capacity of registered organization under FCRA, where the trust was regularly filing its return. Accordingly, he asserted that it is incorrect to suggest that the said Foreign Exchange was accepted/received in contravention of section 3(a) of FEMA, 1999. He stressed that the Reserve Bank of India has got no mandate to regulate the donation/offerings received by the Trust registered under FCRA of Ministry of Home Affairs. The Appellant had written two letters to the RBI on 15.10.2013 & 11.02.2014 seeking their guidance and clarification which they did not give. During personal hearing Ms. Y. Siri Reddy, Advocate, of the Appellant had requested the Ld. Adjudicating Authority to enquire this fact from the RBI, which he did not do in utter disregard to section 4(6) of Foreign Exchange Management (Adjudic....
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....a unique case in nature. If at all any violation is being committed by the Appellant in this matter then that should be considered as technical violation, as the same is unintentional and the same is being established through the letter which is sent to the RBI by the CA of the Appellant, as to how the Foreign Exchange to be dealt. He contended that the Ld. Adjudicating Authority has got powers of a civil court while holding an enquiry as per rule 4(5) & (6). He was duty bound to enquire the factual position from the RBI before coming to the conclusion that the said Foreign Exchange was acquired/accepted in contravention of provisions of section 3(a) of the said act. As per the provision of section 13(2) of FEMA, 1999, an Adjudicating Authority adjudging any contravention under sub section 1 of section 13 may in addition of penalty direct that any currency in respect of which the contravention has taken place be confiscated and credited to Central Government account. He submitted that the confiscation of Foreign Currency equivalent to Rs 3,30,82,775.28 by the Ld. Adjudicating Authority is wrong, malafide and without legal justification, as the same is based on surmises and conjectu....
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....e Trust was for the purpose of purchase of watches. The payment was made for him only and not for the credit of any person resident outside India, as is the condition of section 3(b) of FEMA, 1999. The respondent authority failed to examine Mr. Cody in this regard, but straight away come to this conclusion to penalize the Appellant for the amount of Rs. 1,10,000/- without following the principle of natural justice, which the Ld. Adjudicating Authority ought to have followed. The Ld. Adjudicating Authority could not record his findings in the Impugned Adjudicating Order about the person resident outside India for the credit of whom this payment was made. In the light of the above submissions, Ld. Counsel for the appellant submitted that the present appeal be allowed and thereby set aside the impugned order confiscating the foreign currency and imposing the penalty. 4. On the other hand, Ld. Counsel for the respondent ED strongly controverted the submissions of appellant and the same will be reflected in my discussion & findings in the following para. 5. After considering the rival submissions, I have given my thoughtful consideration to the same. The appellant has made 2 ma....
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....oks of accounts maintained for some of the offerings in Indian Rupees. This clearly establishes that Mr. Samuel Rajkumar Patta was neither declaring the foreign currency received by him, nor depositing the same with any Authorized Dealer since 2007-08. Accordingly, the account statements from August, 2013 to February, 2014 from page 246-252 of appeal paper book are clearly false and fabricated account statements to cover the recovered foreign within limitation period of 180 days, as no foreign exchange is shown received either prior to or after the said period. Thus, in absence of any proper ledger, the defence taken by the appellant that these FCRA contributions which were received in the last 180 days only, cannot be accepted. Also, claim of appellant that these foreign contributions were dropped in the hundis is clearly unreliable and an afterthought strategy because the same are not co-related with the date, time, contributor's name and venue of the meetings. Moreover, the foreign currency was recovered from the bank lockers of the appellant and from the second-floor bathroom and third floor bedroom, but not from the donation boxes of the church. He did not deposit the same in ....