TaxTMI 
TaxTMI 
2025 (6) TMI 1883
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.... exchange (Tribunal) dismissing the Appeals instituted by the Appellants herein against the Special Director's common order dated 30 October 2000. The two orders shall hereafter be referred to as the impugned orders. 3. These Appeals were admitted by a common order dated 20 September 2006 on the following questions of law:- "(1) Whether the provisions of Section 9(i)(a) are attracted only when the person resident in India has made any payment to or for the credit of any person outside India provided the same is made in accordance with the general and special exemption from the provisions of that Section which may be granted conditionally or unconditionally by the Reserve Bank of India ? (2) Whether the penalty imposed was without any basis, more particularly as it was in absence by the Respondents to show loss of foreign exchange or any contumacious conduct of the Appellant ? (3) Whether illustration (g) under section 114 of the Evidence Act would be applicable to the case of the Appellants more particularly in view of the fact that the complete record of the travel of the Appellants daughters during the period of the show cause Notice, including the V....
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....A) as contended by them or whether they were "person resident outside India" as defined under Section 2(q) of FERA for the relevant period referred to in the show cause notices and the impugned orders. The issue of whether there was a violation of the FERA provisions will depend on the determination of this core issue. 9. The Special Director, ED and the Tribunal have concurrently held that the Shroff daughters were not "persons resident in India" as defined under Section 2(p) of the FERA. Instead, the Special Director and the Tribunal have concurrently held that the Shroff daughters were "persons resident outside India" as defined under Section 2(q) of the FERA. Accordingly, the Special Director, ED and the Tribunal have concluded that the financial transactions in which the Appellants were involved concerning the sale and purchase of shares of M/s. Ditco Securities Pvt Ltd, an Indian company, without the prior approval of the Reserve Bank of India (RBI), constituted a violation of the provisions of the FERA. Based on such findings and conclusions, the impugned orders have imposed penalties upon the Appellants in FERA Appeal Nos. 57 of 2006, 60 of 2006, 61 of 2006, and 62 of 20....
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....re funded through the sale of shares and/or other assets and/or the withdrawal of sums from the three sisters' accounts. In the event of any shortfall or an emergent situation, funds were transferred through temporary loans by one of the parents, Kishor Shroff (now deceased) or Ranjan Shroff. During the relevant period referred to in the show cause notice, the Appellants submitted that there was a shortage of funds; therefore, their parents advanced temporary loans through a private limited company, M/S Sujay Trading Co., in which the parents were directors. Investigations were conducted, which involved searching the residential and business premises of the Appellants' parents and their chartered accountant, as well as the business premises of certain other individuals, including employees of M/S Sujay Trading Corporation Pvt Ltd. Their statements were recorded under the provisions of the FERA. The adjudication proceedings followed. 14. The Special Director, ED and the Tribunal, by the impugned common orders, concurrently rejected the Appellants' contentions. Hence, these Appeals, on the questions of law referred to above. 15. Mr. B Seshagopalan, the learned counsel for the A....
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....tted that the impugned orders may be quashed and set aside. 21. Mr. Vinit Jain, Ms. Neeta Masurkar and Mr. Y.R. Mishra, the learned counsel for the Respondents, defended the impugned orders based on the reasoning contained therein. They submitted that these were the matters where the Special Director and the Tribunal, upon detailed evaluation of the material/evidence on record, had reached concurrent findings of fact. They submitted that there was no perversity in reaching such conclusions. Therefore, such findings of fact may not be interfered with in these Appeals, which are restricted only to questions of law as provided under Section 54 of the FERA. 22. The learned counsel for the Respondents pointed out that even the provisions of Section 2(p) and 2(q) of the FERA were quite clear and admitted of no ambiguities. They submitted that these provisions were applied to the facts on record, and the finding was reached that the Shroff daughters were not persons resident in India. Such a situation gives rise to no question of law, and therefore, these Appeals deserve to be dismissed. 23. The learned counsel for the Respondents referred to voluminous material on record, which ....
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.... employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (iii) a person, not being a citizen of India, who has come to, or stays in, India, in either case− (a) for or on taking up employment in India; or (b) for carrying on in India a business or vocation in India, or (c) for staying with his or her spouse, such spouse being a person resident in India, or (d) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (iv) a citizen of India, who, not having stayed in India at any time after the 25th day of March, 1947, comes to India for any of the purpose referred to in paragraphs (a), (b) and (c) of subclause (iii) or for the purpose and in the circumstances referred to in paragraph (d) of that sub-clause or having come to India stays in India for any such purpose and in such circumstances. Explanation.−A person, who has, by reason only of paragraph (a) or paragraph (....
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....g in the USA for employment, business, or vocational purposes. Therefore, the question that arises for determination is whether the Shroff daughters were residing in the USA for any other purpose, in circumstances that would indicate their intention to stay outside India for an uncertain period. 34. The Special Director in the impugned order dated 30 October 2000, has inter alia referred to certain statements recorded under Section 40 of the FERA. Kishore Shroff, the father of the Shroff daughters (now deceased), in his statement recorded on 17 December 1997, admitted that all three of his daughters, namely Kanan, Neha and Kiran, are staying in the USA; that Kanan and Neha are married, and the younger daughter Kiran is studying in the USA. He admitted that Neha was married to Sanjay Bagai, a practising Chartered Accountant having his own consultancy firm in USA known as ZEIGRST Corporation Inc., San Francisco, USA. 35. In the replies filed to the show cause notice, it was admitted that Neha left for the USA in or about 1986 and was residing in the USA in 1996-1997 when the show cause notice alleged violation of the provisions of FERA. There was no assertion on behalf of Neha ....
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....e of such mental state. Still, it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. The Explanation to Section 59 (1) provides that "culpable mental state" includes intention, motive, knowledge of a fact and belief in, or reason to believe, a fact. 39. Thus, even in the context of prosecution, there is a presumption of a culpable mental state. This is a rebuttable presumption; however, the onus would be on the accused to rebut it. 40. Therefore, where the circumstances indicated the Shroff daughter's intention to stay outside India for an uncertain period, it was for the Appellants to have produced some proper material based upon which such circumstances could have been explained, and it could have been established that the Shroff daughters had no intention whatsoever to stay outside India for an uncertain period. The circumstances surrounding their stay in the USA, the length of the stay, their marriage to persons settled in the USA, and the lack of details about their return or any proposed return to India indicate an intention to stay outside India for an uncertain period....
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....f law formulated at the time of admission of this Appeal was whether the provisions of Section 9 read with Section 68 of the FERA would apply to a person resident in India going abroad on a student visa. Now that we have held that the Shroff daughters were not persons resident in India, this question of law will have to be answered against the Appellants. No arguments were advanced based upon clause 1.28 of the Exchange Control Manual, 1993. In any event, even if some aid could be taken from these provisions, the question will have to be determined in the light of the statutory definitions contained in the FERA. This is precisely what the Special Director and the Tribunal have done. 45. The Appeals have raised questions of law referring to Section 114 of the Evidence Act. The Tribunal has also referred to Section 114 of the Evidence Act. The Tribunal has presumed the existence of certain facts which it thought are likely to have happened, having regard to the common course of natural events, human conduct, public and private business, in their relation to the facts of the particular case. The Tribunal has also drawn an adverse inference by reference to illustrations (g) below Se....