TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1041
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....t, 1973 (hereinafter referred to as 'FERA') on the ground that the Appellant had attempted to purchase foreign exchange and gold, and imposed a penalty of Rs. 40,000/- on the Appellant. 2. Shorn of unnecessary details, the facts leading to the instant appeal are as follows:- i. On 16.02.1997, after receipt of specific information that an illegal foreign exchange business was being conducted by the Appellant, Respondent No. 2 i.e. the Enforcement Directorate (hereinafter referred to as "Respondent Agency"), conducted a search of the residential premises of one Bhagwan Das, situated at 3757, Gali No. 3, Regherpura, Karol Bagh, New Delhi and the business premises of the Appellant, situated at 59/2141, Naiwala, Karol Bagh, New Delhi. ii. Consequently, Indian currency worth Rs. 12,31,000/-, USD 6371/-, four gold biscuits, two pieces of gold along with certain documents were recovered from the business premises of the Appellant. iii. During the course of the search operation at the business premises of the Appellant, two Nepalese Nationals, namely, Dukal Bhattarai @ Arjun Bhattarai and Ram Nath Dhukal entered the premises where the search operation was under....
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....sion recorded in the statements, that the foreign currencies recovered from the two Nepalese Nationals i.e. Ram Nath Dhakal and Dukal Bhattarai, had been sold to them by the Appellant in for seized gold, was improbable since the value of the foreign exchange allegedly given to them would have far exceed the prevailing price of gold at that time. The Appellant also contended that the Indian currency seized from him was not liable to confiscation. While rejecting the arguments of the Appellant, the Adjudicating Authority held as under:- "I have gone through the full facts of the case including panchanamas in respect of search of the business-cum-residential premises of Shri Arjun Patil and recoveries made under Section 37 and 34 of FERA, 1973, respectively. I have gone through the statement of Shri Arjun Patil Which was recorded under Section 40 of FERA, 1973 in which he admitted that he alongwith his brother-in-law Shri Bhagwan Dass Jadhav and Shri Pandurang Tukaram, were indulging in illegal sale/ purchase of foreign exchange and gold. He also confirmed the statement tendered by Shri Bhagwan Dass Jadhav. He admitted that the foreign currency of US $ 6371 was given to him b....
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.... been unable to establish that he had not gone beyond the stage of preparation and his conduct was not an attempt to contravene the provisions of FERA. The relevant excerpt of the order of the Appellate Tribunal dated 06.09.2006 reads as under :- "6. From the facts, evidence and circumstances of the case it was quite clear that the appellant was indulged in illegal sale and purchase of foreign exchange and gold where the confessional statement of the appellant has been fully corroborated by the statements of the visitors visiting the shop of the appellant for the purpose of sale and purchase of foreign exchange and also the statement of brother in law of the appellant, as well as by the recovery of the substantial amount of gold, foreign exchange and Indian currency. The appellant has not been able to explain the source of Indian currency which has nowhere been accounted for the appellant. It is not the case of the appellant that the daily turnover of his business was to the tune of about Rs. 12,00,000/- and no explanation has been given by the appellant for recovery of such a huge amount of Indian currency which otherwise would not have been possible in the ordinary cours....
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....cion and torture. The Appellant and his co-accused had requested that they be medically examined and it was revealed that they had received injuries on their person. iii. The request of the Appellant for cross-examination of witnesses was rejected. It has been averred that in terms of the Judgment of the Apex in KTMS Mohamd v. Union of India, (1992) 3 SCC 178, the Deputy Director and the Appellate Tribunal should have examined whether the Appellant and the co-accused were coerced into making confessional statement and this Court should examine whether the impugned Order are vitiated for non-consideration of the same. iv. The Appellate Tribunal failed to appreciate that the burden of establishing that the statements relied upon by the prosecution were made voluntarily rests squarely on the prosecution. The Court while examining the voluntariness of the statement must consider the attending circumstances and all relevant factors surrounding the statement. Reliance has been placed on the Judgment of the Apex Court in Telestar Travels Private Limited v. Enforcement Directorate, (2013) 9 SCC 549. v. As far as the request of cross-examination is concerned, it h....
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....2) of FERA for making an attempt for purchase of foreign exchange and gold in respect of seizure of Rs. 12,31,000/-. iv. It is stated that the Appellate Tribunal in its order dated 10.08.2006 has come to a conclusion that the confessional statement of the Appellant has been corroborated by the statements of the visitors visiting the shop of the Appellant for the purpose of sale and purchase of foreign exchange. The Appellate Tribunal has also held that the Appellant has not been able to explain the source of Indian Currency and the same has not been accounted for by the Appellant. It is contended that the visitors i.e., Ram Nath Dhakkal and Dukal Bhattarai have not stated anywhere that they were selling gold or foreign exchange in exchange for Indian Currency. It is contended that the Ram Nath Dhakkal and Dukal Bhattarai have specifically stated that they were giving gold to the Appellant in exchange of Indian Currency. There is no mention of Indian Currency of Rs. 12,31,000/- and the brother-in-law of the Appellant has stated that the Indian Currency was kept for purchase of gold. This in itself does not amount to a contravention under the FERA Act. 9. Learned Counsel ....
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....ucted. iii. The statements made by the Appellant have been corroborated by the documentary evidence which has been seized from the office premises of the Appellant. These documents contain the accounts and calculations of illegal currency transactions and constitute legal evidence in terms of Section 40 of FERA. A perusal of the documents clearly demonstrates that the Appellant was rotating money in illegal foreign exchange transactions and generating black money, and the recovered foreign currency and gold formed part of that illegal transactions carried out by the Appellant. iv. The Appeal is not maintainable and there is no violation of fundamental rights of the Appellant. Furthermore, the Appellant has not furnished any evidence in order to demonstrate that the money that had been seized was legal and could be accounted for. On the contrary, documents which have been seized and the statements of the Appellant and co-accused clearly establish that there was a contravention of FERA. v. There is adequate corroboration of the statements of the accused persons, and the guilt of the Appellant is not founded exclusively upon the retracted confessional statem....
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....y decision or order of the Appellate Board under sub-section (3) or sub-section (4) of Section 52: Provided that the High Court shall not entertain any appeal under this section if it is filed after the expiry of sixty days of the date of communication of the decision or order of the Appellate Board, unless the High Court is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. Explanation.-In this section and in Section 55, "High Court" means- (i) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents ordinarily resides or carries on business or personally works for gain." 15. Section 35 of FEMA, which is the successor legislation to FERA 1973, under which the present Appeal has been filed is ipsissima verba to Section 54 and reads as under: "35. Appeal to High Court.-Any person aggrieved by any decision or or....
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....t that a reference to this Court is maintainable only on a question of law under sub-section (3) and (4) of Section 54 of FERA and Section 35 of FEMA. 19. The term "question of law" has not been defined under the Act, however the meaning of the term can be gathered and understood from a review of case law on the subject found under analogous statutes. The Apex Court has repeatedly re-affirmed that there is no hard and fast rule that can be used as a uniform metric to draw a line between a question of law and a question of fact. However, over time, there are some general principles have been evolved by the Apex Court, which have been used by the Courts below as a yardstick to assess whether a particular issues is a question of law or question of fact. 20. The Apex Court in Commr. of Agricultural Income Tax v. M.N. Moni, (2007) 10 SCC 584 while dealing with a challenge to order passed by a Division Bench of the Kerala High Court answering the reference made to it under the Kerala Agricultural Income Tax Act, 1950, elucidated the distinction between a question of law and question of fact and held as under: "14. In cases of reference, only a question of law can be answer....
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....ying on business in shares and it was held that this was a question of fact but if the Appellate Tribunal decided the question by taking into consideration materials which are irrelevant to the enquiry or partly relevant and partly irrelevant or based its decision partly on conjectures then in such a situation an issue of law arises, which would be subject to review by the Court and the finding given by the Tribunal would be vitiated. 28. The result of the authorities is that inference from facts would be a question of fact or of law according as the point for determination is one of pure fact or a mixed question of law and fact and that a finding of fact without evidence to support it or if based on relevant and irrelevant matters is not unassailable. 29. The limits of the boundary dividing questions of fact and questions of law were laid down by this court in Meenakshi Mills, Madurai v. CIT [(1956) SCR 691] where the question for decision was whether certain profits made and shown in the name of certain intermediaries were in fact profits actually earned by the assessee or the intermediaries. Taking the course of dealings and the extent of the transaction and th....
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....on of the voluntariness of the confessional statement of the Appellant and his co-accused. He has contended that the confessional statement had been retracted by the Appellant at the first instance and the same had been obtained under duress and coercion by the Respondent Agency. The question as to whether the statement of the Appellant and his co-accused was obtained under duress and coercion is essentially a matter of appreciation of evidence. 24. The Adjudicating Authority and the Appellate Tribunal have given clear and categorical findings on this issue after examining the facts, medical report of the Appellant (or lack thereof), documents recovered during the search and the arguments advanced by the parties. Both the Adjudicating Authority and the Appellate Tribunal were of the view that the Appellant has not been able to demonstrate that his statement was obtained under duress or coercion. Further, before this Court, the learned Counsel for the Appellant been unable to demonstrate any perversity or inadequacy of evidence in the reasoning arrived at by the Adjudicating Authority or the Appellate Tribunal. Thus, as far as the first limb of the argument advanced by the learne....
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....IT, (1959) 35 ITR 594, laid down the approach that the High Court ought to adopt while dealing with a mixed question of fact and law. The Apex Court has held as under : "8. There is no doubt that the jurisdiction conferred on the High Court by Section 66(1) is limited to entertaining references involving questions of law. If the point raised on reference relates to the construction of a document of title or to the interpretation of the relevant provisions of the statute, it is a pure question of law; and in dealing with it, though the High Court may have due regard for the view taken by the Tribunal, its decision would not be fettered by the said view. It is free to adopt such construction of the document or the statute as appears to it reasonable. In some cases, the point sought to be raised on reference may turn out to be a pure question of fact; and if that be so, the finding of fact recorded by the tribunal must be regarded as conclusive in proceedings under Section 66(1). If, however, such a finding of fact is based on an inference drawn from primary evidentiary facts proved in the case, its correctness or validity is open to challenge in reference proceedings within ....
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....ofits ostensibly earned by them were in fact earned by the appellant which had itself sold the goods to the real purchasers and received the prices. On this finding the tribunal had ordered that the profits received from such sales should be added to the amount shown as profits in the appellant's books and should be taxed. The appellant applied for a reference to the Tribunal under Section 66(1) and the High Court of Madras under Section 66(2), but his application was rejected. Then it came to this Court by special leave under Article 136 and it was urged on its behalf that the Tribunal had erred in law in holding that the firms and companies described as the intermediaries were its benamidars and that its application for reference should have been allowed. This plea was rejected by this Court because it was held that the question of benami is purely a question of fact and not a mixed question of law and fact as it does not involve the application of any legal principles for its determination. In dealing with the argument urged by the appellant, this Court has fully considered the true legal position in regard to the limitation of the High Court's jurisdiction in entertaining refer....
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....uthority and the Appellate Tribunal are bad in law for not considering whether the confessional statements of the Appellant and his co-accused were obtained under coercion and duress. 32. This Court is unable to accept the contention advanced by the learned Counsel for the Appellant. 33. The Apex Court in Pyare Lal Bhargava v. State of Rajasthan, 1962 SCC OnLine SC 25 has observed that a retracted statement can be used to convict a person, provided the Court is satisfied that the statement was true and was voluntarily made. However, as a rule of prudence the Courts do not generally base conviction exclusively on an uncorroborated statement. Yet, it cannot be set in stone that under no circumstances can a conviction be made without corroboration. The relevant paras of the said Judgment reads as under : "7. The second argument also has no merits. A retracted confession may form the legal basis of a conviction if the court is satisfied that it was true and was voluntarily made. But it has been held that a court shall not base a conviction on such a confession without corroboration. It is not a rule of law, but is only a rule of prudence. It cannot even be laid down as a....
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.... confession or retracting it but the attending facts and circumstances surrounding the same. It may be remarked that there can be no absolute rule that a retracted confession cannot be acted upon unless the same is corroborated materially. It was laid down in certain cases one such being Kesava Pillai, In re [ILR (1930) 53 Mad 160 : AIR 1929 Mad 837] that if the reasons given by an accused person for retracting a confession are on the face of them false, the confession may be acted upon as it stands and without any corroboration. But the view taken by this Court on more occasions than one is that as a matter of prudence and caution which has sanctified itself into a rule of law, retracted confession cannot be made solely the basis of conviction unless the same is corroborated one of the latest cases being Balbir Singh v. State of Punjab [AIR 1957 SC 216 : 1957 Cri LJ 481], but it does not necessarily mean that each and every circumstance mentioned in the confession regarding the complicity of the accused must be separately and independently corroborated, nor is it essential that the corroboration must come from facts and circumstances discovered after the confession was made. It wo....
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.... all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Custom authorities or the officers of Enforcement under the relevant provisions of the respective Acts is a sine qua non to act on it for any purpose and if the statement appears to have been obtained by any inducement, threat, coercion or by any improper means that statement must be rejected brevi manu. At the same time, it is to be noted that merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained. It is only for the maker of the statement who alleges inducement, threat, promise etc. to establish that such improper means has been adopted. However, even if the maker of the statement fails to establish his allegations of inducement, threat etc. against the officer who recorded the statement, the authority while acting on the inculpatory statement of the maker is not completely relieved of his obligations in at least subjectively applying its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down that the authority or any court intending to act upon the inculpatory state....
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....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-examine 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." 39. A perusal of the order dated 19.12.2003 passed by the Adjudicating Authority demonstrates that several adjournments had been sought by the Appellant. A perusal of the impugned order also demonstrates that irrespective of seeking repeated adjournments, no witnesses were examined for nearly two and half years. Similarly, with respect to the contention advanced by the learned Counsel for the Appellant that Appellant's statement had been obtained under coercion and duress is concerned, the Adjudicating Authority has made categorical observations that the medical examination report of the Appellant has not been furnish....
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.... Respondent Agency lacked the legal authority to confiscate Indian currency. As stated earlier, in the opinion of this Court this contention of the Appellant is without merit. However, before adverting to a discussion on this ground it would be apposite to refer to the wordings of Section 63 of FERA. 42. Section 63 of FEMA reads as under: "Section 63. Any court trying a contravention under Section 56 and the adjudicating officer adjudging any contravention under Section 51 may, if it or he thinks fit and in addition to any sentence or penalty which it or he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the person committing the contravention or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf. Explanation.-For the purposes of this section, property in respect of which contravention has taken place shall include- (a) deposits in a bank, where the ....
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....51 and any court trying a contravention under Section 56, if he or it thinks fit to direct the confiscation of any currency, security or any other money or property in respect of which the contravention has taken place." 44. It is well settled that the meaning of an enactment which was intended by the legislator i.e. the legal meaning is to be understood as corresponds to its literal meaning. Quoties in verbis nulla est ambiguitas, ibi nulla expositio contra verba expressa fienda est (when there is no ambiguity in the words, then no exposition contrary to the expressed words is to be made) [See Bennion on Statutory Interpretation, VIth Edition, pp. 780]. Our view draws strength from the decision of the Apex Court in CCE, Customs & Service Tax v. Shapoorji Pallonji & Co. (P) Ltd., (2024) 3 SCC 358. The relevant paras read as under: "27. In State of W.B. v. Calcutta Municipal Corpn. [State of W.B. v. Calcutta Municipal Corpn., 1966 SCC OnLine SC 42 : (1967) 2 SCR 170], a nine-Judge Bench of this Court, relying upon Craies' On Statute Law (6th Edn.), stated that where the language of a statute is clear, the words are in themselves precise and unambiguous, and a literal rea....
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..... As far as the final contention of the Appellant is concerned, the learned Counsel for the Appellant has contended that the allegations against the Appellant do not constitute "attempt" under Section 64(2) of the Act. He has contended that "attempt" has not been defined under FERA. in the present case, the Respondents have not been able to prove that the Indian Currency was used in an attempt to illegally purchase foreign exchange. Therefore, in sum and substance no actus reus as has been alleged to establish that the Appellant attempted to do any unlawful act using the Indian Currency and purchasing foreign exchange at market rate itself would not be a contravention under FERA. Before addressing this contention, it would be pertinent to refer to the text of Section 64 of FERA. Section 64 of FERA reads as under: 64(1). Whoever makes preparation to contravene any of the provisions of this Act [other than Section 13, clause (a) of sub-section (1) of [Section 18, Section 18-A], clause (a) of sub-section (1) of Section 19, sub-section (2) of Section 44 and Sections 57 and 58] or of any rule, direction or order made thereunder and from the circumstances of the case it may be r....
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....ences his attempt to commit the offence. The word "attempt" is not itself defined, and must, therefore, be taken in its ordinary meaning. This is exactly what the provisions of Section 511 require. An attempt to commit a crime is to be distinguished from an intention to commit it; and from preparation made for its commission. Mere intention to commit an offence, not followed by any act, cannot constitute an offence. The will is not to be taken for the deed unless there be some external act which shows that progress has been made in the direction of it, or towards maturing and effecting it. Intention is the direction of conduct towards the object chosen upon considering the motives which suggest the choice. Preparation consists in devising or arranging the means or measures necessary for the commission of the offence. It differs widely from attempt which is the direct movement towards the commission after preparations are made. Preparation to commit an offence is punishable only when the preparation is to commit offences under Section 122 (waging war against the Government of India) and Section 399 (preparation to commit dacoity). The dividing line between a mere preparation and an ....
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....er Section 5(1)(e) of the Act. The expression "burden of proof" has two distinct meanings (1) the legal burden i.e. the burden of establishing the guilt, and (2) the evidential burden i.e. the burden of leading evidence. In a criminal trial, the burden of proving everything essential to establish the charge against the accused lies upon the prosecution, and that burden never shifts. Notwithstanding the general rule that the burden of proof lies exclusively upon the prosecution, in the case of certain offences, the burden of proving a particular fact in issue may be laid by law upon the accused. The burden resting on the accused in such cases is, however, not so onerous as that which lies on the prosecution and is discharged by proof of a balance of probabilities. The ingredients of the offence of criminal misconduct under Section 5(2) read with Section 5(1)(e) are the possession of pecuniary resources or property disproportionate to the known sources of income for which the public servant cannot satisfactorily account. To substantiate the charge, the prosecution must prove the following facts before it can bring a case under Section 5(1)(e), namely, (1) it must establish that the a....
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....ting to appreciation of evidence. On a consideration of the evidence adduced by the respondent, the High Court has taken the view that it is not possible to exclude the possibility that the property found in possession of the respondent belonged to his father-in-law, Hanumanthu. We have been taken through the evidence and we cannot say that the finding reached by the High Court is either manifestly wrong or perverse. Maybe, this Court, on a reappraisal of the evidence, could have come to a contrary conclusion. That, however, is hardly a ground for interference with an order of acquittal. There are no compelling reasons to interfere with the order of acquittal, particularly when there is overwhelming evidence led by the respondent showing that his father-in-law, Hanumanthu, was a man of affluent circumstances. There is no denying the fact that Hanumanthu was the pairokar of Raja Dharmarao, Zamindar of Aheri Estate and by his close association with the Zamindar, had amassed considerable wealth. More so, because two of his sisters were the kept mistresses of the Zamindar and amply provided for." 51. In the present case it is not disputed that after receipt of specific information b....