TaxTMI 
TaxTMI 
2026 (1) TMI 857
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....agement Act, 1999 (FEMA) to the extent of Rs. 4,43,500/-; penalty of Rs. 5,00,000/- on Shri Joju Baby for the contravention of Regulation 10(A)(b) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 read with Reserve Bank of India (RBI) vide A.P. (DIR Series) Circular No. 16 dated 04.10.2014 to the extent of Rs. 1,24,43,500; and penalty of Rs. 1,25,00,000/- on Shri Kunjukutty Aniyankunju for contravention of Clause 3 to Schedule 4 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 read with Regulation 5 (3) (2) ibid to the extent of Rs. 1,24,43,500/- vide the Impugned Order. 2. Ld. Counsel for the Appellants submitted that that the total sum of Rs. 3,00,00,000/- was advanced by the Appellant Shri Kunjukutty Aniyankunju to the account of M/s Bharat Broadcasting Network Ltd. (the Company). The amounts were transferred from the following two accounts wherein the deposits were made by the said Appellant through inward remittances through proper banking channels: a. Rs. 95,00,000/- from NRE A/c No. 57047111670 held with State Bank of Travan....
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....ign Direct Investment (FDI) is also part of the Appeal paper book. Ld. Counsel further stated that the Show Cause Notice (SCN) dated 17.03.2014 was issued not only to the Appellants herein, but also to the Company and to its Managing Director Shri M. M. Hassan. Ld. Counsel contended that the Company and its Managing Director, even though involved in the same transaction, were exonerated and no penalty was imposed on them in the Impugned Order. Moreover, the Company received the final Approval Letter dated 20.06.2016 from the Ministry of Commerce and Industry, Government of India granting approval for transfer of shares to the Appellant Shri Aniyankunju. A copy of the Approval Letter is also part of the Appeal paper book. Ld. Counsel contended that even the charge of contravention of Section 3(c) of FEMA is not established as the Department has failed to show that the Appellant Shri Baby received any payment by order or on behalf of any person resident outside India. Ld. Counsel therefore pleaded to allow the two Appeals. 4. Ld. Counsel for the Respondent Directorate submitted that the Impugned Order has gone into details of the manner in which various contraventions of the provi....
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....cee No. 3 Company from the Noticee No.1 (Appellant Shri Baby), in lieu of a loan he had given earlier to the Noticee No.1. The Noticee No.2 has not filed any reply to the Show Cause Notice, nor has appeared in the enquiry conducted. The evidence gathered in this case indicates that the Noticee No.2 had a clear intention of investing in the Noticee No.3 Company engaged in broadcasting services. If he had to purchase the shares directly from the Company, he would have had to come under Foreign Direct Investment Scheme which is subject to the terms and conditions specified in Schedule 1 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations 2000. As per the said schedule, an Indian Company may issue shares to a person resident outside India subject to the limits prescribed in Annexure B to the said Schedule in accordance with the entry routes specified therein and the provisions of Foreign Direct Investment policy as notified by the Ministry of Commerce and Industry from time to time. The activity of the Noticee No.3 Company falls under the Broadcasting Content Service, which is specified as Government route, therefore requiri....
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....held that the Appellant Shri Kunjukutty Aniyankunju has not paid any money to the Appellant Shri Joju Baby for the purchase of shares. It has also been recorded in the Impugned Order that the Appellant Shri Kunjukutty Aniyankunju had initially got the shares issued in the name of his close relative Shri Joju Baby, who was a resident as against him being a non-resident, even though the amount of Rs. 3,00,00,000/- was transferred by the Appellant Shri Kunjukutty Aniyankunju to the account of the Company, so as to avoid obtaining the approval of the Government for the Foreign Direct Investment at that stage. Besides the aforementioned contraventions, penalty of Rs. 50,000/- has been imposed on the Appellant Shri Baby, as he failed to explain the source of funds for 44,350 shares out of 12,44,350 shares. 7. We find that the Company had moved Form FC TRS to the RBI through the Authorized Dealer Bank on 22.10.2008 for approving the transfer of 12,44,350 shares that had happened on 05.08.2006 from the Appellant Shri Joju Baby to the Appellant Shri Kunjukutty Aniyankunju. Admittedly the RBI advised the Company to obtain the approval of the FIPB for the said transaction. The Application ....
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.... the approval of Government of India in respect of investment made by non- resident including the Noticee No.2. I feel that since the FIPB Approval has been received subsequently, it will not be just and proper to penalize the Noticee No.3 for contravention of Regulation 4 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000 1, therefore, drop the said charges against the Noticee No. 3. Show Cause Notice has been issued to the Noticee No.4 in his capacity as the Director in charge of the Noticee No.3 Company at the time when the contravention alleged against the Company took place. Since I have already dropped the charges against the Noticee No.3 Company, the charges against the Noticee No. 4 also would not stand and hence, I drop the charges against the Noticee No.4." It is therefore clear that for the same transaction the Ld. AA drop the charges against the two other Noticees viz the Company and its Managing Director Shri M. M. Hassan, on the basis of the Ex-post-facto approval for the said transaction by the Competent Authority. On perusal of the reply dated 04.07.2025, we find that the Respondent Directorate h....