TaxTMI 
TaxTMI 
2026 (3) TMI 661
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....revention of Money Laundering Act, it was revealed that the said company had taken a term loan of Rs.18.73 crores and cash credit limit of Rs. 5 crores totalling to Rs. 23.73 crores from the United Bank of India, Electronic City, Bengaluru for import of software from M/s. Bluetronics FZE LLC, UAE and though M/s. AGS Infotech Ltd, Bengaluru had remitted the above said amount to M/s. Bluetronics FZE LLC, UAE, and no goods were imported against these remittances. The United Bank of India, Electronic City, Bengaluru (herein after referred to as 'UBI') vide its vide letter dated 05.02.2015 had furnished copy of the account opening forms, transcript of the accounts and details of remittances made abroad in respect of the bank accounts held in the name of M/s AGS Infotech Ltd. The bank further suspected that the borrower has not utilised the loan amount sanctioned by the Bank for the purpose it was sanctioned. From the above said documents it was observed that M/s. AGS Infotech Ltd. is a company registered in India having its' corporate office at No. 29/1C, 1st Floor, South Block, Beratina Agrahara, Hosur Road, Electronic City Post, Bengaluru- 560100. Shri G. Dhananjaya ....
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....m the M/s. Bluetronics FZE, UAE totalling to Rs. 18,52,46,628, as discussed above. Shri S.M. Manivannan, the then Managing Director of M/s. AGS Infotech Ltd had been examined on 18/02/2015 under section 37(3) of the Foreign Exchange Management Act, 1999, in his statement, he interalia stated that he joined the company, M/s. AGS Infotech Ltd. as Managing Director in August 2009 and the other directors were Shri G. Dhananjaya Reddy, Shri Nagaraja, Shri Venkatesh, Smt. Veena Srinath; that this arrangement continued till the bank people came and reported that the land mortgaged as security for the loan was fraudulent; and that he had resigned from the company in January, 2011; that he further stated that he was authorized to sign on behalf of the company on the loan applications by the board of M/s AGS Infotech Ltd.; that he had signed the application to send remittance to the vendor, M/s. Bluetronics FZE, UAE; that Shri G. Dhananjaya Reddy & Shri Nagaraja were the authorized signatories for operations of all accounts with the UBI; that he had not seen the software that was to be imported from UAE. During the course of enquiries, Shri Dhananjaya Reddy had been also examined u/s 3....
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....s of Section 10(6) of FEMA, 1999 read with Regulation 6(1) of Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 by not utilizing foreign exchange so acquired from the authorised dealer for the purpose for which it was acquired and/or using the foreign exchange so acquired for a purpose for which acquisition of foreign exchange is not permissible under the provisions of the Act, to the extent of USD 4141000 equivalent to 18,76,34,554 ii) Shri S.M. Manivannan, The then Managing Director of M/s. AGS Infotech Limited and Shri G. Dhananjaya Reddy, and Shri S. Nagaraju were the Directors of M/s. AGS Infotech Limited during the relevant period, have contravened the provisions of Section 10(6) of FEMA, 1999 read with Regulation 6(1) of Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 by not utilizing foreign exchange so acquired from the authorised dealer for the purpose for which it was acquired and/or using the foreign exchange so acquired for a purpose for which acquisition of foreign exchange is not permissible under the provisions of the Act, to the extent of U....
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....on contravenes any provision of the FEMA or contravenes any rules, regulation, notification, direction or order issued in exercise of the powers under the Act, or contravenes any condition subject to which an authorization is issued by the RBI, he shall, upon adjudication, be liable to a penalty upto thrice a sum involved in such contravention where such amount is quantifiable, or upto 2 lakhs where the amount is non-quantifiable, and where such contravention is continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues. He stated that once the Adjudicating Authority decided that the Respondents have contravened the provisions of FEMA, the maximum penalty might have been imposed within the ambit of section 13(1) of FEMA. He stressed that the Adjudicating Authority did not examine the documents placed before him are very well within ambit of section 39 of FEMA, viz. presumption as to documents in certain cases. 4. On the other hand, the Ld. Counsel for the respondents submitted that the AA has already imposed the huge penalty to the extent of 27.39% to the amount of alleged contravention. She....
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....t in State of MP and Ors. Vs. Bharat Heavy Electricals [(1997) 7 Supreme Court Cases 1] in its order dated 14.08.1997 held that in a statute prescribing the provision for penalty equal to ten times the amount of entry tax, the statute prescribed only a maximum limit and did not prescribe an irreducible amount depriving the assessing authority of any discretion in this regard. The stand of the State in the case supra conceded that the assessing authorities are not bound to levy fixed penalty equal to ten times the amount of entry tax. In fact, in the present case the statute (FEMA) itself provides for a penalty up to thrice the sum involved in such contravention and thereby gives explicit scope to the Adjudicating Authority to exercise his discretion, albeit judiciously, for imposition of penalty. 8. In view of the discussion above, that the AA has already imposed the huge penalty to the extent of 27.39% to the amount of alleged contravention. Moreover, the imposition of penalty is a discretion of the AA seeing the facts and circumstances of the case and the mitigating circumstances. Also, as mentioned by the Ld. Counsel for the respondents above, in the cross appeals filed by th....