TaxTMI 
TaxTMI 
2026 (3) TMI 1319
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....on 3(b) of FEMA, read with Section 42 of FEMA, and penalty of Rs. 1,00,00,000/- for the contraventions of Section 3(d) of FEMA read with Section 42 of FEMA, vide the Impugned Order. The Appellant has complied with the making of the pre-deposit of Rs. 30,00,000/- in the form of FDRs as ordered by this Tribunal on 18.03.2025. 2. Ld. Counsel for the Appellant stated that as per allegations, M/s S.R. & Co. and its partners namely Shri Bharat Bhai G. Patel, Rajender Kr. Agarwal, Rajinder Kr. Patel, Hasmukhbhai Patel, Nalin A. Patel, Rameshbhai Patel, Jayanti Bhai Patel, Dashrath Bhai Patel, Vishnu Bhai Patel and Jagdish Bhai Patel and its employee Shri Babu Lal Patel were engaged in receiving and making payments to different persons in India under the instructions of persons resident outside India, without the general or special permissions of Reserve Bank of India (RBI). Accordingly on the basis of investigation conducted by the Respondent Department, the Assistant Director of Respondent Directorate filed a Complaint under Section 16(3) of FEMA alleging that M/s S.R. & Co. and its partners have contravened the provisions of Section 3(b), (c) & (d) of FEMA for receiving and making pa....
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....port. He further submitted that the Department did not bring on record any evidence to show that the said amounts were as a part of hawala transactions and not of diamond business of Appellant. The fact of export and import of diamonds by the Appellant is nowhere disputed by the Respondent. 5. Ld. Counsel for the Appellant stated that the Impugned Order of Ld. Special Director in holding the appellant and other guilty for the contravention of Section 3(d) of FEMA has been rightly set aside by the Tribunal in its order dated 12.06.2009 whereby the Tribunal at para no. 46 clearly held that it was difficult to imagine that last described transaction after happening of first two i.e. when the same amount of money was received and further paid then how further payment could be made again of the very amount in consideration of or in association of acquisition of an asset/ property outside India. The Impugned Order did not describe any different amount for contravention of Section 3(d) of FEMA 1999 but the amount of receipt as well as payment in contravention of Section 3(b) and (c) which had consumed the total money. The Respondent Directorate being aggrieved by the Order dated 12.06.....
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.... partner of M/s S.R. & Co. While making these submissions, the written submissions filed on behalf of the Noticee no. 1, however, do accept that out of the seized amount of Rs.38 lakhs from the premises of Shri Rajender Kumar Aggarwal (Noticee No.2), an amount of Rs.18 lakhs did, in fact, belong to M/s. S.R. & Co. (Noticee No. 1). 7. Ld. Counsel for the Respondent Directorate cited para 56.4 from the Impugned Order: "I would like to deal with the aforesaid contention here. The Noticee No.1, in its reply dated 14.10.2008, has given the composition of the Firm, as per partnership deed dated 15.12.2005, which is tabulated at para 53.2 supra. A perusal of the aforesaid table would show that Shri Rajender Kumar Aggarwal (Raju Aggarwal) who is the Noticee no.2 in these proceedings is one of the partners having a share of 16% in the profit and losses of the Firm. It cannot be argued by the notice no.1 that the acts of omission and commission of the aforesaid partner, whose substantive depositions, significantly, have remained intact, are only to his own peril and that the Firm has no connection whatsoever in the conduct of its partners. As per the partnership deed, the partner....
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....d covertly and in stealth where the tracks and trails are erased by the people who engage in this activity. Some evidence were recovered which shows the preponderance of probability which on being confronted were accepted in the statements which were later on denied. In this case, the recipients of the payments had expressly admitted that they had been receiving the payments from the Noticee Company through its employee Shri Babu Lal and also confirmed by two of its partners, namely, S/Shri Rajender Kumar Patel, Noticee No.4 and Bharat Bhai G. Patel, Noticee No.3 as also by Shri Rajender Kumar Aggarwal, Partner and Noticee No.2 (Appellant) whose substantive depositions remained intact. Further, S/Shri Sunil Madnani and Manish Kumar, who had been the other recipients, had also not retracted from their inculpatory statements. With Shri Yogesh Kohli, Sunil Madnani and Shri Neeraj Pahwa having categorically identified their mobile phone numbers appearing on the call details of the phones used by the Noticee Firm and Shri Babu Lal, its employee coupled with the depositions of the aforesaid recipients providing lucid details of the payments received over a period of time where the recipi....
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.... Counsel for the Respondent Directorate prayed to uphold the imposition of personal penalty of Rs.1,00,00,000 only (Rupees one crore) on Shri Rajinder Kumar Aggarwal, Partner in M/s. S.R. & Co. under Section 13(1) of the FEMA for having contravened the provisions of Sections 3(c) of FEMA read with Section 42 of FEMA; personal penalty of Rs.1,00,00,000/- only (Rupees one crore) for the contravention of Section 3(b) of FEMA read with Section 42 of FEMA on Shri Rajender Kumar Aggarwal, Partner in M/s. S.R. & Co. under Section 13(1) of the FEMA; and personal penalty of Rs.1,00,00,000/- only (Rupees one crore) for the contravention of Section 3(d) of FEMA read with section 42 of FEMA on Shri Rajender Kumar Aggarwal, Partner in M/s. S.R. & Co. under Section 13(1) of the FEMA. Ld. Counsel therefore pleaded to dismiss the Appeal. 11. We have considered the rival submissions and the material on record. We find that it is on record that vide Order dated 12.06.2009 the Appellate Tribunal for Foreign Exchange allowed the Appeals of various Appellants viz Appeal Nos. 21/2009, 22/2009, 23/2009, 24/2009, 26/2009, 28/2009, 31/2009, 32/2009, 33/2009, 34/2009, 35/2009, 41/2009, 36/2009, 37/2009, ....
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.... also contended that the bank accounts being maintained by Rajinder Agarwal in various banks as provided in his statement of 10.01.2007 & 06.02.2007 would show that he is partner of many Firms and Companies namely M/s. Rajmala Exports (Pvt.) Ltd., M/s. Sachit Enterprises, M/s. Kapil International and M/s. Soperb Diamonds (P) Ltd., which was being run by him at the same premises; that he was, at the material time, carrying out his export and import business of diamonds in the names of various Firm/Companies and his explanation of the documents given to the officers of Enforcement is a proof to he reckoned with that all the recipients of various amounts were in the business of diamonds, that whatever he has done was in the course of his diamond business; that the facts and circumstances lead to the conclusion that he acted in his personal capacity and not as a partner of the Appellant Firm; that in view thereof, it is submitted that the impugned order holding the Appellant guilty of the charges in respect of Rs. 17,41,20,000/- is liable to be quashed and set aside. xxxxx We have given our careful thought and consideration to the respective submissions made on behalf of th....
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....the Appellant Firm and since his statements are not incriminating the Appellant Firm, the charges as made out against the Rajender Kumar Aggarwal can be defended by him only. Since the seizures were made from his own business premises and not of the Appellant Firm, it cannot be said that the acts committed by him is in the refer course of the partnership business of the Appellant Firm. xxxxx In Appeal Nos.31 to 39/2009, we find that recovery of the Indian currency is made from the bank lockers or premises not of the partnership Firm but from the places in the exclusive control of one partner of M/s. S.R. & Co. names Rajender Kumar Agarwal. As the recovery has been made from single partner so the recovery cannot be implanted on any other partners of M/s. S.R. & Co. including the Firm. Moreover, none of the partners or employees who have filed these and against whom penalties imposed are neither responsible nor in charge of the partnership business which is mainly handled by Rajender Kumar Agarwal. Hence Invocation of Section 42 of FEM Act, 1999 against them is totally bad in law. Moreover, admissional statements of Rajender Kumar Agarwal are not incriminating against the....