TaxTMI 
TaxTMI 
2026 (4) TMI 434
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....ection 3(b), Section 3(c) and Section 3(d) of FEMA, 1999 various provisions of Foreign Exchange Management Act, 1999. 2. As per the facts of the case, an information was conveyed regarding one Shri. Ratan Das of M/s Light & Sound Forex Private Limited, No.10/30, 10th Main Road, 50 Feet Road, 2nd Block, Banashankari 1 Stage, Bangalore 560 050, who has been carrying out large scale hawala (unauthorized transfer of foreign exchange) transactions between India and Singapore, Dubai, United Kingdom, Australia, Hong Kong etc and also distributing compensatory payments in Kerala. Karnataka, Mumbai, Chennai & Delhi, on the instructions of persons resident outside India. The Officers of Directorate of Enforcement, Bangalore Zonal Unit conducted search of the business premises of M/s Light N Sound Forex Private Limited on 17.12.2007 under the provisions of Sec. 37(3) of Foreign Exchange Management Act, 1999 (herein after referred as FEMA, 1999) read with Section 132 of Income Tax Act, 1961. Consequent to the search Indian currency of Rs. 1,09,75,000/- and foreign currencies having a face value of approximately Rs. 10 lakhs, incriminating documents, one laptop, one pen drive and three SIM C....
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....ilable in the seized pen drive, Sh. Ratan Das admitted that the data pertains to unauthorized transactions done by him. On enquiry, he further stated that whenever he received any order from local parties to send money abroad through unofficial channels, he would calculate the equivalent amount at the prevailing exchange rate and add his commission and the other charges for the transfer of the amount and request the local parties to pay him the particular amount in Indian Currency corresponding to the foreign exchange to be transferred. He also ascertains from them the details of the beneficiary to whom the foreign exchange is required to be transferred such as their name, name and address of the bankers of the beneficiary, account number, swift details etc. He used to charge commission at the rate of 0.75% to 1%. Once agreed, he collected the Indian money at Bangalore and would then inform the contacts abroad of the requirement and the details as to where the foreign currency was required. He used to send messages to his contacts abroad by Fax through some PCO's in his area. He also communicated the 318 above details through ISD in PCO's near his office or residence. After....
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....d that the said person had received compensatory payments by order of persons resident outside India from Sh. Ratan Das, the officers of Enforcement Directorate caused follow up action in this matter and identified that the person whose name is entered in the PD-1 documents as "Anis". "Anish" & "Aneesh" was Sh. Anish Sood, Managing Partner of M/s Fashion Flash functioning from Mota Royal Arcade, Brigade Road, Bangalore. Shri Anish Sood was summoned under Section 37 of FEMA, 1999 read with Section 131(1) of the Income Tax Act, 1961 for appearance before the Assistant Director, Directorate of Enforcement on 25.3.2010. Sh. Anish Sood accordingly appeared and his statement was recorded. In his statement dated 25.3.2010, Sh. Anish Sood interalia stated that he knows Sh. Ratan Das, who was introduced to him by Sh. Sanjeev Yadav of M/s Sivam Forex Private Limited. He and Sh. Sanjeev Yadav were running M/s Shivam Forex Private Limited together in the premises of M/s Fashion Flash. At that time, Sh. Ratan Das used to come to meet Sh. Sanjeev Yadav and that he (Anish Sood) used to buy liquor bottles from Sh. Ratan Das frequently. During the above proceeding, Shri. Anish Sood was shown ....
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....er the said chart, he had arranged to transfer foreign exchange totalling US$ 1855262, Sing$ 530000, CHF11500 and Euro 21101 through Sh. Ratan Das in lieu of Indian currencies collected by him from his customers. The entry dated 24/08/2006 Rs. 1,96,000/ & entry dated 15/11/2006 for Rs. 5,00,000/- gave no indication of the equivalent foreign currencies that were arranged to be transferred/paid abroad. He also does not remember how much foreign exchange of that Indian money was transferred on his behalf. He did not have with him the identity details of persons viz., Lebius Mattews, Ranjit, Chandra, Amar Navneethan, Heera, Ralph, Chandru, Sameer etc, whose names are figuring in the said PD-1 document together with his (Anish Sood) name. Some of them came to his shop and handed over the amounts that were to be transferred out of India for some beneficiaries abroad along with the beneficiary details and since it was not his official business, he neither maintained any account of such transaction entered by him with Sh. Ratan Das, nor he maintained the details of such person who came to him for such illegal transfer of foreign exchange. Once the equivalent foreign exchange had been arran....
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....d come asked him for help and that he did not know the purpose for which they were sending the money abroad through unauthorized channels. On being questioned about the valuation of the imports carried out by him, Sh. Anish Sood stated that his imports had been very less and from different countries and that he did not do any under-valuation of his imports. Sh. Anish Sood vide affidavit dated 29.3.2010 contended that his statements were recorded under force and no reliance should be placed on them as they were not voluntary. The affidavit of Shri Anish Sood was considered by the Deputy Director, Directorate of Enforcement, Bangalore, who vide letter dated 1.04.2010 addressed to Shri. Anish Sood interalia rejected all the contentions/allegations contained in the said affidavit as devoid of merit and rejected the same. The investigation conducted by the Enforcement Directorate and the material evidences discussed above appeared to establish the following facts: i. Shri. Anish Sood had collected Indian currencies from his customers, who required foreign exchange abroad through non-banking channel and handed over the Indian currencies, after deducting his commission, to ....
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....out the general or special permission of the Reserve Bank of India; c) Sec.3(b) of FEMA, 1999 in as much as he had paid during the period March 2006 to April 2007, amounts totalling Rs. 12,52,700/- to two persons in India by order of persons resident in Singapore for their credit. He was thus, proceeded against in terms of Section 16 of FEMA, 1999 for determining his penal liabilities in terms of Section 13(1) of FEMA, 1999. The Assistant Director, Directorate of Enforcement, hence filed Complaint dated 27.4.2012 under Section 16(3) of FEMA, 1999 before the Special Director, Directorate of Enforcement. A Show Cause Notice F.No. T4/02/BAN/2012 dated 26.5.2012 was issued by the Special Director, Directorate of Enforcement, to Sh. Anish Sood @ Aneesh @ Anis i.e. the appellant on the said complaint and the documents relied thereon, requiring him to file a reply within 30 days from the receipt of Show Cause Notice as to why adjudication proceedings as contemplated under Section 16 of FEMA, 1999 should not be held against him for the alleged contraventions and why Penalty as provided under Section 13(1) of FEMA, 1999 should not be imposed on him for the alleged contraventi....
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....r, the pen drive was neither protected with proper sealing under Panchnama at the time of its seizure nor the said extraction and printing of the data took place in the presence of witnesses and under Panchnama. Accordingly, the impugned print outs i.e. item No.6 in the relied-on Documents (RUD Annexure to the Complaint) was a highly vitiated and inadmissible document. By placing reliance on the impugned print out, the Adjudicating Authority had seriously erred in facts and law. The Ld. counsel further contended that the Adjudicating Authority had seriously violated section 16 (6) of FEMA the Rules and procedure by unnecessarily keeping the adjudication pending for 5 years and then suddenly deciding it without giving a fresh hearing for the say of the Appellant. Prayer is accordingly made to allow the present appeal. 4. Ld. Counsel for the respondent argued and controverted the submissions made by the appellant and the same will be reproduced in our discussions and findings in paras below. 5. We have heard the arguments of both sides and regarding the issue that the pen drive as an evidence cannot be used as the said pen drive was not seized from the premises of the app....
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....esence. Neither of them disputed the contents of the data retrieved from these electronic media at that time, nor later when they were confronted with the same in the course of investigation. He also referred to corroborating evidence by way of statements of witnesses. Having considered the entire conspectus of facts, the rival contentions of the parties and the material on record, we are the view that the data found on the pen-drive was both admissible in evidence and constituted authentic evidence against the appellants. This issue is thus decided against the appellant and in favour of respondent. 6. Regarding the issue of retraction of voluntary statement and the same being inadmissible, we are of the view that simple retraction or denial has no value as there is nothing on record that the said statement was not voluntary. Moreover, the same is corroborating the documentary evidence already on record like the statement of Ratan Das and also the authenticity of contents of the pen drive are not disputed as the data was derived from it at the time of investigation itself and it rules out any contention regarding doubt on the material derived from pen drive. In fact, the stat....