TaxTMI 
TaxTMI 
2026 (5) TMI 1600
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....bmitted that the Appellant had stated that the said Flat was purchased by him through his close family friend/relative Shri Siddharth Kandpile, a Dubai based NRI for helping by way of giving consultation for Shri Kandpile's construction related business. It was also alleged that the Appellant admitted that his family members namely his wife Smt. Darshana D. Desai and his son Shri. Tejas D. Desai were not aware of the said deal. It is further alleged that AED 7,79,000/- receivable against consultation fee for rendering services to Shri Siddharth Kandpile in his business has been invested for purchasing the said Flat admeasuring 89.08 Sq. Meters in Dubai. It was submitted that the said Flat accrued income of AED 1,35,000/ by way of renting it out for two years which was deposited in the bank account of Shri. Siddharth Kandpile as he had been given Power of Attorney to deal with the rent, maintenance, etc.. It was also the case of the Respondent that the Appellant was in the process of bringing back the amount involving the cost of the said Flat and the rent received from it back to India. 3. Ld. Counsel for the Appellant stated that the Appellant is also the registered owner of an....
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....12.02.2020 of Shri. Siddharth Kandpile inter-alia stating that the said Flat and the rental income had been enjoyed by Shri. Siddharth Kandpile and that the Appellant and his family had no legal right or claim on the said Flat. The Respondent has also failed and/or neglected to take into consideration the letter dated 16.03.2020, of Shri. Siddharth Kandpile to the Respondent, after issuing of Summons to Shri. Siddharth Kandpile, inter-alia stating that Shri. Siddharth Kandpile is the beneficial owner of the said Flat and that the said Flat was also transferred back in his favour, without any consideration. Despite bringing back foreign exchange amounting to Rs. 1,77,63,590/- as mentioned in the Seizure Order No. 01/2020, on 05.05.2020, the Respondent deviously and only for bettering its case mischievously contends that there is no link of the receipt of export proceeds having been established with the amount received and thereby illegally continues to hold on to the property of the Appellant. A copy of Certificate from the HDFC Bank confirming the receipt of foreign inward remittance of Rs. 1,86,96,939/ in the Appellant's bank account was filed. The Respondent also failed to ac....
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....Kandpile and with a view to buy peace as permissible under Section 37A(4) of FEMA and under advise from the Chartered Accountant and Advocate of the Appellant and with a view to put an end to the present investigation, the Appellant's daughter transferred an amount of USD 2,49,992/-(equivalent to AED 9,14,000/-) to the account of the Appellant, which otherwise Mrs. Urvi Naik/Desai had to repay to Shri Siddharth Kandpile for the financial assistance given by him to her in the year 2014. The said fact was confirmed by Mrs. Urvi Naik/Desai by her email sent to Respondent on the same date. Copies of emails of Shri Siddharth Kandpile and Mrs. Urvi Naik/Desai confirming the same were filed. The Appellant thus justified the linkage of funds repatriated through USA by explaining that foreign exchange equivalent to the cost of Flat in Dubai, U.A.E. was adjusted against financial help given by Shri. Siddharth Kandpile to his daughter to set up her business and to buy a house in Texas, USA, to the tune of AED 9,00,000/- during the year 2014. The Appellant's daughter viz. Mrs. Urvi Naik/Desai, at the instance of Shri Siddharth Kandpile remitted foreign exchange of AED 9,14,000/- i.e. U....
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....-13 or afterwards as the said property had not been purchased by him or his family members. Smt. Darshana D. Desai, wife of Shri Devendra N. Desai and Shri Teja D. Desai, Son of Shri Devendra N. Desai in their respective statements stated that they were not aware of the above said property deal. Shri Siddharth M. Kandpile in his reply dated 16.03.2020 to Summon dated 03.03.2020 submitted that Shri Devendra N. Desai is an experienced Civil Engineer and that they used to exchange ideas and discuss issues regarding interior and other construction matter. Shri Devendra N. Desai had given him all the help and advice without any consideration and expectation and he had love and affection for him and he thought of reciprocating for his selfless help and consultation by buying an apartment in his name so that he could stay as and when he settled in Dubai. He also confirmed that the said residential flat was beneficially owned by him and its entire income by way of rent also belonged to him since rent was deposited in his account. In affidavit dated 12.02.2020, Shri Siddharth M. Kandpile confirmed that he had provided the entire funds to purchase the said property in the names of the Appell....
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....d. Counsel for the Respondent Directorate submitted that the Appellant in written submission has not denied the fact that the aforementioned property in Dubai was held in his name and names of his wife and son. The WhatsApp chats extracted during the investigation also indicate that the Appellant is owner of the flat. The Appellant's mere contentions that payment for acquiring the property was made by Shri Siddharth M. Kandpile and that property was in his possession and rental income from the said property was received in the bank account by Shri Siddharth M. Kandpile do not assist them. In view of the above relevant provisions of FEMA and Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015 and facts as above, the Authorised Officer had reasons to believe that immovable property is suspected to have been held in contravention of Sections 4 and 6(3)(h) of FEMA and Regulation 3 of the Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015. Ld. Counsel argued that the sufficiency of the said reasons to believe cannot be questioned. Therefore, in terms of Section 37A(1), ther....
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....00014535 of Shri Devendra N Desai from Ms. Urvi Desai on 05.05.2020 by declaring the purpose of the said inward remittance as GIFT. The petitioner has further contended that however no link of the receipt of export proceeds is established with the amount sent by his daughter under the head namely "GIFT". The Petitioner has also contended that all the procedure provided under section 37A of the Foreign Exchange Management Act, 1999 were followed at the time of issuance of Order of Seizure No. 01/2020 dated 02.03.2020. The respondent was in possession of the foreign exchange outside India in contravention of Section 4 of Foreign Exchange Management Act, 1999 and therefore, the equivalent value of the property of Shri Devendra Desai in India to the tune of Rs. 1,77,63,590/- is liable to be seized in terms of the provisions of sub-section (1) of section 37A of FEMA, 1999 and in terms of G.S.R 702(E) dated 16.09.2015 & G.S.R. 701(E) dated 16.09.2015 issued by the Central Government. 11.4 I find that Section 37A(4) provides that "The order of the Competent Authority confirming seizure of equivalent asset shall continue till the disposal of adjudication proceedings and thereafter....
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....sted his daughter who is also related to Siddharth, to remit foreign exchange of aed 914000/- i.e. USD 249992/-. However, in the absence of cogent evidence, the same does not seem convincing one. Even otherwise this aspect of repatriation of funds under Section 37A(4) of FEMA, 1999 appears premature at this stage. This aspect could be taken at appropriate time at the appropriate level i.e. adjudicating authority. 12. In view of the above discussions and considering the fact that these are interim proceedings and the matter of repatriation of export proceeds of services is still in dispute, I do not find any reason to interfere in the impugned Seizure Order at this stage in the case where the validity of Seizure Order is unquestionable. Accordingly, I hold that the impugned order of seizure no. 01/2020 dated 02.03.2020 seizing the immovable property to the extent of Rs. 1,77,63,590/- which is equivalent to AED $ 9,14,000 of foreign exchange held outside India by the respondent in terms of Section 37A(1) is legal and proper and therefore the impugned Seizure Order No. 01/2020 dated 02.03.2020 by the petitioner Asstt. Director, Directorate of Enforcement, Mumbai is confirmed.....
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....e of Shri Devendra N. Desai and Shri Tejas Desai, son of Shri Devendra N. Desai. We may add that Shri Devendra N Desai has taken the sole responsibility for the transaction which has also been corroborated by his wife and son, who denied being aware of the said property deal. It is obvious that the property in Dubai was being held by the Appellant on the date of the seizure. In fact, even when the provisions of Section 37A were introduced in FEMA, the property in Dubai was being held by the Appellant. Therefore, the argument of the Appellant that the provisions of Section 37A(1) has been applied retrospectively cannot be accepted. 14. The Ld. Competent Authority has confirmed the seizure of the property in India of the Appellant equivalent in value to the property being held by the Appellant in Dubai. In this regard, Ld. Competent Authority has accepted and confirmed the prima facie basis of contravention of Section 4 of FEMA. Para 10.7 of the Impugned Order brings this out: "10.7 The respondent in written submission has not denied the fact that the aforementioned property in Dubai was not held in his name and names of his wife and son. The WhatsApp chats extracted duri....
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.....02.2020 for the amount AED 9,00,000. The Appellant failed to produce any document to demonstrate the acquisition and holding of said property in Dubai with the permission of RBI. We therefore agree with the findings of the Ld. Competent Authority that there was prima facie basis available with the Assistant Director of the Respondent Directorate to invoke the provisions of Section 37A(1) and have reasons to believe to suspect that Foreign Exchange worth total amount of AED 9,14,000 was held outside India in contravention of Section 4 of FEMA. We may clarify that the contravention of Section 4 of FEMA and other Sections cited in the matter shall however be established only after the adjudication proceedings before the Adjudicating Authority is decided through an Order under Section 13(1A) of FEMA. 16. The Appellant has also pleaded that the said property in Dubai has ceased to be in his name and that of his family members, which is evident from the aforementioned Title Deed dated 16.02.2020. The Appellant has further pleaded that the foreign exchange of amount USD 2,49,992 (equivalent to AED 9,14,000) was transferred to the Appellant's Account No. 02271000014535 in the HDFC Bank....
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.... said document. From the facts of the case, it is also clear that the said property in Dubai was held in the name of the Appellant and his family members with effect from 28.03.2012 as is evident from the Title Deed of the same date. Again, the Respondent has not challenged the said Title Deed. It is on record as brought out by the statement of the Appellant which is also corroborated through communication from Shri Siddharth M. Kandpile that the payment for the said property was made by Shri Kandpile, as compensation for the consultancy services rendered by the Appellant to Shri Kandpile in his construction business in Dubai. They also stated that besides the purchase value of AED 7,79,000 borne by Shri Kandpile, the amount of rent of AED 1,35,000 for two years was credited in the bank account in Dubai of Shri Kandpile. There is nothing to the contrary which has been brought on record. Subsequently, when the remittance of USD 2,49,992 equivalent to AED 9,14,000 was made by Ms. Urvi Desai, daughter of the Appellant to her father's account in HDFC Bank, Mumbai, the Respondent Directorate has rejected the explanation given by the Appellant even though corroborated through communicati....