1992 (6) TMI 161 - AT - FEMA

Issues Involved:
1. Applicability of the Act to the appellant.
2. Validity of the notice under section 6(1) and section 7(1) of the Act.
3. Explanation of sources of funds for the acquisition of properties.
4. Validity of the Competent Authority's decision on forfeiture.
5. Alleged delay in proceedings.
6. Non-supply of "reasons to believe" under section 6(1).

Issue-Wise Detailed Analysis:

1. Applicability of the Act to the Appellant:
The appellant, being the real brother of a person detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, falls under the definition of "relative" as per section 2(2)(c) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. Consequently, all provisions of the Act are applicable to him.

2. Validity of the Notice under Section 6(1) and Section 7(1) of the Act:
The Competent Authority recorded reasons under section 6(1) on July 26, 1980, and served a notice on September 30, 1980. The appellant responded on February 11, 1981, but failed to provide documentary evidence supporting his claims. A subsequent notice under section 7(1) was issued, providing the appellant an opportunity for a personal hearing and to produce evidence, which he failed to adequately do.

3. Explanation of Sources of Funds for the Acquisition of Properties:
The appellant's explanations regarding the sources of funds for acquiring the properties were inconsistent and unsubstantiated. Initially, he claimed agricultural income but later introduced the concept of friendly loans and remittances from the U.K. The Competent Authority found these claims unsupported by documentary evidence. The appellant's balance-sheets and statements of assets and liabilities were deemed self-serving and unreliable.

- Remittance from the U.K.: The Tribunal had already determined in related cases that the remittance of Rs. 3,50,000 was utilized for purchasing land in the name of the appellant's brother and his wife, not for the appellant's properties.
- Loans from Different Parties: Affidavits from alleged creditors were insufficient as they lacked details of financial capacity and were not corroborated by credible evidence.
- Sundry Creditors: No details were provided for the claimed sundry creditors amounting to Rs. 77,264.
- Agricultural Income: The appellant failed to provide substantive evidence of agricultural income, lease details, or expenses, making his claims speculative.

4. Validity of the Competent Authority's Decision on Forfeiture:
The Competent Authority concluded that the sources of investment for the Vasant Vihar property and the compensation received for the agricultural land were not substantiated by legitimate income. Consequently, the properties were ordered to be forfeited. The Tribunal upheld this decision, emphasizing the lack of credible evidence to support the appellant's claims.

5. Alleged Delay in Proceedings:
The appellant argued that there was an inordinate delay in the proceedings. However, the Tribunal found that the delay was justified due to the complexity of the case, the need for thorough evidence collection, and the appellant's own requests for adjournments. The proceedings were deemed to have been conducted without avoidable delay.

6. Non-supply of "Reasons to Believe" under Section 6(1):
The appellant contended that the non-supply of "reasons to believe" under section 6(1) prejudiced his case. The Tribunal held that non-supply of reasons would only vitiate the proceedings if it caused prejudice, which was not evident in this case. Therefore, this contention was dismissed.

Conclusion:
The appeal was dismissed, affirming the Competent Authority's decision to forfeit the properties in question. The Tribunal found that the appellant failed to substantiate the sources of funds for acquiring the properties and that the proceedings were conducted fairly and without undue delay.

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