2017 (10) TMI 459 - AT - FEMA

Proceedings contemplated under Section 51 of FERA, 1973 - Held that - In the case of Shri Joji Thelliankal, who had acted as an agent to identify NRE account holders, there was no fool proof evidence on record, to establish that Shri Joji Thelliankal received premium amount and thus it was found by the trial court that there is no corroborative evidence except the statements. It was held that no other evidence on the records placed to show that Shri Joji Thelliankal was indulging in any money transfer business. Therefore, the benefit of doubt was given to Shri Joji Thilliankal in the absence of any cogent evidence, as both David Mathew and Monikutty Augustine have denied for having taken part in any such translation knowingly. Therefore no penalty was imposed any penalty on Shri Joji Thailliankal, although it was found that he contravened the provisions of Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973. However, it is the admitted position that Shri P.R. Ganapathy who did not dispute the receipt of the money both in his reply to the Memorandum and during the personal hearing before the Authority. He only attempted to project it as investment from friends. It is correctly mentioned in the impugned order that his denial that he had not given money in return for the cheques/DDs as the statements recorded rather confirmed that the cheques/DDs were received after making payment in cash. Admittedly penalty amount has been deposited by the appellant. I totally agree with the impugned order passed against Shri P.R. Ganapathy. There is no infirmity in the order. Even I am of the view that routine small function such a big amount is not possible to receive as gift from NRI. It is evident that against the gift amount, the cash must have been given by the appellant. As the amount in question was unaccounted sources for his own benefit and directly involved in the contraventions of the provisions of Section 9(1)(d) of FERA, 1973.

Summary

Issues: Alleged contravention of the Foreign Exchange Regulation Act, 1973

Analysis:
1. The appellant organized an auspicious function and received gifts, including money in the form of Demand Draft and Cheque, which were disclosed to the Income Tax Authority.
2. Enforcement Directorate received information alleging contravention of the Foreign Exchange Regulation Act, 1973 by individuals residing in India.
3. A Memorandum was issued to the appellant, alleging contravention of Section 9(1)(d) of FERA, 1973, leading to proceedings under Section 50 of FERA, 1973.
4. The Memorandum accused the appellant of making payments to individuals residing outside India from NRE accounts without RBI exemption, resulting in a penalty imposition.
5. The appellant was asked to show cause for adjudication proceedings under Section 51 of FERA, 1973.
6. The appellant replied to the Memorandum and attended a Personal Hearing with the Counsel.
7. An Adjudicating Authority imposed a penalty on the appellant after considering the reply and submissions.
8. Statements from individuals involved revealed transactions and receipt of money, leading to penalties and investigations.
9. Lack of conclusive evidence led to the benefit of doubt given to one individual, while penalties were imposed on others based on statements and evidence.
10. One individual admitted to receiving money and attempted to justify it as an investment, leading to the affirmation of penalty imposition.
11. The unaccounted amount received by the appellant was deemed to be for personal benefit, resulting in contravention of FERA, 1973.
12. The appeal was dismissed for lack of merit.
13. No costs were awarded in the judgment.