9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (2) TMI 317 - AT - FEMASeizure order made under FEMA - remitting foreign exchange within a short span of few months no import took place against those outward remittances - Commissioner set aside seizure order - HELD THAT - We find that an elaborate order has been passed by the Commissioner/Competent Authority after considering all the issues. It not only considered legal but factual issues raised by the parties. If the case in hand is taken in chronological order it started at the instance of M/s Sunshine Global Importers said to have been managed by one Ramash Babu Srinivasan. The bank account in the name of the company was opened along with the Certificate of Importer Exporter Code Service Tax Registration Certificate Pan Card E-tax Payment etc. It was with Yes Bank and even before the Indusind Bank where the account opening form application along with Pan Card was submitted for registration of MSME by the Govt. of Tamil Nadu. The amount of Rs.112.27 Crores was remitted from the account of M/s Sunshine Global Importers. The starting point of the investigation should have been the bank accounts of the aforesaid company to find out as to from where a sum of Rs.112.27 Crores was deposited. It has to find out the source behind the deposit. However instead of finding out the source to deposit Rs.112.27 Cores in the account of M/s Sunshine Global Importers the appellant had tried to collect the evidence from the company from where the money was transmitted leaving the first point of investigation. Appellant even failed to make serious investigation to find out the person holding five companies in Hong Kong in whose accounts the remittance of Rs.112.27 Crores was made. It is despite expiry of long period and in fact this Tribunal had provided additional time to the appellant to complete the investigation. They could not complete the investigation though period for it was got curtailed on account of the order passed by the Division Bench of Delhi High Court preponing the date of hearing of the appeal with a direction that the appeal should be heard without adjournment on 04.11.2024 though 5th December 2024 was the date fixed by the Tribunal. What we find is that the appellant failed to collect the material to make out a case for contravention of Section 4 of the Act of 1999. The case could not have been taken against the respondents based on the statements of few persons without corroborative evidence and that too relying on the statement of Sawan Bohra who retracted his statement. The statement of Bharat Kumar has also been recorded but without any corroboratory evidence. In fact M/s J.G. Group have been referred without showing it to be a legal entity in that name. Thus we find that till date the appellant has failed to collect the evidence to the extent required for making out a case against the appellant for the contravention of Section 4 of the Act of 1999. Thus we find no reason to cause interference in the order. The appeal is accordingly dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this case include: 1. Whether the seizure order under Section 37A of the Foreign Exchange Management Act, 1999 (FEMA) was justified. 2. Whether there was sufficient evidence to establish that the remittance of Rs.112.27 Crores by M/s Sunshine Global Importers to five offshore entities was in violation of Section 4 of FEMA. 3. Whether the investigation conducted by the Directorate of Enforcement was adequate and whether it identified the true beneficiaries of the remitted funds. 4. Whether the delay in the investigation affected the validity of the seizure order. ISSUE-WISE DETAILED ANALYSIS 1. Justification of the Seizure Order under Section 37A of FEMA Relevant Legal Framework and Precedents: Section 37A of FEMA allows for the seizure of properties if it is believed that foreign exchange, foreign security, or immovable property outside India is held in contravention of the Act. Court's Interpretation and Reasoning: The Tribunal examined whether the seizure order was supported by adequate evidence and whether the procedural requirements were met. The Tribunal noted that the Commissioner set aside the seizure order, citing a lack of substantive evidence and procedural delays. Key Evidence and Findings: The Tribunal found that the appellant failed to provide sufficient evidence linking the remittance to a violation of Section 4 of FEMA. The statements of individuals associated with the offshore entities were found to be uncorroborated. Conclusions: The Tribunal concluded that the seizure order was not justified due to insufficient evidence and procedural deficiencies. 2. Evidence of Violation of Section 4 of FEMA Relevant Legal Framework and Precedents: Section 4 of FEMA prohibits the holding of foreign exchange, foreign security, or immovable property outside India, except as provided by the Act. Court's Interpretation and Reasoning: The Tribunal assessed whether the remittances were made in violation of Section 4. The Tribunal emphasized the need for concrete evidence to establish a contravention of the Act. Key Evidence and Findings: The Tribunal noted that the appellant relied heavily on statements from individuals, many of which were retracted or lacked corroboration. The investigation did not conclusively trace the funds to the respondents or establish their involvement in the alleged violations. Conclusions: The Tribunal found no evidence of a contravention of Section 4, as the appellant failed to establish a direct link between the respondents and the remitted funds. 3. Adequacy of the Investigation Relevant Legal Framework and Precedents: The adequacy of an investigation is measured by its thoroughness and the evidence it produces. Court's Interpretation and Reasoning: The Tribunal scrutinized the steps taken by the Directorate of Enforcement in their investigation. The Tribunal found that the investigation was incomplete and lacked focus on critical aspects, such as tracing the source of the funds. Key Evidence and Findings: The Tribunal highlighted the failure to identify the actual source of the Rs.112.27 Crores and the lack of substantial evidence linking the funds to the respondents. Conclusions: The Tribunal determined that the investigation was inadequate and did not support the claims made by the appellant. 4. Impact of Delay on the Seizure Order Relevant Legal Framework and Precedents: Procedural delays can affect the validity of enforcement actions if they result in prejudice to the parties involved. Court's Interpretation and Reasoning: The Tribunal considered whether the delay in the investigation undermined the seizure order. The Tribunal noted that the delay contributed to the lack of evidence and weakened the appellant's case. Key Evidence and Findings: The Tribunal found that the delay was significant and impacted the ability to gather timely and relevant evidence. Conclusions: The Tribunal concluded that the delay was detrimental to the appellant's case and contributed to the decision to set aside the seizure order. SIGNIFICANT HOLDINGS Core Principles Established: The Tribunal reinforced the principle that enforcement actions under FEMA must be supported by concrete and corroborated evidence. Procedural delays and reliance on uncorroborated statements weaken the case for seizure orders. Final Determinations on Each Issue: The Tribunal dismissed the appeal, upholding the Commissioner's decision to set aside the seizure order. The Tribunal found no contravention of Section 4 of FEMA and determined that the investigation was inadequate and delayed.
|
