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2025 (2) TMI 686 - AT - FEMAPenalty imposed on the Respondent for contravention of Section 3(c) of FEMA - Order passed on the facts that the officials of Police Station Rahon Distt. Shaheed Bhagat Singh Nagar Punjab intimated the ED Office that they had seized an amount involved in Hawala transaction from two persons - Investigation was initiated by the Enforcement Directorate under the provisions of FEMA - Special Director (Appeals) has held that the statement was retracted by the Respondent at the first possible opportunity. HELD THAT - In response to the notice under Section 17(4) of the FEMA Act Sh. S.L. Chopra Sh. Ravi Chopra Advocate and Shri Pankaj Yadav Legal Consultant of Enforcement Directorate appeared for hearing. The appellant s AR referred to the fact that the statement was retracted by the appellant at first possible opportunity. Also it is seen from the records and submission of the appellant that the purchase of the car could not be completed hence no documentary evidence could be submitted. Further for the source of money the Appellant has filed CA certified copy of Cash book which explains the source of cash. Also it is seen from the order that no proper investigation has been made by the Adjudicating Officer to establish clear chain of events or link between persons involved and no effort has been made to trace or record a statement of Shri Rocky Singh or trace the trail of money. In the absence of any proof or sound basis for levy of penalty or clear chain of events allowing the appeal and directing the respondent to waive off the penalty and release the confiscated amount within 30 days of this order.
The Appellate Tribunal under SAFEMA at New Delhi considered Appeal No. FPA-FE-108/DLI/2018 filed by the Union of India, Deputy Legal Advisor (HO), Directorate of Enforcement, New Delhi, under the Foreign Exchange Management Act, 1999 (FEMA), seeking to set aside an order passed by the Special Director (Appeals), Delhi, and to restore an earlier order passed by the Assistant Director, Enforcement Directorate (ED), Jalandhar. The Assistant Director's order imposed a penalty on the Respondent, Sh. Ajay Kumar Bhardwaj, for contravention of Section 3(c) of FEMA and confiscated an amount of Rs. 5,75,000 seized from the Respondent in 2010.The key issue revolved around the alleged Hawala transaction involving the seized amount and the instructions received by the Respondent from individuals in the UK and India. The Adjudicating Authority found the Respondent's explanations unsatisfactory, leading to the penalty and confiscation. The Respondent contested the decision, claiming harassment and coercion by ED officials and disputing the veracity of the statements obtained.The Appellate Tribunal analyzed the evidence and arguments presented by both parties. It noted the lack of corroborative evidence linking the seized amount to the alleged transactions and individuals mentioned by the Respondent. The Tribunal highlighted discrepancies in the investigations, including the failure to verify the statements of key individuals and the absence of a clear chain of events establishing the alleged transactions.Ultimately, the Tribunal upheld the impugned order of the Special Director (Appeals), dismissing the appeal and affirming the penalty and confiscation imposed on the Respondent. The Tribunal concluded that the evidence and investigations did not warrant interference with the lower authority's decision.In summary, the Tribunal's decision hinged on the lack of substantiated evidence supporting the Respondent's claims and the failure to establish a clear nexus between the seized amount and the alleged transactions. The appeal was dismissed, and the penalty and confiscation were upheld based on the findings of the lower authorities.
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