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2023 (7) TMI 1125 - HC - FEMAOffence under FERA - sum received by petitioner from person outside India and the Petitioner was to make payment to various persons in India on behalf of the person outside India - contravention of the provisions of Section 9(1)(b) and 9(1)(d) of the FERA - HELD THAT - As after being unsuccessful in the first round, the E.D. had issued a second Show Cause Notice. The E.D. department had not recorded statement of any person who according to them had received any benefit from the said amount - There was no evidence to prove the petitioner guilty as regards proposed distribution. Petitioner had officially received these amounts and had shown the same in the Income tax returns. In fact, in the Order of the CIT (Appeals), it has been quoted that the assigning officer in his remand report dated 17th June, 2004 had admitted that seized cash seems to be cash on hand on the firm. There is nothing on record to prove that the Petitioner had committed an offence under Section 9 (1) (d) of the FERA Act. No case is made out for holding the Petitioner guilty for violation of Section 9(1)(d) r/w Section 64(2) of the Customs Act. The seized documents do not corroborate the fact of receipt and distribution of said amount by the Petitioner. This is a clear case where the Petitioner appears to have been deprived of his amount of Rs. 1,48,000/- without authority of law on a totally untenable basis. The Petitioner could have utilized the said amount, the value of which at the relevant time was substantial. Considered from all angles, the Respondents could not have retained the said amount depriving the Petitioner from his legitimate entitlement. We would, hence be justified in allowing interest to the Petitioner in allowing this Writ Petition. An amount of Rs. 1,48,000/- shall be refunded by the respondent to the petitioner within a period of four weeks from today with simple interest at the rate of 6% per annum from 12 May 1988.
Issues Involved:
1. Legality of the Appellate Tribunal's order dated 24 April 2004. 2. Entitlement to a refund of Rs. 1,48,000/- seized on 12 May 1988. Summary: Legality of the Appellate Tribunal's Order: The Petitioner challenged the Appellate Tribunal for Foreign Exchange's order dated 24 April 2004 under Articles 226 and 227 of the Constitution of India. The Petitioner argued that he was not given a fair opportunity to defend himself as the impugned order was passed in his absence due to his poor financial condition, which prevented him from attending the hearing in Delhi. The Petitioner contended that the two Show Cause Notices issued by the Enforcement Directorate (E.D.) were based on the same facts and seizure, and there was no evidence to hold him guilty. The Respondent, Union of India, argued that the Petitioner had admitted to receiving the notice of hearing but chose not to attend, and the Appellate Tribunal had no option but to proceed in his absence. Entitlement to Refund of Rs. 1,48,000/-: The Petitioner owned Zaibash Cloth Stores in Mumbai, which was raided by E.D. officers on 12 May 1988, resulting in the seizure of Rs. 1,78,000/- in cash. The first Show Cause Notice issued on 5 May 1989 alleged contraventions under Section 9(1)(b) and Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 (FERA). The Assistant Director of Enforcement found the Petitioner guilty and imposed a penalty of Rs. 30,000/-, which was deducted from the seized amount, and the balance was forwarded to the Income Tax Department. The Petitioner successfully appealed this order, and the FERA Appellate Board set aside the penalty. A second Show Cause Notice was issued on 25 May 1990, again alleging contraventions under FERA. The Deputy Director of Enforcement found the Petitioner guilty under Section 9(1)(d) and imposed a penalty of Rs. 22,000/-, dropping the charges under Section 9(1)(b). The Petitioner appealed to the FEMA Appellate Tribunal, which dismissed his appeal in his absence. The Petitioner also succeeded in an appeal before the Commissioner of Income Tax, who held that the seized cash was reflected in the firm's cash book and balance sheet. The Court found that there was no corroborative evidence to support the allegations against the Petitioner and that the E.D. had not recorded statements from any recipients of the alleged amounts. The Court concluded that the Petitioner was deprived of his money without authority of law and allowed the Writ Petition. Order: (i) The impugned order dated 24 March 2004 passed by the Appellate Authority is set aside. (ii) The Respondent is directed to refund Rs. 1,48,000/- to the Petitioner within four weeks, with simple interest at the rate of 6% per annum from 12 May 1988. Rule is made absolute.
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