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2024 (9) TMI 557 - AT - FEMAUnauthorised transactions in foreign exchange - search was conducted at the business and residential premises of the appellant which yielded foreign currencies pertaining to various countries, including US , Singapore , Euro, Hong Kong and Australia , in addition to a large amount of Indian currency - prima facie corroborate the information on the basis of the Directorate had initiated action against the appellant - HELD THAT - Joint Director has pointed out a number of discrepancies in the so-called agreements to sell and fabrication of said agreements is not ruled out. We find that very cogent issues have been raised therein for which no explanations are forthcoming from the appellant's side. Further, there is nothing to show that the transactions for the sale of land as claimed by the appellant materialized as balance payments were not received till date and no sale deeds were executed in favour of vendees. It cannot be believed that any vendee will give huge part- payment in cash. The said vendees have not filed their claims in any court or before ED. It is also not explained whether the so-called advances were refunded to the intending buyers after the sale transactions failed to fructify. Even the very contention that four different and almost identical transactions were entered into within a span of 10 days for sale four immovable properties owned by the members of his family are not credible to say the least especially as the appellant had failed to advance any such explanation in his earlier statement wherein very specific claims had been made. Thus, we are in full agreement with the Ld. Joint Director that explanations provided subsequently to justify the Indian currency seized as well as the documents produced to substantiate the explanations are the result of an afterthought and suffer from deep contradictions. Even otherwise, it is unlikely that any family will agree to sell most of its properties, without agreeing to purchase alternate better properties. Similarly, as regards the foreign currencies found, as already stated, the appellant had initially claimed that he had made six trips abroad to various countries, namely, Sri Lanka, Thailand, Hong Kong, Dubai, Singapore Australia. For undertaking the said trips, he used to purchase foreign exchange from different money changers and also the local market. He claimed that the foreign currencies seized were unspent balances of the foreign currencies which he had purchased in this manner. He undertook to furnish the details of his visits and purchases of foreign exchange made along with copies of his passport as evidence of his foreign trips and stated that he was not aware that after return from trips abroad he ought to have surrendered the unspent balance of foreign exchange to an authorized dealer within 180 days from the date of his return to India. There were also several discrepancies in the documents produced by him in support of claim that the foreign currencies were leftover balances of foreign currencies purchased by him in connection with his visits abroad. These have also been discussed in detail of the order Ld. Joint Director and are not being repeated here for the sake of brevity. When it was pointed out to him that there was no co-relation between the documents produced and the amounts of various currencies seized from his premises, he put forward a new claim that during his trips abroad, he visited many casinos and played various games and won prize money in various currencies including S 15,100, HK 12,100, US 600, Euro 500, Aus 1000 and UAE Dh 3350 and brought back various amounts of such foreign currencies to India. No proof was adduced for the claims made. Even if the claims were correct, it would mean that he failed to surrender the same to an authorised person within 180 days from the date of his return to India in contravention of the provisions of Section 8 of FEMA, 1999 read with Regulation No. 6A of the Foreign Exchange Management (Realisation, Repatriation Surrender of Foreign Exchange) Regulations 2000. Furthermore, the Appellant failed to explain the source of US 6200 seized at his premises. It is pointed out by the Ld. Joint Director that as per Rule 3 of Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulation, 2015 a person can only hold US 2000 foreign currency notes and hence the Appellant was in violation of the provisions of this rule and possession of the said money was not justified by the Appellant. 32. Having considered the entire gamut of facts commencing with the initial information received, the findings from the search operation, the initial explanations put forward and the explanations advanced subsequently, the findings recorded in the impugned order upon appraisal of the evidence by the authority below, we are of the view that the arguments and contentions put forward on behalf of the appellant, are self- serving and lack credibility and the appellant has totally failed to explain the seizure of Indian and foreign currency from the premises by way of any cogent and reliable evidence and that the findings of the Authority below are well supported by the material on record. Accordingly, we hereby confirm the penalties levied by the Ld. Adjudicating Authority vide order dated 30.09.2013, impugned before us.
Issues Involved:
1. Unauthorized transactions in foreign exchange and Indian currency. 2. Contravention of Section 3(c) of FEMA, 1999. 3. Contravention of Section 3(a) of FEMA, 1999. 4. Contravention of Section 8 of FEMA, 1999 read with Regulation No. 6A of the Foreign Exchange Management (Realisation, Repatriation & Surrender of Foreign Exchange) Regulations, 2000. 5. Penalties imposed by the Adjudicating Authority. Issue-wise Detailed Analysis: 1. Unauthorized Transactions in Foreign Exchange and Indian Currency: The appellant, Shri Nirmal Kumar Singhania, was found to have indulged in unauthorized transactions in foreign exchange and Indian currency. On 29.01.2011, a search conducted by the Enforcement Directorate at his business and residential premises led to the seizure of significant amounts of Indian and foreign currencies. The appellant initially admitted that Rs. 30,00,000/- belonged to his friend, Shri Anil Tody, a resident of Hong Kong, and that the remaining Rs. 57,50,000/- was kept for business purposes. However, during the investigation, he provided revised explanations, claiming that the seized Indian currency was part of advance payments for property sales and business cash balances, supported by documents and Chartered Accountant certificates. The Tribunal found these explanations to lack credibility and be inconsistent with the initial statements. 2. Contravention of Section 3(c) of FEMA, 1999: The appellant was found to have received a total payment of Rs. 1,42,50,000/- from persons other than authorized dealers in foreign exchange, as per the instructions of Shri Anil Tody residing in Hong Kong, in contravention of Section 3(c) of FEMA, 1999. The initial statement of the appellant on 29.01.2011 admitted involvement in hawala transactions, receiving money on behalf of Shri Anil Tody without RBI's permission. The Tribunal upheld the findings of the Adjudicating Authority, rejecting the appellant's subsequent explanations and supporting documents as an afterthought and inconsistent. 3. Contravention of Section 3(a) of FEMA, 1999: The appellant dealt in foreign exchange by purchasing a total of US $6200 from persons other than authorized dealers without any general or special permission from the Reserve Bank of India, contravening Section 3(a) of FEMA, 1999. The appellant initially claimed that the foreign currencies seized were unspent balances from his trips abroad. However, discrepancies were found in the documents produced, and the Tribunal noted that the explanations lacked credibility and were inconsistent with the initial statements. 4. Contravention of Section 8 of FEMA, 1999 read with Regulation No. 6A of the Foreign Exchange Management (Realisation, Repatriation & Surrender of Foreign Exchange) Regulations, 2000: The appellant, an individual resident in India, failed to surrender various amounts of foreign currencies aggregating to HK $12100, S$15100, A$1000, Euro 500, US $600, and UAE Dhs 3350, acquired as prize money from casinos in Macau, to an authorized person within 180 days from the date of his return to India, contravening Section 8 of FEMA, 1999 read with Regulation No. 6A. The Tribunal found that the appellant's explanations lacked credibility and were inconsistent with the initial statements, and upheld the findings of the Adjudicating Authority. 5. Penalties Imposed by the Adjudicating Authority: The Adjudicating Authority imposed penalties on the appellant as follows: - Rs. 30 lakhs for contravention of Section 3(c) of FEMA, 1999. - Rs. 2,00,000/- for contravention of Section 3(a) of FEMA, 1999. - Rs. 3,00,000/- for contravention of Section 8 of FEMA, 1999 read with Regulation No. 6A. - Confiscation of Indian currencies totaling Rs. 1,42,50,000/- and foreign currencies seized from the premises. The Tribunal confirmed the penalties, finding that the appellant's contentions lacked credibility and were unsupported by cogent and reliable evidence. The appeal was dismissed as devoid of any merits, and the penalties imposed by the Adjudicating Authority were upheld. Conclusion: The Tribunal dismissed the appeal, confirming the penalties imposed by the Adjudicating Authority, and found that the appellant failed to provide credible and consistent explanations for the seized Indian and foreign currencies, thereby upholding the findings of contraventions under FEMA, 1999.
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