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TMI Blog2018 (5) TMI 1531X X X X Extracts X X X X X X X X Extracts X X X X ..... avel which was purchased in Indian Rupees and other expenses were taken care of by his friends - The Special Director, ED has erroneously held that the aforesaid Affidavits cannot be considered as the Appellant did not mention the names of these persons and the respective countries in his written submissions - The Special Director, ED has incorrectly ignored the affidavit of Mr. Saikumar by holding that the Consulate General of India, Dubai takes “No responsibility” for the correctness of the statements made in the above affidavit and has thus proceeded on an incorrect understanding of law. Penalty - Held that: - the present case is not fit for imposition of Penalty because liability to pay penalty does not arise merely upon the proof o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cause Notice under Section 3(a) of FEMA, filed by the Respondent ED. In Para 4 of the Complaint, it was wrongly alleged that the Appellant in his Statement dated 29.05.2014 deposed that he had received remaining amount of ₹ 7,59,615/- in foreign currency from unknown persons and the same was spent while he was of India . 5. Show-Cause Notice dated 30.07.2014 issued to the Appellant under Section 3(a) of FEMA by the Assistant Director (Adjudicating Authority), Enforcement Directorate. Reply to Show-Cause Notice filed by the Appellant on 04.03.2015. Closure Report filed by the Police in FIR No. 1279/2012 on 16.03.2015. 6. On 29.,09.2016, Order was passed by the Adjudicating Authority, i.e. the Assistant Director, ED holding vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia . This is completely incorrect and patently contrary to the said Statement of the Appellant. The above incorrect allegation in the Complaint has become the basis of the finding of the Adjudicating Authority in para 10-12, and the finding of the Special Director (Appeals) in para 7. 11. The said incorrect factual allegation was specifically highlighted by the Appellant, in the appeal before the Special Director in para 7 (viii ), but the same has been ignored. As such, it is submitted that the entire case of the ED and the Impugned Orders are premised on an incorrect reading and understanding of the said statement of the Appellant, which has been made the sole basis of the findings against the Appellant. 12. This FIR arose fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the proof of that fact shall lie on any particular person. 16. Instances of law providing a reverse evidentiary burden are Section 24, PMLA and Section 71 of Foreign Exchange Regulation Act. ( FERA ) FERA, i.e., the legislation preceding FEMA,contained a reverse burden clause. Pertinently, the said provision was not incorporated in any form in FEMA at the time of repeal of FERA and enactment of FEMA. 17. There is no statutory provision in FEMA imposing reverse evidentiary burden upon an accused person, as is the case under PMLA. 18. The law in this is quite settled. a. In AIR 1956 SC 404 in the case of Shambu Nath Mehra (Appellant )v/s. State of Ajmer (Respondent), in para 9, it is held as under:- 9. This lays down the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this nature, cannot be held to have any substance. The initial burden to prove that the confession was voluntary in nature would be on the Department. The special or peculiar knowledge of the person proceeded against would not relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It may only alleviate that burden to discharge any very slight evidence may suffice. 19. In the Appeal before the Special Director, ED, the Appellant had filed affidavit of Mr. SaikumarEdayankaraKadankotte and E.S. Mohammad Ali with relevant enclosures, evidencing that the Appellant had visited them in Dubai and Doha, that the Appellant on various occasions stayed at their residence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ac penalty was imposed. Having considered the facts and law, I am of the considered view that the present case is not fit for imposition of Penalty because liability to pay penalty does not arise merely upon the proof of contravention of a provision. Being an quasi-criminal proceeding, imposing penalty for contravention of a statutory obligation ought not ordinarily be imposed unless the accused/ defendant acted deliberately in defence of law or was guilty of contumacious or dishonest conduct or acted in conscious disregard of the obligation. It is submitted that none of the aforesaid conditions are satisfied in the present case. Reliance is placed on 3-Judge Bench decision of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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