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TMI Blog2019 (9) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, (hereinafter referred to as FEMA), Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 read with Section 6(2) of the FEMA to the extent of Rs. 2,15,21,972/-, Regulation 3 of the Foreign Exchange Management (Investment in firm or proprietary concern in India) Regulations 2000 read with Section 47 of the FEMA to the extent of Rs. 2,15,21,972/- and Regulation 8 of the Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations 2000 (Notification No. FEMA 21/2000 RB dated 3rd May 2000) read with Section 6(3) of the FEMA to the extent of Rs. 71,83,982/- 3. In the Complaint it had alleged that the Appellant Nos. 2 and 3 who are Korean Nationals came to India on repeated business visa basis on 08.08.2008 and have been residing in India on extended visa basis. They have created First Appellant Firm in India under a registered Partnership Deed dated 31.12.2008 without the prior permission of the Reserve Bank of India, despite the fact that the Reserve Bank of India had refused to grant permission to open a firm in India as their residential status was not clear. It is further alleged in the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmoveable property i.e., residential site bearing No. 41 and 56, property No.116/2, Khata No. 88 measuring 3237 sq. ft. at Chelekere, K.R. Puram Hobli, Bangalore for a consideration of Rs. 16,03,000/- vide a registered Sale Deed dated 01.09.2009. It was further alleged they had paid a sum of Rs. 30,59,710 to one Ruben Ravikumar, a contractor, for the purpose of constructing a building at the said site. It was alleged that the source of income for purchase of the site and the payments to the contractor was from funds and donations received from Korean relatives, friends and members of Korean churches who visited India and brought foreign currency which after getting converted into Indian Rupees, was donated to the Appellant No. 1 firm. It was stated that the amounts were received in two accounts one being a savings bank account No. 029801506568 held in the name of Appellant No. 2 and a current account no. 029805003204 held in the name of the Appellant No. 1 firm, both at ICICI Bank, M-417, 80 feet Road, Kalyan Nagar, Bangalore. It was further stated in the complaint that the statement of account of the above-mentioned accounts revealed that they had received a total sum of Rs. 2,15, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted a. Land measuring 3237 sq. ft. at site No. 41 and 56, Katha No. 88, S. No. 116/2 at Challakere Village, K. R. Puram Hobli, Bangalore East Taluk, Bangalore 560 084; b. Savings Bank account No. 029801506568 maintainted with ICICI Bank, M-417, 80 feet Road, Kalyan Nagar Bangalore in the name of Appellant No. 2 having a balance of Rs. 8,530.55 as on 28.01.201; and c. Current account bearing No. 029805003204 maintained with ICICI Bank, M-417, 80 feet Road, Kalyan Nagar Bangalore in the name of the Appellant No. 1 having a balance of Rs. 24,036.82 as on 28.01.2015. 8. The Appellants appeared before the Respondent and stated their defense. It was contented on behalf of the Appellants that the Appellants are "Resident Indians" and as such entitled to acquire properties in India. The factum of opening the Appellant No. 1 firm by the Appellant Nos. 2 and 3, the purchase of the immovable property in India as well as the receipt of donations from foreign nationals were not disputed. The only issue was that being "Resident Indians" they are entitled to purchase properties and as such there is no violation as alleged under the showcause notice. A request was made before the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the documents furnished by the Appellant had been met which shows that the same has been passed without application of mind. The Respondent was required to meet each of the contentions urged and was required to have recorded reasons for its rejection which the Respondent has failed in doing. For this reason alone, the order under challenge herein is liable to be set aside. (iii) The Respondent has failed to notice and appreciate that the allegations in the Complaint which was based on documents and which had formed the basis for the show-cause notice did not amount to a contravention, much less a contravention under FEMA. Hence, the entire proceedings carried out against the Appellants and the consequential order and confiscation are bad in law and liable to be set aside. (iv) The Respondent in the impugned order has merely reiterated the narration as laid down in the Complaint filed against the Appellants. By merely and meekly repeating the allegations made in the Complaint and without properly considering and adjudicating upon the reply submitted by the Appellants, the Respondent authority has erred in no applying its mind. No reason has been ascribed as to why the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that effect, the order passed cannot be sustained. (x) There has been a failure on part of the Respondent to notice that the necessary ingredients of Section 3(c) of FEMA were required to have been met in light of the provisions of Section 2(v) read with Section 2(w) of FEMA. In absence of the same having been established or corroborated, the order passed cannot be allowed to stand. (xi) The Respondent authority has failed in not appreciating the explanations and various documents which were tendered by the Appellants with reference to the Statements recorded during the course of investigation and the hearing. The Respondent authority ought to have considered the contradictions pointed out by the Appellants between the statements recorded and the documents relied upon. The failure on the part of the Respondent to do so renders the order passed liable to be quashed. (xii) The Respondent failed to appreciate that there was a clear and an apparent lack of investigation on part of the Directorate of Enforcement in their entire proceedings. Once the statements of the Appellants have been recorded, which on the face of it seemed probable, then investigation ought to have been ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serve Bank of India vide their letter dated 26.08.2009 bearing no. FE.CO.FID/5396/10.51.000/2009-10 had confirmed under Section 2(v) of the FEMA, 1999 that the Appellants do not require the approval from the RBI from the FEMA angle and that they would have only to prove his/her residential status if required, by any Authority. Therefore, before purchase of the immovable property, the appellants had approached the RBI seeking permission. In view fo the reply of the RBI vide the afre said letter, the Appelalnt had only to satisfy Section 2(v) of FEMA, 1999, and no prior approval was required on the date when they ahd purchased the immovable property. Copy of the RBI letter is enclosed Documents no.2. This fact has been noted by the Adjudicating Authority (internal page 6, paragraph No. 18 (6)) while passing the impugned order. 14. The Appellants had paid the sale consideration of Rs. 16,03,000/- (Rupees Sixteen Lakhs Three Thousand Only) under the Sale Deed. The said amount was received by them from overseas into their Account in ICICI Bank on 16.08.2009. There was compliance with regard to receipt of the said amount. This is substantiated in the two (2) FIRC certificates issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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