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TMI Blog2024 (9) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - SHRI V. ANANDARAJAN : MEMBER And SHRI RAJESH MALHOTRA : MEMBER For the Appellant : Mr. Hitender Kapur, Adv For the Respondent : Mr. Pranav Mishra, Adv 16.07.2024 ORDER 1. The Appellant Shri Nirmal Singhania has preferred this Appeal being aggrieved by the order bearing No. JD/03/BZ/2013-14/(FEMA)/(JD-SA) dated 30.09.2013 passed by the Ld. Adjudicating Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the instructions of one Shri Anil Tody residing in Hong Kong, in contravention of the provisions of Section 3 (c) of FEMA 1999; (ii) The appellant herein dealt in foreign exchange by purchasing a total foreign exchange of US $ 6200 from persons other than authorized dealer in foreign exchange without any general or special permission from Reserve Bank of India in contravention of the provisions of Section 3 (a) of FEMA 1999; (iii) The appellant herein, who was an individual resident in India, claimed that he acquired various amounts of foreign currencies aggregating to HK $ 12100,S$ 15100, A$ 1000, Euro 500, US $ 600 and UAE Dhs 3350 by way of prize money from various games played by him in many Casinos in Macau and brought the said foreign exchange so received on his return to India on 06-03-2010 and 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. 5. Consequent to the above findings, a complaint dated 12/07/2012 containing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The Appellant and his son were under apprehension that they may be arrested in false case by officers of the Directorate and therefore they agreed to it and they were, thereafter, released after midnight. It is contended that immediately afterwards on 31/01/2011, the appellant wrote a letter to Enforcement Director and explained details of amounts in Indian currency and foreign currency seized from him on 29/01/2011. He gave complete explanation for the possession of Indian Currency and Foreign Currency along with documents supporting the stand of Appellant. It is submitted that the said fact is also mentioned in statement of Appellant recorded on 03/05/2012 by Assistant Director. 9. It is further contended that there was no evidence whatsoever on record regarding contravention of section 3(a), (c) and 8 of FEMA,1999 to seize the Indian Currency as well as Foreign Currency. The Directorate has not conducted any enquiry or produced any evidence to sustain the charge that Appellant has received total sum of Rs. 1,42,50,000/- from foreign nationals directly or foreign currency has been converted to Indian currency by Appellant and solely on the basis of the alleged statement of Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it's books and in order to meet the exigencies of business and payments to the various vendors, the said firm kept cash readily available for smooth functioning of its business. It has is submitted that the availability of cash balance of Rs. 42,53,701/- as on 28.01.2011 was duly certified by the Chartered Accountant. 12. In view of the above, it is contended that the Indian cash seized was duly accounted for and it was duly certified by the Chartered Accountant's that the appellant and his family members were having cash balance of Rs. 1,42,50,000/. The Respondent was duly informed about the said facts by the Appellant. Thus, the allegations made by the Respondent against the Appellant in impugned order dated 30.09.2013 against the Appellant herein in regard to the contravention of the provision of Section 3 (c) of FEMA are incorrect and thus not sustainable in law. 13. It is emphasized that none of the witnesses denied the execution of agreement to sell and merely on flimsy grounds, the documents have been brushed aside. It is submitted that it was also brought to the notice of the Ld. Assistant Director vide statement dated 03.05.2012 that the Indian currency as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back from foreign country. However, the said currency was seized by the officers of the Directorate on 29.01.2011. 17. It is submitted before us that penalty cannot be imposed on assumptions and presumptions. As it has been done in the present case. 18. In light of the above submissions, the appellant has prayed that the impugned order is liable to be set aside and the Indian currency as well foreign currency which have been illegally seized, are liable to be refunded along with interest from the date of seizure, till realization under Rule 8 of Foreign Exchange Management (Encashment of Draft, Cheque Instrument and Payment of Interest) Rules 2000. Arguments on Behalf of the Respondents 19. The Respondent Directorate has strongly contested the arguments and contentions put forward on behalf of the appellant. It is submitted by them at the outset that the Appellant herein was involved in hawala transaction, whereby the appellant has received amounts totalling to Rs. 1,42,50,000/-. 20. In this context it is firstly pointed out that the Appellant, in his statement dated 29/01/2011, admitted that he was involved in hawala transaction as he received money on behalf of one Sh. Anil Tody, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual resident in India has claimed that he acquired various amounts of foreign currencies aggregating to HK $12100, S$ 15100, A$ 1000, Euro 500, US $ 600 and UAE Dhs 3350 by way of prize money from various games played by him in many Casinos in Macau and brought the said foreign exchange so received, on his return to India on 06-03-2010 and 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. 16.3 I find from the individual Panchanama dated 29/01/2011 drawn for the search of the business and residential premises of Shri Nirmal Kumar Singhania that Indian Currency of Rs.55 Lakhs and a green colour file with documents were seized from the business premises, while from the residence Indian Currency of Rs.87,50,000/- Foreign Currency of US $ 6800, HK $ 12100, S $ 15100, A $ 1000, Furo 500, UAE Dh 3350 documents were seized by the officers of Directorate of Enforcement on that date. I find from the statement dated 29/01/2011 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family members during the period from 18.08.2010 to 23.08.2010 for the purpose of sightseeing and that during their stay in Hong Kong he came into contact with Shri Anil Tody, who is doing trading business in Hong Kong and Singapore: that the said Anil Tody told him that he hailed from Rajasthan and settled in Hong Kong for over 20 years and that he was planning to visit India sometime in January 2011 to explore the possibility of settling down in ore by purchasing a house in the outskirts of Bangalore; that the said Anil Tody informed him that he would get in touch with Nirmal Kumar Singhania, when he (Anil Tody) comes to Bangalore: that the said Anil Tady noted down his office address and phone numbers at Bangalore; that on 25-01-2011, he received a call from Shri Anil Tody residing in Hong Kong over his office phone number: that during their conversation the said Shri Anil Tody informed him that he had come to Mumbai and that he intended to purchase a property in Bangalore and that in that connection he had made arrangements in Hong Kong to send an amount of Rs. 30 lakhs in the name of Nirmal Kumar Singhania, which would be delivered to the latter at Bangalore and requested Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for undertaking the said trips he used to purchase foreign exchange from different money changers and local market; that the above said currencies are the unspent balances of the foreign currencies, which he had purchased as aforesaid. He undertook to furnish the details of his visits and purchases of foreign exchange made along with copies of his passport as evidence 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. 16.6 I find from the statement dated 29/01/2011 of Shri Kunal Singhania, son of the Noticee that he too, when questioned about the amount of Rs.55 lakhs seized from his office, stated that the said amount was being kept in their firm as cash for facilitating their business trading in Iron Ore and that his father Shri Nirmal Kumar Singhania (i.e. the Noticee) would be in a position to explain the source of the said amount of Rs.55,00,000/-. 16.6 I find from the records that the Noticee had submitted letters dated 03/02/2011 10/02/2011 and enclosed certain agreements for sale and claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from either of his premises were received on the instructions of Shri Anil Tody, a person resident in Hong Kong. I find no merit in the argument of the Noticee that even assuming that there were discrepancies in the documents, produced by him, it would fall under the ambit of the Income Tax authorities and that ingredients of section 3(c) of FEMA are not met in this case. I am of the view that on preponderance of probability, there is sufficient cause to arrive at the conclusion that the amount of Rs. 1,42,50,000/-seized from either of his premises were received by order of Shri Anil Tody, a resident of Hong Kong, a person resident outside India. I also find no merit in the argument of the Noticee that since his statement dated 20/01/2011 has been recorded by the Assistant Director with the assistance of two Enforcement Officers, it was not voluntary and hence cannot be used as evidence against him, as there is nothing in law that prohibits the Assistant Director in utilizing the services of his junior officers for assistance in recording a Statement. Even in his letter dated 31/01/2011 of Shri Nirmal Kumar Singhania also, I do not find any allegations having been levelled by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized dealer to his son and daughter- in-law, there is no compulsion on the part of the Department to make enquiries with the authorized dealer. I find that there is a clear attempt on the part of the Noticee to correlate certain foreign exchange that were released by the authorized dealers over a period of time and to another set of foreign exchange that were seized from his residence. Hence, I find no merit in the arguments. 16.10 I have carefully gone through the reply dated 23/07/2013 filed by the Noticee, which was in response to the corrigendum dated 02/07/2013 issued to him and the entire defence put forth by him. I have also gone through the citations annexed thereto in support of the contention of the Noticee. It is a settled principle that power to issue show cause notice includes power to issue addendum, corrigendum and also to withdraw the same. All the citations produced by the Noticee pertain to Central Excise and Customs Acts, and hence have no applicability to FEMA. The corrigendum dated 02/07/2013 does not alter the basic facts or add any new charge against the Noticee. The contraventions are as alleged in the show cause notice bearing no. T-4/1- BZ/2012-13 dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of FEMA to the extent of Rs. 1,42,50,000/- as alleged in the show cause notice bearing no. T-4/1-BZ/2012-13 dated 20/07/2012. I also hold him guilty of contravening the provisions of section 3 (a) of FEMA to the extent of US$ 6200/- and further hold him guilty of contravention of the provisions of section 8 of FEMA read with Regulation No. 6A of the Foreign Exchange Management (Realisation. Repatriation Surrender of Foreign Exchange) Regulations, 2000 to the extent of Hong Kong $ 12,100, Singapore Dollars 15,100, Australian Dollars 1000, Euro 500, US Dollar 600 and UAE Dirhams 3350, as alleged in the show cause notice bearing no. T-4/1-BZ/2012-13 dated 20/07/2012. I pass the following ORDER In exercise of powers conferred upon me under section 13 (1) of FEMA. in impose on the Noticee, a penalty of Rs. 30 lakhs (Rupees Thirty Lakhs only) for having committed contravention of the provisions of section 3(c) of FEMA. In exercise of powers conferred upon me under section 13 (1) of FEMA, in impose on the Noticee, a penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) for having committed contravention of the provisions of section 3(a) of FEMA. In exercise of powers conferred upon me under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- belonged to his friend Shri Anil Tody, a resident of Hong Kong. He gave a detailed account of the circumstances under which he became acquainted with Shri Tody during his visit to Hong Kong, the purpose for which Shri Tody had sent him the money, and the modus operandi adopted for delivery of the amount to him, whereby the appellant was asked to provide the serial number of a Rs.10/- note for identification purposes. He categorically stated that arrangements were made in Hong Kong by Shri Anil Todyfor sending the cash in the name of the appellant, Shri Nirmal Kumar Singhania. These facts have been discussed in para-16.4 of the impugned order which has been extracted on page 11-12 above. The appellant further stated that he kept the said amount of Rs. 30,00,000/- along with the other amount of Rs. 57.50 lakhs. He further added that though Shri Anil Tody was supposed to come and meet him to collect the said amount, the said he did not turn up thereafter and the officers seized the said amount from his residence. He also stated that he did not know the address or telephone number of Shri Anil Tody in Hong Kong/India. In effect, therefore, we note in his statement recorded on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed explanations. As per the revised version of facts, the explanation with regard to the Indian Rupees seized was as follows: i. An amount of Rs. 40,00,000/- represented advance received towards payment of sale consideration in respect of two agreements for sale of properties entered into by the appellant's wife Smt. Suman Singhania, located in Yelahanka Municipality, Bangalore; ii. Rs. 25,00,000/- was received by Shri Karan Singhania, son of the appellant toward advance payment of sale consideration in respect of an agreement to sale his property at village Sompura, Bangalore District owned by him; iii. Rs. 25,00,000/- was received by Shri Kunal Singhania, son of the appellant toward advance payment of sale consideration in respect of an agreement to sale his property at village Sompura, Bangalore District owned by him; iv. Cash balance of Rs. 42,53,701/- available with M/s JJ Impex, a partnership concerns of the appellant, his wife and two sons. The cash was kept readily available for smooth functioning of the business. 29. Certificates issued by a Chartered Accountant are relied upon by the appellant in support of the above contentions. 30. Having given our careful considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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. Further, 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 in paragraphs 13 and 14 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 In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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