AT overturned penalty imposed under FEMA Section 3(c) related to ...

Foreign Exchange Management Act penalty waived after insufficient evidence linking appellant to alleged Hawala transactions under Section 3(c)

February 19, 2025

Case Laws     FEMA     AT

AT overturned penalty imposed under FEMA Section 3(c) related to alleged Hawala transactions. Initially, Punjab Police seized funds and ED initiated investigation. While statements were recorded, the respondent retracted testimony at first opportunity. Investigation revealed incomplete car purchase transaction and appellant provided CA-certified cash book documenting fund source. AT found Adjudicating Officer failed to establish clear chain of events, trace key witness Rocky Singh, or document money trail. Given insufficient evidence and procedural gaps, AT directed waiver of penalty and release of confiscated amount within 30 days, highlighting importance of thorough investigation and documentary proof in FEMA cases.

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