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2014 (9) TMI 1085 - HC - FEMAGuilty of the offence under Sections 6(4), 6(5) 8(1), 9(1)(a) and 9(1)(f)(i) of Foreign Exchange Regulation Act, 1973 - fine imposed - Held that:- In the first place, it is not clear why, after recording the statements under Section 40 of FERA of the appellant and Mr. Mendiratta in May 1995, the ED waited till the last date of the sunset period, i.e., 30th May, 2002 for issuing the Memorandum. The second feature is that the only relied upon documents in the Memorandum are the statements made by the appellant and Mr. Mendiratta, the letter dated 7th August, 1995 of Mr. Sethi and the statement of account provided by the AMEX Bank. In other words, the ED does not appear to have undertaken any further investigation in the seven years since it recorded the statements. In particular, there was no attempt made to undertake investigation outside India to find out the names of the persons who had made remittances into the NRE Account of Mr. Sethi. The Court is of the view that the AO dated 24th March, 2004, and the impugned order of the AT to the extent they hold the appellant liable for contravention of Section 8(1) of FERA, cannot be sustained in law. As regards contravention of Section 9(1)(a) and Section 9(1)(f)(i), the Court is unable to appreciate how the said provisions are at all attracted in the facts and circumstances of the case. The said provisions require a person resident in India having to make “any payment for the credit of any person outside India.” The beneficiary under both the provisions is a person resident outside India. The allegations in the Memorandum do not make out any such case even prima facie. It is not the case of the ED that Mr. Sethi, who in the facts and circumstances was the only person resident outside India, was the beneficiary of any of the transactions in his NRE account. Consequently, the impugned order cannot be sustained even as regards the question of contravention of Section 9(1) of FERA. Thus AO dated 24th March, 2004 and the impugned order dated 24th December, 2010 of the AT are hereby set aside. Any amount deposited by the appellant pursuant to the AO shall be refunded to him in accordance with law within a period of eight weeks from today
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