TMI Blog2019 (10) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... ellectual flight of imagination. While arriving at the guilt the Special Director devised his own fresh reasoning, contrary to material on record and without complying with the law of evidence and in derogation of the principles of natural justice un-confronted tried to justify the order by creating an imaginary basis for attributing the name of the trust to the first alphabet of the names of the appellants but in this exercise also he could not find anything to refer to the alphabet u in Ruvisha . Special Director without recording the main contentions of the Appellant and without any cross-appeal, then proceeded to enhance the penalty and imposed a penalty of ₹ 1,60,98,308/- against each of the appellants instead of the original imposed penalty of ₹ 5 lakhs. Before this Tribunal the Appellants have filed their sworn affidavit stating on oath that appellants have nothing whatsoever to do with the alleged trust and have never opened and maintained any account or have any title in respect of any amount of such Trust. It appears from is a letter dated 11th June 2013 wherein the Deputy Director of the ED made some queries to the Income Tax Department, seeking t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals were heard and the order were reserved on 18th December, 2018, after which the said appeals were posted by the Tribunal again on 9.9.2019. The same are clarified. Brief Facts are that 2. The respondent Enforcement Directorate issued a show cause notice against the appellants alleging contravention of Section 3 (a), Section 4 read with Section 39 of FEMA on the allegation that the appellants namely Chandrakant Ishwarlal Gandhi, Dhanlakshmi Chandrakant Gandhi, Rajesh Chandrakant Gandhi and Viraj Chandrakant Gandhi have allegedly benefited and received a total sum of US dollars 4,47,789.08, which was alleged to have been acquired/possessed/held/owned outside India with LGT Bank without any General or Special permission of RBI and thus contravention alleged by invoking presumption under section 39 of FEMA, 99. 3. The reliance for the said allegations in the SCN, Complaint is placed where the denial statements of all the four persons and prosecution complaint along with enclosures filed by Deputy Commissioner of Income Tax before the Magistrate's Court at Kolkata. 4. At page 58 (iii), it was alleged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or not. ii. Any other authenticated documents in this regard received by you. iii. Any documents relating to the opening of accounts of the Trusts in LGT Bank, Lichestein. Yours faithfully (D.N. Poddar) Deputy Director 8. The Adjudicating Authority instead of adducing any evidence, contrary to the allegations in SCN and complaint contrived to divide the alleged amount of US$447789.08/- among the four appellants by converting the amount in Indian currency and attributed one fourth of the amount to each of the appellants contrary to any evidence and material on record and even contrary to allegations in the SCN. 9. The complainant invoked the clause of presumption as engrafted under section 39 of FEMA as stated by the learned counsel appearing on behalf the respondent. The same are also the pleadings. 10. The admitted case of the complainant is that the documents purported to have been relating to the account are unauthenticated photocopies claimed to have been received from Income Tax department. 11. The documents re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/4th proportion among the four appellants without such apportioning in SCN and held the appellants guilty by imposing a penalty of ₹ 5 lakhs on each of the appellants, without any evidence. 14. The appellants have filed the Appeals before the Special Director (Appeals) against the order of the Ld. Joint Director. 15. It is stated on behalf of appellants that before the Special Director, the Appellants reiterated their contentions, in addition to submitting that the conclusion of guilt against the appellant is based on no material and that the order passed is perfunctory without application of mind and even contrary to show cause notice where the theory of 1/4th of amount was not even alleged, but the Special Director affirmed the order of the Adjudication Authority on his self-innovated and imaginary reasoning, neither based on any evidence nor based on any material but based on assumptions and presumptions arrived at by indulging in an intellectual flight of imagination. While arriving at the guilt the Special Director devised his own fresh reasoning, contrary to material on record and without complying with the law of evidence and in derog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated in the show-cause notice. In the instant case, what the appellant has tried to highlight is the alleged connection between the various concerns. That is not sufficient to proceed against the respondents unless it is shown that they were parties to the arrangements, if any. As no sufficient material much less any material has been placed on record to substantiate the stand of the appellant, the conclusions of the Commissioner as affirmed by CEGAT cannot be faulted. (emphasis supplied) 20. The respondent has not discharged its burden about the predicament of the non-availability of the evidence has tried to overcome the same by invoking Section 39 of FEMA which is relating to presumption of documents. It is humbly submitted that Section 39 has been misread by the respondent, as the documents received from abroad in any proceedings need to be duly authenticated under FEMA (Authentication of documents) Rules, 2000 which require authentication of the documents received from abroad by way of seal and signature of any person who is authorised by the Diplomatic and Consular Officers (Oaths Fees), Act, 1998. Similar provision w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstand why the Indian Customs did not interact with the Japan Customs and obtain authentic copies of the document from the latter. Merely because the Department offered cross-examination of the steamer agent from whom the export declaration had been obtained and the respondents chose not to avail of that opportunity is no ground for holding that the requirements of Section 139 are satisfied for the purpose of raising the presumption. In order to raise the presumption under the said provision, the basic facts had to be laid. Even though they bear a serial number and stamp of Japan Customs, the fact remains that they are copies of copies and indisputably bear no signature of the exporter, the forwarding agent, the stevedore or the Customs Officer; no signature at all of any of them. The discrepancy in regard to copies bearing the seal of Customs at Kobe also raises a serious doubt whether the copies relate to any of the consignments in question. In these circumstances, if the majority was disinclined to place reliance on these documents we find it difficult to hold that it was in error in doing so. 21.1 On same lines the Hon‟ble Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Italy. In the present case admittedly documents were simply forwarded by the office without any authentication as such. The procedure for authentication is set out in the Foreign Exchange Regulations (Authentication of Documents) Rules 1976. Clearly the said procedure was not followed in the present case. What appears to have happened is that the ED applied to the ACMM for issuance of Letters Rogatory for obtaining the said documents through the official channel. Mr Datta very candidly stated that pursuant to the orders passed by the learned ACMM, no documents were in fact received. Surprisingly in the AO it is noted by the Commissioner: Further I observe that the documents from the overseas suppliers have been obtained in terms of the Letter of Rogatory dated 5-1-2001 issued by Additional Chief Metropolitan Magistrate, New Delhi in terms of this Letter of Rogatory, the documents to be collected pursuant to this letter have to be true copies of the corresponding entries or of documents. This Letter of Rogatory does not stipulate that original documents be supplied and accordingly the documents supplied in consonance with the terms set out un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f State of Kerala v. Vijaya Stores, (1978) 4 SCC 41 : 1978 SCC (Tax) 203, at page 41, the relevant paras of which are reproduced below: 1. The short question raised in this appeal by special leave is whether the Appellate Tribunal has power under Section 39(4) of the Kerala General Sales Tax Act, 1963 to enhance the assessment in the absence of any appeal or cross-objections by the Revenue ? 6. It is true that the two Bombay decisions reported in 13 ITR 272 and 31 ITR 844 (supra) on which the High Court has relied have been rendered in relation to Section 33(4) of Indian Income Tax Act, 1922 but in our view the said provision of Income Tax Act is in parimateria with the provision of Section 39(4) of the Kerala General Sales Tax Act, 1963. Moreover, the Bombay High Court has pointed out in those decisions that Section 33(4) merely enacted what was the elementary principle to be found in Civil Procedure Code that the respondent who has neither preferred his own appeal nor filed cross-objections in the appeal preferred by the appellant, must be deemed to be satisfied with the decision of the lower authority and he will not be entitled to seek re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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