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TMI Blog2025 (5) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... e business and residential premises of the appellant - Shri Prasanth Narayan. Brief facts of the case: 2. It is a case where an information was received by the Enforcement Directorate, Bangalore that one Shri Ratan Das M of M/s Light N Sound Forex Pvt. Ltd. is involved in Hawala transactions between India and Singapore, Dubai, UK, Australia, Hong Kong etc. and distributing compensatory payments in Kerala, Karnataka, Mumbai, Chennai and Delhi on the instructions of the persons resident outside India. The Directorate of Enforcement searched the office premises of M/s Light N Sound Forex Pvt. Ltd.. Apart from many incriminating documents, one Laptop and a pen drive were seized from the business premises. The data stored in the laptop and pen drive were downloaded and their printouts were taken. Shri Ratan Das M and his son Srinivas M were confronted with the print outs. They admitted the details contained in the printout of the transactions which they had entered into India on behalf of the persons resident outside of India. It was explained that they have friends and relatives abroad who used to manage foreign exchange for the credit of the persons outside India from whom they used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue and the balance 2% to 5% would be paid by them on their furnishing the final invoice for the balance after receipt of the quality assurance report regarding the chemical composition issued by the Chinese authorities. The remaining amount of 2% to 2.5% was received by the appellant in cash through Shri Ratan Das. It was stated that the appellant has received total amount of Rs. 1,74,21,883/- from Shri Ratan Das M as per the instructions of Shri Mustafa @ Salvam and M/s Adani Global Pte. Ltd., Singapore during the period between 16.11.2007 to 08.12.2007. Out of the amount of Rs. 1,74,21,883/-, he kept Rs. 30 lakhs in the office premises and the remaining amount of Rs. 80,95,000/- at the residence which was seized by the Enforcement Directorate. 6. The appellant in his further statement dated 04.01.2008 explained the documents seized from the residential and office premises. The procedure involved in preparing documents for export of consignment of iron ore was clarified and it was further stated that the statement made by Shri Srinivas is same and true. On a question in reference to the amount received from Shri Ratan Das and reasons for making payment to him as reflected in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was given by the Adjudicating Authority while passing the order on 17.08.2011. The date of personal hearing was given for 18.08.2010 but it was the date of hearing only on the issue of an opportunity of cross-examination and not for final hearing. Thus, the appellant was not given an opportunity for personal hearing and thus the impugned order deserves to be set-aside. 11. The Ld. Counsel for the appellant further submitted that in regard to seizure of Rs. 30,00,000/- lakhs from his business premises and a sum of Rs. 80,95,000/- from his residence, the respondent ignored that the appellant was having Rs. 40 lakhs cash in hand as per the cash book and otherwise out of Rs. 80,95,000/- seized from the residence, an amount of Rs. 69,95,000/- was recovered from the Almirah in the room of Shri D.N. Gopalkrishna who was having an independent source to possess the cash. The amount lying in the Almirah was out of his own withdrawal, thus should have been returned to him but respondent ignored the aforesaid fact and while passing the impugned order, the Special Director ordered forfeiture Rs. 30,00,000/- recovered from the business premises and Rs. 80,95,000/- from the residence ignoring th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent, though presumption may remain as per Section 39 of the Act of 1999 regarding genuineness of the documents. Since the cross-examination of Shri Ratan Das M was not permitted, the documents recovered from him could not have been relied or if at all the documents are relied, Shri Ratan Das M should have been tried along with the appellant. In absence of it, the impugned order is not sustainable in the eyes of law. In the light of the arguments made above, the prayer was made to set-aside the impugned order with the argument that the statement recorded by the respondent was retracted but much emphasis on it was not made looking to the fact that retraction was made much subsequent to the recording of the statement. In any case, argument in this regard was not pressed even after giving reference to it and accordingly the respondent was called upon to argue their part of the case. Arguments of the Counsel for the respondent: 14. The Ld. Counsel for the respondent contested the appeal in reference to the issues raised by the appellant. Elaborate arguments were made to clarify each and every issue and would be referred to while recording our finding in reference to the arguments of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... witnesses. The copies of the statement of Shri Ratan Das M on 3 dates referred to above were supplied on 25.08.2010. 18. The appellant furnished the reasons to seek cross- examination of the witnesses vide letter dated 17.09.2010 and contended that certain contradiction in the statement of the noticee is to be sorted out for which cross-examination of the officers is required apart from the cross-examination of the panch witnesses. The Adjudicating Authority duly considered the reasons supplied for cross-examination, however, the prayer was found to be devoid of merit and accordingly the request for cross-examination was rejected vide order dated 24.09.2010. The said order has not been challenged by the appellant which would be born out from the prayer of the appeal. It is despite the acknowledgment and the receipt of the order on 25.10.2010. 19. In the absence to the challenge to the order dated 24.09.2010, the arguments in reference to denial of an opportunity of cross-examination would not be tenable. No one prevented the appellant to challenge the order dated 24.09.2010 along with the final order with the prayer to set- aside both the orders but prayer for quashing of the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cross-examination for which the order passed on 24.09.2010 remains unchallenged as no prayer in reference to the aforesaid order has been made. It is to be clarified that this Tribunal cannot exercise powers as are available to the High Court while exercising the writ jurisdiction, rather, this Tribunal is confined to the relief prayed in the appeal. In view of the above, we would now address the issue on merits for which full opportunity has been given to the appellant. 22. The allegation against the appellant is for contravention of Section 3(c) and Section 3(d) of the Act of 1999. The allegations are forthcoming not only in the light of the statements recorded but the documents recovered from the possession of Shri Ratan Das M. It was found that the appellant had made certain transfers of funds outside India and also received money in India through unauthorized channel on the instructions of the persons resident outside India. The money was arranged through Shri Ratan Das M. Shri Ratan Das M and Shri Srinivas did not retract from their statements and otherwise the material recovered from their possessions i.e. laptop and pen drive were admissible in light of the Section 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e we don't find any error in the findings recorded by the Adjudicating Authority: xx xx xx xx xx xx xx xx xx xx xx 5.2 The allegations against the Noticee are of contravention of section 3(c) and 3(d) of FEMA, 1999 for having indulged in receipt of Indian Currency in an unauthorized manner outside the banking channels on the instructions of persons resident outside India and for entering into financial transaction in India for creation of right to acquire foreign exchange by persons outside India. The facts, as they are narrated in the complaint and for which the impugned Show Cause Notice had been issued to the Noticee, bring out the allegations based on certain transactions which came to surface consequent to the searches made in the business and residential premises of Ratan Das M. and also on the basis of recovery of cash from the business and residential premises of the Noticee. The recovery of pen drive and laptop from Shri Ratan Das M. of M/s. Light N Sound Forex Pvt Ltd and the depositions related thereto by Ratan Das M. and his son Srinivas M lead to the investigations about the transactions attributed to the Noticee based on the details contained in these seized docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied having known Shri Ratan Das M. The wife of the Noticee, in her statement dated 2.1.2008 has also admitted that Shri Ratan Das M had been facilitating certain international transactions the details of which were known to her husband, i.e., the Noticee. The seizure of cash amounting to Rs. 30,00,000/- from the business premises of the Noticee and Rs. 80,95,000/- from the residence of the Noticee further corroborates the fact that the Noticee had been receiving monies in India through Shri Ratan Das M. outside the banking channels " 24. The appellant contested the appeal but could not show any error in the findings recorded by the Special Director and quoted above, thus, while exercising the appellant jurisdiction, this Tribunal would not be justified to cause interference in the order for the sake of it unless an error or the illegality in the order is shown. It is, otherwise, not a case to place the reliance on the statements of Shri Ratan Das M and Shri Srinivas alone but the statements were corroborated by the documents and hence we find a case for contravention of Section 3(c) and Section 3(d) of the Act of 1999 where the appellant had received a sum of Rs. 12,06,97,702/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty imposed for contravention of Section 3(c) of the Act is substituted to Rs. 2,75,00,000/- (Rupees Two Crores Seventy Five Lakhs only) against the penalty of Rs. 9,00,00,000/- and for contravention of Section 3(d) of the Act of 1999, the penalty of Rs. 1,00,00,000/- is substituted to Rs. 25,00,000/- (Rupees Twenty Five Lakhs only) making total penalty of Rs. 3,00,00,000/- (Rupees Three Crores only). The appellant has already deposited Rs. 90 lakhs towards the satisfaction of the condition of High Court of Delhi and otherwise Bank Guarantee of Rs. 1,10,00,000/- was given which can be encashed by the respondent and apart from that we direct the respondent to adjust the amount of Rs. 1,00,00,000/- out of Rs. 1,10,95,000/- (Rupees One Crore Ten Lakhs Ninety-Five thousand only) confiscated by them with direction to the respondent to return the excess amount after adjusting an amount of Rs. 1,00,00,000/- (Rupees One Crore only) to make good of the penalty and remaining amount would be refunded to the appellant. The adjustment of the confiscated amount has been allowed looking to availability of cash in hand in cash-books of the Firm and in the hands of the appellant's father. 27. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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