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TMI Blog2025 (5) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 3(b) of FEMA, 1999, for an amount of USD 22000 Rs. 10,000/- Further, in exercise of the power conferred under section 13(2) of FEMA, 1999, Adjudicating Authority, ordered for the confiscation of the assorted foreign currency equivalent to Rs. 3,30,82,775.28 (Rupees Three Crore Thirty Lacs Eighty-Two Thousand Seven Hundred Seventy-Five and Twenty-Eight Paise) seized by the Income Tax Authorities and which was taken over by the Directorate of Enforcement u/s 37 of FEMA, 1999, r.w.s. 132A of Income Tax Act, 1961. The confiscation of foreign currency was ordered to be appropriated to the Central Government. 2. As per the facts of the case, the complaint was filed before the Adjudicating Authority, u/s 16(3) of the Foreign Exchange Management Act, 1999 (herein after referred to as 'FEMA, 1999'), in F. No. T-3/26/HYZO/2014, dated 22.03.2018 by the Assistant Director, Directorate of Enforcement, Hyderabad, and in the said complaint, the Complainant, inter alia, has stated as follows: The Additional Director of Income Tax (Inv.), Unit II Hyderabad, vide letter dated 06.03.2014 informed that they have seized foreign currency under Panchnama dated 28.02.2014 from the residence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds are received locally and it holds bank accounts with HDFC Bank & ICICI Bank and the Kings Temple Church is functioning under the supervision of International Outreach, which have several branches all over Andhra Pradesh. It has a Bible School, Children's Home, Limitless Love Foundation etc. He lived in USA during 2000 to 2004. Presently, he is living in India, but travelling widely to minister in Churches, Conferences and seminars. He is a US Green Card holder since 2004 and is married to Merlyn Patta, who assists him in all his work. They have two children namely Steven Patta and Dborah Patta. He established a Religious Trust by name Samuel Patta Foundation registered u/s 25 of the Companies Act. Funds are received into this foundation locally. People from India and abroad drop their offerings in the Hundi placed in the church in Hyderabad and other locations in A.P. The donor put the offerings in an envelope and drop into Hundis. The offerings from people in India are collected & counted by a team and then deposited into bank accounts. The offerings received in foreign currency, are not accounted and are also not deposited in any bank accounts. Bank accounts of International ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Television Broadcasting Legacy, USA and that he paid to Mr. Cody, the equivalent in Indian Currency, when he visited India. During the course of investigation, additional information was received from the Deputy Director of Income Tax (Inv.), Unit II(3), Hyderabad, regarding the foreign accounts in UAE, transactions relating to foreign currencies and the copies of seized diary. Shri Samuel Rajkumar Patta was summoned again and his statement was recorded u/s 37 of the FEMA, 1999, on 20.08.2014. In his statement Shri Samuel Rajkumar Patta stated that the deposits in UAE bank accounts are from living World Christian Centre, Chicago, USA and also Honorarium payments received for his preaching in Seminars in UAE. The UAE bank accounts are the joint accounts in the name of his wife and himself. The acknowledgement dated 08.06.2013 given by Mr. Cody, employee of M/s Television Broadcast Legacy, USA, is the receipt of USD 22,000 and though the amount is expressed in USD in the receipt, they actually gave equivalent Indian Rupees for purchase of watch etc. by him in Hyderabad. As per documents submitted by Mr. Samuel Rajkumar Patta vide his letter dated 13.03.2014, the balances in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 are available, (equivalent to about Rs. 1,62,60,573/-), failed to repatriate the same and surrender to the authorized person within the prescribed period. c) Mr. Samuel Rajkumar Patta, a person resident in India has paid Indian currency equivalent to USD 22,000 to Mr. Cody of USA, a person resident outside India, when Mr. Cody visited India in June 2013, towards services rendered by Television Broadcast Legacy, USA for broadcasting his preaching. Though, Samuel Rajkumar Patta has contended in his statement dated 22.05.2014 that major portion of the seized foreign currencies were received as offerings since August, 2013, no evidence whatsoever has been submitted by him. On the contrary, he had in his statement dated 28.02.2014 given before the Deputy Director, Income Tax. Investigation, Hyderabad stated that the seized foreign currencies were not accounted for in any books of accounts and that they were accumulating those amounts over a period of time since 2007-08 and the said foreign currency was received as offerings from the congregational members, foreign visitors and delegates from different countries. Further, in his statement dated 22.05.2014 given u/s 37 of FEMA, Mr. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational Outreach Charitable Trust from the foreigners, who attend the meetings held by the trust. Trust is registered under Foreign Currency Regulation Act, 1976. Thus the trust is governed by Ministry of Home Affairs and not by the Reserve Bank of India. The said foreign currency equivalent to Rs. 3,30,82,775.28 was seized by the Income Tax Department and the same is proposed to be confiscated by the Directorate of Enforcement, which is improper and illegal, as their trust is registered under FRCA. It is also contested that the said Foreign Currency was seized by the IT officials on the ground that the books of accounts for the amounts received were not maintained and the said amounts were not deposited with the banks. The Noticee refuted the said charges and contended that proper books of accounts were maintained for the foreign receipts and contributions and the same are reported to MHA in FCR3 format. It is also submitted in reply that even assuming, without agreeing to the violation, that the person resident in India is allowed to retain the foreign currency with themselves upto 180 days from the date of receipt of the foreign currency as per Regulation 6A of FEM (Realization, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each, as the amount involved is very minimal, and hence, the maximum penalty that can be imposed is Rs. 2 Lakhs only as per Section 13(1) of FEMA, 1999. It is also contended that the impugned show cause notice is barred by limitation in terms of powers conferred to the officers of Enforcement Directorate like the powers conferred on Income Tax authorities under the Income Tax Act, 1961 in respect of Sub- Section 3 of Section 36 of FEMA, 1999. Thus, he requested to drop further proceedings in the impugned notice and take a lenient view. After going through the material on record and the reply filed by the appellant, Learned Adjudicating Authority imposed the penalty on the appellant and also confiscated the recovered foreign currency amount, as mentioned in para no.1 above. Aggrieved by the same, appellant filed the present appeal. 3. Ld. Counsel for the appellant submitted that there is no substance in Impugned Order dated 02.07.2019 passed by the Respondent, as there is no direct evidence to support the impugned order for imposing penalty and confiscation of currency. The impugned order has been passed in clear violation of Rule 4(3) of the Foreign Exchange Management (Adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is incorrect to suggest that the said Foreign Exchange was accepted/received in contravention of section 3(a) of FEMA, 1999. He stressed that the Reserve Bank of India has got no mandate to regulate the donation/offerings received by the Trust registered under FCRA of Ministry of Home Affairs. The Appellant had written two letters to the RBI on 15.10.2013 & 11.02.2014 seeking their guidance and clarification which they did not give. During personal hearing Ms. Y. Siri Reddy, Advocate, of the Appellant had requested the Ld. Adjudicating Authority to enquire this fact from the RBI, which he did not do in utter disregard to section 4(6) of Foreign Exchange Management (Adjudication Proceedings and Appeal) Rule, 2000 with which he is bound to enquire. He pointed out that the Complainant did not utter even a single word as to with whom noticee had financial dealings, as alleged in the Complaint. The complainant was duty bound to come with the name and address of those person with whom noticee had dealing in Foreign Exchange in alleged contravention of provision of Section 3(a). Contrary to this the noticee had stated before the complainant that there were seminars and meetings which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re coming to the conclusion that the said Foreign Exchange was acquired/accepted in contravention of provisions of section 3(a) of the said act. As per the provision of section 13(2) of FEMA, 1999, an Adjudicating Authority adjudging any contravention under sub section 1 of section 13 may in addition of penalty direct that any currency in respect of which the contravention has taken place be confiscated and credited to Central Government account. He submitted that the confiscation of Foreign Currency equivalent to Rs 3,30,82,775.28 by the Ld. Adjudicating Authority is wrong, malafide and without legal justification, as the same is based on surmises and conjecture and not based on the legal position. He argued that since the said Foreign Exchange was acquired/accepted on the strength of registration under FCRA, the same could not have been confiscated under section 13(2) as contravention of section 3(a) has not been established by the complainant in his complaint. On the contrary, the Appellant has established with documentary evidence that the said Foreign Exchange was accepted/received during the period from August 2013 to February 2014 and was allowed to deposit the same with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indings in the Impugned Adjudicating Order about the person resident outside India for the credit of whom this payment was made. In the light of the above submissions, Ld. Counsel for the appellant submitted that the present appeal be allowed and thereby set aside the impugned order confiscating the foreign currency and imposing the penalty. 4. On the other hand, Ld. Counsel for the respondent ED strongly controverted the submissions of appellant and the same will be reflected in my discussion & findings in the following para. 5. After considering the rival submissions, I have given my thoughtful consideration to the same. The appellant has made 2 major contentions in the present case. The first contention is that he has not made contravention of Section 3(a) of FEMA and thus the Ld. Adjudicating Authority has erroneously concluded that Foreign Exchange equivalent to Rs. 3,30,82,775.28 was acquired by the Appellant in contravention of provision of section 3(a) of FEMA, 1999, without appreciating the true facts and reply filed by him. As per the appellant there is no evidence on the record that he dealt with the Foreign Exchange received through offerings with any unauthorized pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to or after the said period. Thus, in absence of any proper ledger, the defence taken by the appellant that these FCRA contributions which were received in the last 180 days only, cannot be accepted. Also, claim of appellant that these foreign contributions were dropped in the hundis is clearly unreliable and an afterthought strategy because the same are not co-related with the date, time, contributor's name and venue of the meetings. Moreover, the foreign currency was recovered from the bank lockers of the appellant and from the second-floor bathroom and third floor bedroom, but not from the donation boxes of the church. He did not deposit the same in the in the FCRA registered bank account. There is no cogent explanation for keeping the foreign currency in his individual possession, after allegedly taking out the same from the hundies/ donation boxes. All these circumstances coupled with his statement demolish the plea of the appellant. Further, the appellant has filed this appeal in personal capacity, but neither in the name of Kings Temple Church, where the amount of allegedly donated in hundies/donation boxes, nor in the name of International Outreach Charity Trust. As appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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