Dismissed

FPA-FE-58/CHN/2015 of Shri P.R. Ganapathy v/s The Joint Director Directorate of Enforcement, Chennai

ATFP4 Oct 2017FPA-FE-58/CHN/2015

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed the appeal against an order imposing a penalty of Rs. 50,000/- under the Foreign Exchange Regulation Act, 1973. The court upheld the penalty for unexplained receipt of funds contrary to Section 9(1)(d) of FERA.

What did the court decide?

The appeal was dismissed and the impugned order imposing a penalty of Rs. 50,000/- was confirmed.

FPA-FE-58/CHN/2015 of Shri P.R. Ganapathy v/s The Joint… — Banking and Recovery | ATFP (2017)

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APPELLATE TRIBUNAL, FOREIGN EXCHANGE MANAGEMENT ACT AT NEW DELHI

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Date of Decision: 04.10.2017

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FPA-FE-58/CHN/2015

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Shri P.R. Ganapathy … Appellant Versus The Joint Director Directorate of Enforcement, Chennai … Respondent

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Advocates/Authorized Representatives who appeared

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For the appellant	:	Shri S. Ravi, Advocate
For the respondent	:	Shri Prashant Pandey, Legal Consultant
CORAM
JUSTICE MANMOHAN SINGH	:	CHAIRMAN
JUDGEMENT

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FPA-FE-58/CHN/2015

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The appellant conducted auspicious function in the family and for that the close friends and relations were invited from India and from abroad. At the time of function the appellant has received several gifts including money in the form of Demand Draft and Cheque. The appellant has disclosed the payment received as gift to Income Tax Authority while filing the return for the financial year 1994-95/Assessment year 199596.

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The Enforcement Directorate received information from the sources

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that P.R. Ganapathy and Shri Joji Thelliankal, both being persons

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FPA-FE-58/CHN/2015

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resident in India were involved in alleged contravention of the provisions of the Foreign Exchange Regulation Act, 1973. On the basis of information investigation were conducted against the appellant.

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After conducting investigation a Memorandum was issued to the appellant in F.No. T.4/5/SZ/C/2000 dated 31.12.1999 alleging that he has contravened Section 9(1)(d) of FERA, 1973 and thereby rendered himself liable to be proceeded against him under section 50 of FERA, 1973.

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It was alleged in the Memorandum that the appellant a person residing in India without the general or special exemption from the Reserve Bank of India (RBI) has made payments totaling Rs. 16,28,000/to Shri Joji Thelliankal, Thelliankal Veedu, Vazhakulam Post, Muvattupuzha, Kerala on behalf of Shri David Mathew employed in Saudi Arabia and Ms. Monikutty Augustin employed in Muscat persons residing outside India in lieu of the purchase of NRE Chque/Demand Drafts from the NRE account of the said Shri David Mathew and Ms. Monikutty Augustin;

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Accordingly the appellant was asked to show cause as to why the adjudication proceedings contemplated under Section 51 of FERA, 1973 should not be held against him.

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The above said Memorandum was duly replied vide the appellant reply dated 27.03.2015 and Personal Hearing was also attended by the Counsel of the appellant.

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FPA-FE-58/CHN/2015

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Thereafter an Order in Original No. AD/CEZO/03/2015(TJ) dated 31.03.2015 in F.No. T-4/5/SZ/C/2000 has been passed by the Assistant Director of Enforcement Directorate (Adjudicating Authority). The Adjudicating Authority after taking into account the reply and submissions made during the personal hearing, imposed a penalty of Rs. 50,000/- on the appellant under Section 50 of FERA, 1973.

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Shri Joji Thelliankal, a person residing in India, in his statement dated 24.3.1998 under FERA has, interalia, stated that having been tempted by the premium amount promised by Shri P.R. Ganapathy he had contacted Shri David Mathew of Saudi Arabia and Smt. Monikutti Augustin of Muscat, both being native of Kerala, for arranging payments from NRE Accounts, collected and gave the NRE cheques to Shri P.R. Ganapathy; that he also received back Rs. 16,28,000/- (inclusive of the premium) on the same day from Shri P.R. Ganapathy in cash on behalf of the said Shri David Mathew of Saudi Arabia and Smt. Monikutti Augustin of Muscat.

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8.1 Shri David Mathew of Saudi Arabia, a person resident outside India, in his statement dated 06.08.1997, under FERA, has, interalia, confessed that, lured by the promised return in addition to a premium of Rs. 20,000/-, he gave an amount of Rs. 15,66,500/- to Shri Joji Thelliankal from his NRE Account; that instructed Shri Joji Thelliankal to receive the entire return i.e. Rs. 15,86,500/-, in his behalf.

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8.3 Smt. Monikutty Augustin of Muscat, a person resident outside India, in her statement dated 12.09.1996, under FERA, has, interalia, stated that she had given Rs. 40,000/- to Shri Joji Thelliankal through her husband from her NRE Account enthralled by the promised return FPA-FE-58/CHN/2015 Page 3 of 5

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along with Premium amount; that instructed Shri Joji Thelliankal to received the entire return i.e. Rs. 41,500/-, in her behalf.

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In the case of Shri Joji Thelliankal, who had acted as an agent to identify NRE account holders, there was no fool proof evidence on record, to establish that Shri Joji Thelliankal received premium amount and thus it was found by the trial court that there is no corroborative evidence except the statements. It was held that no other evidence on the records placed to show that Shri Joji Thelliankal was indulging in any money transfer business. Therefore, the benefit of doubt was given to Shri Joji Thilliankal in the absence of any cogent evidence, as both David Mathew and Monikutty Augustine have denied for having taken part in any such translation knowingly. Therefore no penalty was imposed any penalty on Shri Joji Thailliankal, although it was found that he contravened the provisions of Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973.

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However, it is the admitted position that Shri P.R. Ganapathy who did not dispute the receipt of the money both in his reply to the Memorandum and during the personal hearing before the Authority. He only attempted to project it as investment from friends. It is correctly mentioned in the impugned order that his denial that he had not given money in return for the cheques/DDs as the statements recorded rather confirmed that the cheques/DDs were received after making payment in cash. Admittedly penalty amount has been deposited by the appellant. I totally agree with the impugned order passed against Shri P.R. Ganapathy. There is no infirmity in the order. Even I am of the view that routine small function such a big amount is not possible to receive as gift

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FPA-FE-58/CHN/2015

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from NRI. It is evident that against the gift amount, the cash must have been given by the appellant.

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As the amount in question was unaccounted sources for his own benefit and directly involved in the contraventions of the provisions of Section 9(1)(d) of FERA, 1973.

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There is no merit, the appeal is accordingly dismissed.

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No costs.

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(Justice Manmohan Singh) Chairman

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New Delhi, 4^th October, 2017.

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‘d’

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FPA-FE-58/CHN/2015

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FPA-FE-58/CHN/2015 of Shri P.R. Ganapathy v/s The Joint Director Directorate of Enforcement, Chennai

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FPA-FE-58/CHN/2015 of Shri P.R. Ganapathy v/s The Joint Director Directorate of Enforcement, Chennai

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