Remanded

FPA-FE-26/KOL/2015 of Shri Pradeep Saraogi @ Pradeep Jain v/s The Special Director Directorate of Enforcement, Kolkata

ATFP8 Jan 2019FPA-FE-26/KOL/2015

Case brief

AI extract

What is this about?

The Tribunal held that since the seized amount was not confiscated or forfeited to the Government, it could not be adjusted towards the penalty. The appeal was set aside and the case remanded to pass a fresh order.

What did the court decide?

Case remanded to the original authority to pass a fresh speaking order after affording an opportunity to the appellants and passing clear cut orders on each issue.

FPA-FE-26/KOL/2015 of Shri Pradeep Saraogi @ Pradeep Jain v/s The… — Money Laundering | ATFP (2019)

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APPELLATE TRIBUNAL FOR SAFEMA, FEMA, PMLA, NDPS, PBPT ACT AT NEW DELHI

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DATE OF DECISION: 08.01.2019

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FPA-FE-12/KOL/2015

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Shri D. C. Agarwal … Appellant Versus The Special Director Directorate of Enforcement, Kolkata … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellants :	Shri Sudhir Advocate	Kumar Mehta,
For the Respondent :	Mrs. Aagam Consultant	Kaur, Legal
FPA-FE-26/KOL/2015
Shri Pradeep Saraogi @ Pradeep Jain		… Appellant
Versus
The Special Director Directorate of Enforcement, Kolkata		… Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellants :	Shri J. K. Srivasta Advocate	va,
For the Respondent :	Mrs. Aagam Kaur, Consultant	Legal
FPA-FE-27/KOL/2015
Shri Sanjay Chaturvedi	…	Appellant
Versus
The Special Director Directorate of Enforcement, Kolkata	…	Respondent
FPA-FE-12/KOL/2015 FPA-FE-26 & 27/KOL/2015		Page 1 of 6

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Advocates/Authorized Representatives who appeared

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For the Appellant : None For the Respondent : Mrs. Aagam Kaur, Legal Consultant

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CORAM SMT. ANANYA RAY : MEMBER

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JUDGMENT

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FPA-FE-12/KOL/2015 & FPA-FE-26 & 27/KOL/2015

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Appeals have been filed before this Tribunal against the order in original T-4/1-C/2007/1072 dated 11.02.2015 passed by the Special Director, Enforcement. Briefly the case is that on a search of the residential as well as office premises of Shri Pradeep Kumar Saraogi @ Pradeep Kumar Jain @ Pappu, certain loose sheets and Indian currency aggregating to Rs. 46.75 lakhs was seized from his premises by the officers of the ED. The allegation was that Shri Saraogi, a person resident in India undertook a large number of transactions involving dealings in foreign exchange and transfer of foreign exchange to persons not being authorized persons and also entered into financial transactions in India as consideration for or in association with acquisition or creating or transferring of a right to acquire assets outside India by a number of persons. It was alleged, inter alia , that the other two appellants Shri D.C. Aggarwal and Shri Sanjay Chaturvedi made payments of Rs. 29.05 lakhs, Rs. 4 lakhs and Rs. 11 lakhs to Shri Pradeep Saraogi as consideration for acquisition/creation or transfer a right to acquire equivalent funds in foreign exchange outside India without any general or special permission of the RBI. The appellants in FPA-FE-12/KOL/2015 & FPA-FE26/KOL/2015 have, both in their appeal, written submission as well as during the hearing before me stated the following:

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FPA-FE-12/KOL/2015 FPA-FE-26 & 27/KOL/2015

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Page 2 of 6

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a. That they have not contravened any provisions of the FEMA in as much as there was no seizure of foreign exchange. Moreover there has been no asset creation abroad and hence the provision of Section 3(d) of FEMA is also not applicable.

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b. The whole case of the department is based on certain loose sheets recovered from the premises of Shri Saraogi which cannot be treated as evidence as per the Supreme Court judgment in the V.C. Shukla case.

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c. That it is apparent from the records of personal hearing dated 25.06.2010 that the proceedings before the adjudicating authority had not yet been completed but the adjudicating authority without waiting, passed the impugned order. That the said record of hearing states “hence cross-examination of Shri S.K. Barik will continue. With other requests decision shall be taken in due course”. That while the cross-examination of Shri Barik was not completed no decision with regard to cross-examination of others was ever communicated to them and hence the impugned order suffers from illegality.

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d. That the investigation speaks of one Mr. Shah at Singapore who was used as a media to transfer Indian Rupees into foreign exchange and transferring it to the actual beneficiaries. That the High Commission of India at Singapore has not given any evidence of the existence of this Mr. Shah.

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FPA-FE-12/KOL/2015 FPA-FE-26 & 27/KOL/2015

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Page 3 of 6

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They relied on the following judgments:

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i. 2001 (130) ELT 271 (TRI-Kolkata)- Sharma

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Chemicals vs. Commissioner of Central Excise, Calcutta-II

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ii. 2004 (164) ELT 339 (TRI-Kolkata) Woodmen Industries vs. Commissioner of Central Excise, Patna

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iii. 1983 ELT 2208 (All.) Lalit Kumar vs. Assistant Collector of Central Excise, Meerut.

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iv. AIR 1998 Supreme Court 1406 Central Bureau of

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Investigation vs. V.C. Shukla & Ors.

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v. 1996 (2) C.C. Cases 41 HC (Delhi) L.K. Advani vs. CBI.

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e. In addition, the appellant in FPA-FE-12/KOL/2015 stated that there is no charge of any foreign exchange dealing in their case, that it is not disputed that they were doing business of Rukka which is a legal business and that the money given to Mr. Saraogi was for the purposes of investment in the said rukka business. They relied on the Supreme Court decision of 1961 SCC Online Calcutta 170 in the case of Tiloke Chand Chopra vs. Ramdhandas Beharilal & Anr.

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f. On behalf of both the appellants, it was submitted that while Rs.46.75 lakhs was seized, the same was not confiscated or forfeited to the Central Government. Hence, adjusting the same towards the penalty levied by the adjudicating authority is blatantly wrong and illegal.

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FPA-FE-12/KOL/2015 FPA-FE-26 & 27/KOL/2015

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Page 4 of 6

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No one appeared on behalf of the appellant in FPA-FE27/KOL/2015 before me.

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In reply, the respondent has argued that Section 3(a) of FEMA has been rightly invoked since there has been a financial transaction and the explanation to this Section defines financial transaction as “making any payment to or for the credit of any person, receiving any payment for, by order or on behalf of any person, or drawing, or issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt”. Moreover, Shri Pradeep Saraogi has in his own hand written statement accepted his involvement in hawala transactions. They relied on Section 39 of FEMA which authorizes presumption unless the contrary is proved that the signature and every other part is by that person‟s handwriting and admit the document in evidence notwithstanding that it is not duly stamp. With regard to the appellant‟s reliance on the V.C. Shuklas‟s case judgment of the Supreme Court as stated above they referred to Rule 4(5) of the Foreign Exchange Management (Adjudication Proceedings And Appeal) Rules, 2000 wherein it is clearly laid down that the adjudicating authority is not bound to observe the provisions of the Indian Evidence Act.

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I have carefully gone through all the documents as well as heard both the parties at length. Without going into the merits of the case, I find that the impugned order suffers from a blatant illegality in as much as the seized amount has not been confiscated or forfeited to the Central Government. The amount cannot therefore be appropriated towards payment or adjustment of penalty amount or anything else. Moreover, once the principal amount is not confiscated the interest also cannot be appropriated. It is to be presumed that by not confiscating the seized FPA-FE-12/KOL/2015 Page 5 of 6 FPA-FE-26 & 27/KOL/2015

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amount and passing a final adjudication order, the seizure has been vacated. In such a situation I deem it fit to remand the case back to the original authority to pass a fresh speaking order after affording an opportunity to the appellants and pass clear cut orders on each of the issues.

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(Ananya Ray) Member New Delhi, 08^th January, 2019

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„A‟

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FPA-FE-12/KOL/2015 FPA-FE-26 & 27/KOL/2015

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Page 6 of 6

FPA-FE-26/KOL/2015 of Shri Pradeep Saraogi @ Pradeep Jain v/s The Special Director Directorate of Enforcement, Kolkata

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FPA-FE-26/KOL/2015 of Shri Pradeep Saraogi @ Pradeep Jain v/s The Special Director Directorate of Enforcement, Kolkata

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