No Error in Imposing Penalty Without Confiscation Under FEMA | SAFEMA Tribunal

Case Details: Union of India vs. M. Gnanavelu - [2025] 178 taxmann.com 772 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• Balesh Kumar & Rajesh Malhotra, Member
• Pranav Mishra, Adv. for the Appellant.

Facts of the Case

In the instant case, the Respondent was found to have acquired certain agricultural properties in Tamil Nadu while residing abroad, an action that contravened FEMA provisions, for which a penalty of Rs. 1 crore was imposed upon him by the Adjudicating Authority vide the Impugned Order.

The appellant-ED filed an instant appeal for enhancement of penalty on the ground that the penalty imposed was low and was not commensurate with the quantified amounts of contravention.

ED had stated that the Adjudicating Authority had ignored provisions of Section 13 (1) of the FEMA, which provides for the imposition of the penalty up to three times the sum involved in contraventions.

It was noted that the amount of penalty which was to be imposed by the Adjudicating Authority is a matter of discretion which, of course, is necessarily required to be exercised judiciously after taking into account the facts of the case and the evidence placed before it.

Further, in the instant case, while passing the impugned order, the Adjudicating Authority had not only taken notice of the facts of the case but also had evaluated the evidence on record.

Appellate Tribunal Held

The Appellate Tribunal observed that there was no statutory requirement to impose a maximum penalty and to mandatorily confiscate, as long as each contravention had been examined and, if found established, had attracted a penalty. Further, reading of the Adjudication Order reflected objectivity and judiciousness on the part of the Adjudicating Authority.

The Appellate Tribunal held that in view of the appeal having failed to bring out reasons why the penalty imposed was low and as to how the Adjudicating Authority had not exercised its discretion judiciously, the order of the Adjudicating Authority could not be interfered with. Therefore, the instant appeal was to be dismissed.

List of Cases Reviewed

• State of MP v. Bharat Heavy Electricals 1998 taxmann.com 1267 (SC)/(1997) 7 (Para 9) followed

List of Cases Referred to

• State of MP v. Bharat Heavy Electricals 1998 taxmann.com 1267 (SC) (para 9).