Tribunal Reduced Penalty Amount for FEMA Violations as Amount Imposed Was Excessive Compared to Contraventions

Case Details: Shri Satpal Singh Vig @Pali v. Joint Director, Directorate of Enforcement - [2024] 162 taxmann.com 713 (SAFEMA - New Delhi)

Facts of the Case

In the instant case, Respondent received specific information that the appellant was receiving and accepting bets on scores and outcomes of cricket matches and other sporting events on behalf of their clients and bookies based locally, nationally and internationally and accordingly, a penalty was imposed by ED for alleged violation of section 3 and 4 of FEMA which had been assailed in the instant appeal.

It was noted that the respondent had not recorded a finding solely based on statements of the appellant and JS, who was said to be co-accused; however, it was also based on documents recovered from their business premises during search and seizure.

Further, JS’s statement was recorded in continuity from the date of search, 02.08.2004. His statement was recorded even on 03.08.2004, 8.09.2004, and 11.10.2004. He did not retract his statement immediately, so it could not be taken that statements were recorded with inducement.

The appellant’s position was similar. His statements were recorded on 03.08.2004, 04.08.2004, and 06.08.2004. Again, it was in continuity, and he did not raise any objection to recording his statement in four days by calling him. There was no retraction of his statement immediately thereupon.

Thus, the findings recorded by the respondent were error-free, and the penalty issue remains. A penalty of Rs. 26 lakhs was imposed for contravention of Section 4 and Rs. 98 lakhs for Section 3(d) of FEMA

ITAT Held

The Tribunal held that the penalty amount was in excess of contravention of the amount involved. The appellant had already deposited Rs.50 lakhs to satisfy the condition of pre-deposit.

Thus, to make the penalty amount proportionate to the contravention, it was to be reduced. Accordingly, for contravention of Section 4, a penalty of Rs.26 lakhs was to be reduced to Rs.10 lakhs. Similarly, a penalty of Rs.98 lakhs was to be reduced to Rs.40 lakhs. Accordingly, the appeal was partly allowed.