* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 5632/2007
PRAKASH BAFNA ..... Petitioner
Through Mr. R.K. Handoo, Mr. S.P. Pandey, Mr.
Atul Sharma, Advocates.
Petitioner in person.
versus
SPECIAL DIRECTOR ENFORCEMENT DIRECTORATE & ORS ... Respondent
Through Ms. Rajdipa Behura and Mr.
Shravanth Shankar, Advocates for ED.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
ORDER
% 11.12.2009 This writ petition by Mr. Prakash Bafna is directed against the order dated 28th May, 2007, passed by the Appellate Tribunal for Foreign Exchange, disposing of the application for waiver of pre deposit. By order dated 28 th May, 2007, the petitioner has been directed to deposit 50% of the penalty amount of Rs. 50 lacs. The impugned order records that if it is necessary, it will be open to the petitioner to seek relaxation from income-tax authorities.
2. Counsel for the petitioner submitted that the adjudication order is an W.P.(C) 5632/2007 Page 1 ex-parte order and is passed upon retracted statements. He further pleads that the entire assets of the petitioner have been attached by the Income Tax Department and the financial condition of the petitioner does not permit him to deposit Rs. 25 lacs to enable him to have hearing of his appeal on merits.
3. The adjudication order refers to several NRE bank accounts which were credited with foreign exchange and then transferred in Indian currency to third parties as gifts. The allegation is that these deposits and transfers were made in violation of the provisions of the Foreign Exchange Regulation Act, 1973 to avail of tax benefits and exemptions. The show cause notice specifically refers to transcript or statement of accounts from the NRE accounts. As per the adjudication order, the total amount of foreign exchange deposited in the NRE accounts was equal to Indian Rs.1,23,29,010/-
4. Pursuant to the directions of this Court, the petitioner has filed statement of accounts of his saving account for the period 1st April, 2005 to 31st March, 2006. The statement of accounts reveals that the petitioner has been applying for issue of shares under initial public offers. It also shows that the petitioner has made payments for purchase of shop Nos. 7 and 8 at Easteet and a flat at Ekbote Colony. The statement of accounts indicates W.P.(C) 5632/2007 Page 2 transactions of substantial value in the said account. Counsel for the petitioner submits that the attachment order passed by the Income Tax Department was not in operation for some time and, therefore, during this period the petitioner was able to procure loans from third parties and had made payments for purchase of two shops and the flat. The balance sheet for the period 1st April, 2005- 31st March, 2006, reveals that the petitioner is a joint owner of the property at Rituraj Society, Pune Satara Road, Pune and has shown rental income from shop No.2124, East Street, Pune. It also shows capital gains from sale of residential houses of Rs.15,98,318/-. The petitioner, however, states that the entire sale consideration of Rs. 39,70,000/- approx. received from sale of flats has been deposited with the Income Tax Department.
5. I have mentioned the aforesaid facts to show that the petitioner is a man of means and has been making investments.
6. In view of the aforesaid facts, it cannot be said that the petitioner should be given complete waiver of pre deposit of the penalty amount. However, at the same time the petitioner has right to press his appeal and the tribunal has itself stated that if required the petitioner should approach the W.P.(C) 5632/2007 Page 3 Income Tax Department. Question of quantum and the benefit earned in the transactions in which the main beneficiaries were the recipients is also an aspect which requires consideration by the tribunal. The petitioner claims that in other cases similar proceedings have been dropped. In these circumstances, it is directed that the petitioner will deposit a sum of Rs. 10 lacs in two equal installments with the Enforcement Directorate. The first installment will be paid on or before 15th January, 2010 and the second installment will be paid on or before 31st March, 2010. The petitioner will file an affidavit with the Enforcement Directorate giving full details of his bank accounts and de-mat accounts. The petitioner will also furnish full details of his investments in mutual funds. In case, Income Tax Department withdraw their attachment order, the petitioner will immediately inform the respondent, Enforcement Directorate. The petitioner will not sell, transfer, encumber or alienate his immovable properties without permission of the Appellate Tribunal for Foreign Exchange till the disposal of the appeal.
7. The writ petition is accordingly disposed of. In the facts and circumstances of the case, there will be no order as to costs. It is clarified that the observations made in this order are for the purpose of disposing of the W.P.(C) 5632/2007 Page 4 writ petition and will not influence the Appellate Tribunal for Foreign Exchange when it decides the appeal on merits. It is further clarified that all the contentions raised by the petitioner and the department on merits are left open and will be examined by the Appellate Tribunal for Foreign Exchange.
Dasti to the counsel for the parties.
SANJIV KHANNA, J.
DECEMBER11, 2009 NA/P W.P.(C) 5632/2007 Page 5