The Enforcement Directorate (ED) has seized a city-based industrialist’s Rs 1.59 crore deposits, the amount equivalent to the value of alleged assets stashed abroad, in connection with its probe in the HSBC black money list. The central probe agency said it has carried out the action under the recently introduced section 37A(1) of the Foreign Exchange Management Act (FEMA) that empowers it to seize equivalent property in India, if there is a suspicion that any forex, foreign security or any immovable property located outside India is held in contravention of the Act. This is the first action under FEMA in the HSBC black money list.
The agency said it has “seized movable properties of about Rs 1.59 crore of Pradip D Kothari, Chennai, under the provisions of FEMA, during investigations against the persons holding foreign assets without proper approvals”. Officials said the ED began probing a case against Kothari in respect of credit of foreign exchange to the tune of USD 352,258 (about Rs 2.2 crore at present) that was “held” in the HSBC Bank, Geneva and was “suspected to be held outside India and thereby contravened the provisions of FEMA”.
“During investigations, it was admitted that (this) amount was kept in the foreign accounts without proper permission from RBI and without declaring the same to tax authorities. Further, he (Kothari) could not produce any evidences to show that the said amount was repatriated to India,” the agency said in a statement.
This instance, it said, is a violation of the FEMA. “Accordingly, ED has seized Rs 1.59 crore of Kothari, held in his demat account with Axis Bank Ltd, Mylapore branch, Chennai under the provisions of Section 37A of FEMA,” it said. The case pertains to 628 Indians, who figured on a list of account holders in HSBC’s Geneva branch that India had obtained from the French government in 2007. The ED had got these documents from the court after the Income Tax Department, which first obtained and probed the names on the list on charges of tax evasion, filed its prosecution in these cases.
The agency had carried out a similar action a fortnight ago against the owners of a Delhi-based jewellery group as it seized funds worth Rs 7 crore in connection with its FEMA probe in the Panama Papers case. Through the recent changes in the FEMA, the ED has been empowered to seize equivalent property in India, if there is a suspicion that any forex, foreign security or any immovable property located outside India is held in contravention of the Act. This section or amendment was brought in FEMA in 2015 as part of the Union government’s strategy to combat black money stashed abroad.