The Enforcement Directorate (ED) seized two flats belonging to Businessman Bhupesh Agarwal and his wife in Borivali area of Mumbai. This seizure of flats was made under the provisions of Section 37A of the Foreign Exchange Management Act (FEMA), 1999. The worth of flats is INR 2.83 crore.
The ED raid was conducted on the basis of a tip they received. The officials found out that Bhupesh Agarwal used many dummy corporations for transferring funds to Dubai-based firms. He did this without availing any services as previously declared by him to Authorised Dealer (AD) banks.
Swiftly after getting the tip, ED raided Bhupesh Agarwal’s premises, as well as those of his linked businesses and individuals.
Further, it was revealed during the probe that three companies owned by Bhupesh Agarwal transferred funds of approximately INR 52.83 crore to Dubai-based entities. The three companies owned by him are M/s Lunarart Media Entertainment Pvt. Ltd., M/s Cineblossom Films & Productions Pvt. Ltd., and M/s Rocster Entertainment LLP. The transfer of funds was made under the pretext of aiding audio-video services. But the police stated that no such services were availed by the three companies.
The directors of the three companies along with the chartered Accountant were questioned too. During the questioning, they stated that all the formations were made as per the instructions of Bhupesh Agarwal.
All the money required for foreign payments made under the name of the above-mentioned companies was arranged by Bhupesh Agarwal only.
What Is FEMA?
The Foreign Exchange Management Act, 1999 is an official Act that consolidates and amends laws regulating foreign exchange in India. FEMA, 1999 is in consonance with the frameworks of the World Trade Organization. Under this act, the Reserve Bank of India is empowered to pass regulations and enables the Government of India to pass rules relating to foreign exchange. The motive of the act is to combine and amend foreign exchange laws, enabling external payments and trade, and promoting the maintenance and development of the foreign exchange market of India.
The Foreign Exchange Regulation Act (FERA) was replaced by FEMA, 1999. FERA was an act used to regulate the financial transactions associated with foreign exchange and securities. It was introduced when the forex reserve of India was very low.
Enforcement Directorate’s role in FEMA
The Enforcement Directorate has the authority to probe the acts or cases involving violations of the provisions of FEMA, 1999. Such acts or cases are probed by the designated authorities and officials of the Enforcement Directorate. Those officials have the power to impose penalties up to three times the sum (amount) involved in the cases.
As per section 37 of FEMA, 1999, the Director and Assistant Director of ED have the power to examine and inquire about any contraventions that occurred or may have occurred. ED, under this act, has similar power to that of any Income Tax Officer under ITA section 131.
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