The Enforcement Directorate’s Bhopal Zonal Office conducted search and seizure operations at three locations linked to M/s Rajul Group and its partner Priyank Mehta in Jabalpur, Madhya Pradesh. The action, carried out under the Foreign Exchange Management Act (FEMA) of 1999, is related to the alleged misuse of the Liberalised Remittance Scheme (LRS) for buying properties abroad. The investigation was initiated based on information from the Income Tax Department.
During a search at Rajul Group in September 2023, tax officials discovered evidence indicating that Mehta possessed foreign assets. Further inquiries revealed that he had bought a residential flat in Lisbon, Portugal, for €5,10,000 and was earning rental income from it. These foreign investments and income were not disclosed in the Foreign Assets Schedule of his income tax returns, according to an ED press statement.
The recent operation by the ED led to the seizure of unaccounted cash amounting to Rs 31 lakh from Mehta’s premises. Investigators also identified fund transfers totaling $5,48,000 to the US under the LRS scheme, which were then sent to Portugal. Additionally, €4,20,998 (equivalent to Rs 3.65 crore) was transferred to Portugal for purchasing the flat in Lisbon. A balance of around Rs 2.1 crore remains in Mehta’s bank account in Portugal, as per the central agency.
Authorities suspect that these transactions were structured to evade disclosure norms and hide foreign assets. The case underscores concerns regarding the potential misuse of the LRS framework, which permits resident individuals to remit up to $250,000 annually for permissible transactions, including overseas property acquisitions. While the ED has not revealed the possibility of further arrests, a detailed investigation is ongoing to uncover the extent of violations and potential money laundering aspects. The seizure of cash and documents represents a significant development in the probe, with broader implications for compliance with FEMA and the Income Tax Act.
