I-T department launches probe against 600 cash hoarders

NEW DELHI: The income tax department has begun prosecution proceedings against some of the 600 entities of Indian origin who have allegedly laundered money through bogus investments in tax havens either in their name or through their front companies.

Recently, the member (investigation) of Central Board of Direct Taxes, who has been reporting to the finance minister on this issue, held a video conference with income tax directors general and chief commissioners and asked them to expedite their probe against all such individuals and corporate entities.

This time, the finance ministry has roped in Enforcement Directorate, Financial Intelligence Unit and Directorate of Revenue Intelligence besides the I-T department to investigate the list of 600 who have allegedly stashed funds in tax havens.

The finance ministry through the FIU has sought help from the US, UK and Australia on these entities and has been assured of some inputs from Australia. The government is also banking on receiving information from some of these countries by invoking the Double Taxation Avoidance Agreements and tax information exchange agreements which India has signed with many of the tax havens.

These 600 names, whose investments have been allegedly tracked in tax havens, are in addition to the 700 that France had shared with the government in 2011 about Indians having deposits in the Geneva branch of HSBC.

Investigation in the HSBC deposits across Mumbai, Delhi, Chennai and Kolkata among other cities had revealed that the ill-gotten cash belonged to top industrialists, some politicians and other entities, some working as fronts for people yet to be identified. The I-T department had recovered tax from many of these high-profile individuals and let them off without prosecution.

Sources said the ED has begun investigation of foreign exchange violations, and possible money laundering against these 600 entities. The database of 600 was first brought out by the International Consortium of Investigative Journalists (ICIJ) in the summer of 2013.

According to sources, the ED has written to the CBDT for details it has obtained from various foreign authorities on the Indians on the ICIJ list. The CBDT investigation has found that some of the addresses on the list are wrong, and in some cases, the individuals are NRIs who can legally carry out financial transactions in tax havens.

The ED is primarily looking at violations of Foreign Exchange Management Act, but if any criminality is unearthed, the agency could probe the violation under Prevention of Money Laundering Act.

The ICIJ database contains names of a few famous industrial families, some politicians, and several others. These people primarily used the services of Singapore-based Portcullis TrustNet and British Virgin Islands-based Commonwealth Trust Limited for opening offshore financial entities.

Among those who figure in the database are two Members of Parliament — Lok Sabha MP Vivekanand Gaddam and Rajya Sabha member Vijay Mallya. Also on it are industrialists such as Ravikant Ruia, Samir Modi, Chetan Burman, Abhay Kumar Oswal, Rahul Mammen Mappillai, Teja Raju, Saurabh Mittal, Vinod Doshi etc.

Former IAS officer Anil Lakhina, wife of a former Delhi power secretary R K Verma also figure on the list. The name of Gautam Khaitan, whose name has cropped up in the VVIP helicopter scandal, also figures among those with such accounts.

The database, which contains transactions carried out several years ago as well as recent ones, has 170 addresses from Mumbai, 113 with Delhi addresses, 44 with Kolkata addresses, 32 from Bangalore and 26 from Chennai.
Courtesy:
Pradeep Thakur & Josy Joseph,TNN
Feb 17, 2014, 01.35 AM IST
http://timesofindia.indiatimes.com/india/I-T-department-launches-probe-against-600-cash-hoarders/articleshow/30532519.cms

Duty Evasion Scam: DRI sends notice to Lalit Modi for 18.5cr duty evasion

Mumbai: The Directorate of Revenue Intelligence (DRI) has issued a show-cause notice to former IPL commissioner Lalit Modi for Rs 18.5 crore duty evasion in the import of an aircraft in 2008.

The aircraft was for Modi’s private use but he created dummy companies to import the aircraft by falsely availing Customs duty exemption, the notice said.

The DRI has relied on the various e-mails between Modi, his former employee and confidante Deepa Palekar and other facilitators to substantiate its claims.

Also, the registration number of the aircraft was VT-RAK, where RAK stood for the first alphabet of his three children, it said.

The Rs 100 crore Bombardier Challenger 300 aircraft was imported by Vile Parlebased Golden Wings Pvt Ltd (GWPL) from Peel Aviation, Ireland, for a lease amount of Rs 10.85 crore for a period of 7 years beginning May 2008.

“Investigations reveal that Mr Lalit K Modi orchestrated a series of events to acquire an aircraft for his personal use,” the notice said. “Peel Aviation is a corporate veil to mask the actual owner of the aircraft, Modi.”

Customs duty exemptions are granted if aircraft is imported for non-scheduled passenger services or non-scheduled (charter) services. Modi’s aircraft was not used for public transport of passengers considering that Golden Wings does not have a published tariff and was not its authorized business activity. It also did not undertake any charter services, the notice said.

Modi had used the aircraft for his trips related to IPL in the country and also abroad. Eighty six per cent of flying hours were used to transport Modi, it said.

The import of spare parts for the aircraft also amounts to duty violation of Rs 45 lakh, it said. The aircraft’s last trip was to United Kingdom on July 20, 2010 and since then it is parked at Beggin Hills airport. The show-cause notice has also been issued to Palekar as well as GWPL directors Pradeep Thampi, and Tanveer Romani.
Courtesy:
C Unnikrishnan TNN
http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW

Customs slaps 38.5cr duty evasion fine on Adani firms

Mumbai:The Customs department has imposed a collective penalty of Rs 38.5 crore on Ahmedabad-based Adani Exports Limited (AEL) and its related entities in a case of Rs 679.62 crore duty evasion involving import and export of diamonds. Of the penalty, Rs 1 crore has been imposed on AEL’s managing director Rajesh Adani.

The Customs’ decision has come six years after the Directorate of Revenue Intelligence (DRI) issued a show-cause, accusing the company of importing diamonds and exporting the same, falsely claiming value addition. AEL thus inflated the export turnover to claim government incentives in the form of duty-free imports, DRI had alleged. Customs commissioner P M Saleem, in the January 14 order, endorsed the findings and said, “The value addition claimed is bogus.”

Vikram Nankani of Economic Laws Practice, who represented the company, said they have gone in appeal in the Customs, Central Excise and Service Tax Appellate Tribunal. “The matter is sub judice and I would not like to comment,” he told TOI over the phone on Friday. AEL had denied the allegations during the hearing of the show-cause notice and said the value addition was genuine.

In 2004, the government launched a scheme, Target Plus, that permitted duty-free imports for companies which fulfilled certain export performance conditions. The scheme was for five years, but diamonds were removed from the list of items in 2006, following misuse complaints. While the scheme was in force, AEL acquired interest in two companies and accordingly, the export figures rose. When the policy changed, enhancing the value addition from 5% to 10%, AEL’s corresponding figures also rose, thus inflating exports, the order said. The exports dropped to one-third in January 2006 because the companies had achieved the targets for the same by then.

The order said the companies in Hong Kong and Singapore that either supplied the diamonds or bought the value--added diamonds were controlled by AEL. These firms were shut the moment the incentive scheme was discontinued. AEL also paid illegal commission to overseas entities for exports, which if taken into account reduces the value addition claimed by the company. AEL is the main culprit, the order said.

The order said that AEL entered into MoUs with group companies, who passed on incentives claimed for exports to AEL for a commission.
Courtsy:
C Unnikrishnan TNN
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