Income Tax department attaches 2 bank accounts, row house of Yash Birla
, ET Bureau|
Nov 07, 2017, 11.40 PM IST
MUMBAI: In the chase to unearth Yashovardhan Birla's undisclosed assets allegedly lying in multiple tax havens, the income-tax department has issued 'provisional attachment orders' on two bank accounts of Birla and his row house in South Mumbai's Grand Parade complex.
The tax office is aiming to recover Rs 743 crore on earnings of Rs 1,500 crore which the department believes had escaped taxation.
Birla's legal advisor has denied the existence of any undisclosed offshore assets owned by his client.
However, the tax department's claim is understood to be built on evidence it gathered in the course of a search conducted few years ago and information subsequently obtained from some of the tax havens.
Responding to a text message from ET, Zulfiquar Memon of MZM Legal, which is representing Birla, said, "The 281B notice originally issued by the Income Tax Department was an erroneous notice and after realising the mistake, the same was immediately withdrawn by the authorities. A revised notice has now been issued.
We must clarify that there is no demand of any amount whatsoever because the assessment by the Income Tax Department has not concluded yet. We are presently before the Hon'ble Bombay HC and the matter is sub-judice.
In case there is an assessment in the future, the same will be subject to the outcome of the said petition in the Hon'ble Bombay HC. Moreover, it is likely that the said assessment may never even take place.
Section 281B in the Income Tax Act allows provisional attachment to protect revenue in cases where tax assessment proceedings are pending or for assessment (or reassessment) of income which has escaped assessment. A provisional attachment order expires in six months.
Union Bank and HDFC Bank have received "no debit" instruction from the tax office on the two accounts of Birla, said a bank official. The tax department's notices pertain to assessment years 2008-09 to 2014-15.
In 2016, Birla had moved the Income Tax Settlement Commission, an alternative dispute resolution mechanism. On rejection by the commission, Birla had moved the High Court which referred the matter back to the commission.
In September 2017, the Commission rejected the assessee's offer to pay a little over Rs 2.8 crore. The matter was revived by the tax assessing officer and fresh notices were issued. Birla has again moved the High court challenging the order of the Settlement Commission.
The sequence of events in the matter in a way reflects the travails of the tax collector as well as in some cases the tax payer in the hunt for alleged secret assets and bank accounts in distant tax havens.
As they pick up clues from Panama and Paradise Papers, the I-T department will have to use all the available provisions in Tax Information Exchange Agreements, mutual assistance legal treaty (MALT), and double tax avoidance agreement (DTAA) to check the veracity of information they stumble upon, spot the violations in any, and extract information with various jurisdictions in a form that stands legal scrutiny.
The tax office is aiming to recover Rs 743 crore on earnings of Rs 1,500 crore which the department believes had escaped taxation.
Birla's legal advisor has denied the existence of any undisclosed offshore assets owned by his client.
However, the tax department's claim is understood to be built on evidence it gathered in the course of a search conducted few years ago and information subsequently obtained from some of the tax havens.
Responding to a text message from ET, Zulfiquar Memon of MZM Legal, which is representing Birla, said, "The 281B notice originally issued by the Income Tax Department was an erroneous notice and after realising the mistake, the same was immediately withdrawn by the authorities. A revised notice has now been issued.
We must clarify that there is no demand of any amount whatsoever because the assessment by the Income Tax Department has not concluded yet. We are presently before the Hon'ble Bombay HC and the matter is sub-judice.
In case there is an assessment in the future, the same will be subject to the outcome of the said petition in the Hon'ble Bombay HC. Moreover, it is likely that the said assessment may never even take place.
Section 281B in the Income Tax Act allows provisional attachment to protect revenue in cases where tax assessment proceedings are pending or for assessment (or reassessment) of income which has escaped assessment. A provisional attachment order expires in six months.
Union Bank and HDFC Bank have received "no debit" instruction from the tax office on the two accounts of Birla, said a bank official. The tax department's notices pertain to assessment years 2008-09 to 2014-15.
In 2016, Birla had moved the Income Tax Settlement Commission, an alternative dispute resolution mechanism. On rejection by the commission, Birla had moved the High Court which referred the matter back to the commission.
In September 2017, the Commission rejected the assessee's offer to pay a little over Rs 2.8 crore. The matter was revived by the tax assessing officer and fresh notices were issued. Birla has again moved the High court challenging the order of the Settlement Commission.
The sequence of events in the matter in a way reflects the travails of the tax collector as well as in some cases the tax payer in the hunt for alleged secret assets and bank accounts in distant tax havens.
As they pick up clues from Panama and Paradise Papers, the I-T department will have to use all the available provisions in Tax Information Exchange Agreements, mutual assistance legal treaty (MALT), and double tax avoidance agreement (DTAA) to check the veracity of information they stumble upon, spot the violations in any, and extract information with various jurisdictions in a form that stands legal scrutiny.
