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I-T department launches probe against 600 cash hoarders
February, 17th 2014

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.

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