Tax Dept probing officers' role in MDH case flip-flop
April, 07th 2008
The Income Tax department is trying to ascertain it's officers role in spice powder company MDH Masala's offer to pay Rs 54 crore to get tax sleuths off its back and subsequent claim that it was forced to do so.
It is believed that an internal probe is on to get to the bottom of whether tax officials extracted a confessional statement from MDH after searches in November 2006 for alleged tax evasion failed to yield any incriminating evidence.
MDH in a statement then had said "for mental peace, the company is surrendering an amount of Rs 54 crore to the department," sources said, adding that the company had retracted it four days later.
The probe will find why tax officials concerned accepted a vague letter from the company that did not even say under which head the amount was to be surrendered, sources added.
The Income Tax department had conducted raids on at least 50 offices of the MDH group of companies including in Delhi, Gurgaon, Jaipur and residential premises of its owners and seized huge amounts of cash and documents.
The inquiry will also go into whether officials provided a loophole to the company, which has tried to take refuge under the plea that it was forced to give a confession statement.
MDH officials declined to comment on the matter. "The officials are now finding it difficult to explain why they had accepted a letter that mentioned that the amount was being surrendered for mental peace and not toward tax evasion or undisclosed income," said a senior official.
Sources said the department issued letters to the officials about two months back when they failed to establish the claimed tax evasion by the company.
MDH has an annual turnover of around Rs 200 crore and is a leading manufacturer of blended spices.