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Raids reveal proxy stakes, tax evasion
April, 23rd 2010

Tax authorities are widening the net on Indian Premier League (IPL) stakeholders amid suspicions of irregular fund transfers, evasion of withholding tax and proxy ownership structures of various franchisees.

On Thursday, officials of the income-tax department carried out searches at the Mumbai offices of Shah Rukh Khans Red Chillies Entertainment, the parent company of Kolkata Knight Riders (KKR), the New Delhi premises of the GMR group-owned Delhi Daredevils and the Lucknow corporate office of Sahara India that bagged the Pune team.

In the last few days, there have been allegations that some of the shareholders in the franchisees could be fronts for IPL commissioner Lalit Modi. According to a top functionary in the UPA government, the income-tax department suspects that Jay Mehta, one of the KKR promoters, may be holding the shares on behalf of Modi. However, this has been emphatically denied by Mr Mehta.

However, the IT department has sought details from the Director General of Civil Aviation (DGCA) air-traffic regulatorto get a list of those who have used Modis private jet. Mr Modis jet was at the disposal of some of the team owners...The book entries will establish whether these air trips were paid for, he said.

The I-T officials have also conducted searches at the Mumbai offices of KKR at Khar and Bandra. In the case of KKR, there is no indication of overseas fund flow. Money appears to have been raised within country, said an I-T official.

Director General (Mumbai) B P Gaur on Thursday met Sudhir Chandra member, investigation, Central Board of Direct Taxes (CBDT), and held a day-long discussion on the various aspects of the I-T investigation currently underway.

Income-tax officials mostly collected documents related to the auction, bidding of players, shareholding structure, bank details, payments to players, expenditure incurred by the franchisees, income statements of persons involved in the deals. The details will be examined and matched with the tax returns of respective parties.

The tax department surveyed our Barakhamba Road office that houses our sports division. We were not allowed to use our mobile phones during the course of the search, a GMR official said.

The much publicised Super Hospitality Boxes at Eden Gardens have also drawn the attention of the IT department. These VIP enclosures were sold for Rs 32,000 per person...there may have been cash deals in these transactions, said an official.

Interestingly, the West Bengal government too has demanded a probe in the sale of tickets of matches played at the Eden Gardens. As per the rules, the organisers need to furnish all details about the sale of tickets to the state government.

As reported, the IT officials surveyed the Cricket Association of Bengal (CAB) and the Knight Riders office along with the Shakespeare Sarani office of Gameplan, a sports management company that is believed to have close ties with the IPL.

The raids were primarily directed towards finding the sources of funding of KKR. It is learnt that Shah Rukh Khan was rushing to New Delhi on Thursday night.

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