NDTV withheld information on shell companies from IT Department: ITAT

The ITAT has also held that shell companies were floated by NDTV and used for money laundering to the tune of Rs 642.54 crore in the assessment year 2009 -10. 

Published: 22nd July 2017 11:23 PM  |   Last Updated: 23rd July 2017 08:20 AM   |  A+A-

By Express News Service

NEW DELHI: The Income Tax Appellate Tribunal has confirmed the findings of the Income Tax Department that NDTV chief Dr Prannoy Roy made conscious and deliberate efforts to hide details of foreign paper subsidiary companies of NDTV by not attaching relevant documents for the assessment year 2009-10.

NDTV did not furnish to the IT Department the audited profit loss account, balance sheet and annual report of the shell companies along with its annual report for the assessment year 2009-10 in which the tribunal has passed an adverse order against the Media firm.  

The ITAT has also held that shell companies were floated by NDTV and used for money laundering to the tune of Rs 642.54 crore in the assessment year 2009 -10. 

In 2009, Ministry of Corporate Affairs was ostensibly hand in gloves with Dr Prannoy Roy in his conscious efforts to hide financial information of the foreign shell companies floated and used for money laundering to the tune of Rs 642.54 crores.  

The ITAT has further held that Dr Roy in his application to the Ministry of Corporate Affairs on May 8, 2009 seeking exemption to the NDTV for not making disclosure of financials of foreign shell companies fraudulently misinformed both share holders and other regulatory authorities by claiming on April 30, 2009 itself that the MCA had already granted the exemptions to it. Apparently, Roy was sure that Ministry of Corporate Affairs will grant such exceptional exemption to NDTV even before approaching to the Ministry. 

“…this order (of MCA) exempting the assessee (NDTV) was not retrospectively operative. Therefore, the lapses or omissions of not making full and true disclosurein the audited accounts of the assessee were not condoned by the exemption order of Ministry of Corporate Affairs,” says the tribunal order.

“Even though, these subsidiary companies were paper companies located in UK, Mauritius, Netherland, Sweden etc. having no office, employee and known business activities, financial transactions worth several hundreds of crores were routed through these subsidiary companies for the benefit of NDTV Ltd. and its management….the assessee had seriously restricted the probe by the AO into the issue of substance over form by withholding information about the subsidiary companies,” the order said.

As per the Companies Act and Indian Accounting Standards stipulations, the NDTV  was supposed to furnish the transaction of the subsidiaries (in this case the shell companies)  along with the audited accounts of the parent company (NDTV). By not disclosing the transactions of the subsidiary/shell companies, NDTV also violated the norms for listing with the Stock Exchange as prescribed by the Securities and Exchange Board of India, according to the tribunal order.  

In its order, the tribunal noted, “It is for other regulatory and supervisory agencies to get alarmed with such an act. In view of these glaring facts, we do not have any hesitation to say that the conduct of the assessee shows that assessee had never an intention to disclose the details of its subsidiary companies and its financial transactions to its stakeholders and to regulatory authorities including the income tax authorities.”

The ITAT has confirmed the finding of Income Tax Department that NDTV Group had laundered its own black money of Rs. 642.54 crores using foreign paper companies. The tribunal also held that Dr Prannoy Roy was personally involved in tax evasion and money laundering of Rs. 642.54 crores. 
According to the IT Department probe, the NDTV and its promoters had allegedly laundered black money to the tune of Rs 1,100 crores during assessment years 2007-08 to 2009-10 out of which finding of black money of Rs 642.54 crores and its laundering during A.Y. 2009-10 has been confirmed by the ITAT in case of NDTV. 

Adjudication for assessment years 2007-08 and 2008-09 involving similar issue of money laundering using foreign shell companies to the tune of Rs 450 crores is pending with ITAT. 

The finding of ITAT for A.Y. 2009-10 is expected to be relevant and applicable to other pending assessments of the firm involving tax evasion and laundering of black money to the tune of Rs 450 crores.     

The tribunal has also noted the dubious role of audit consultant Pricewaterhouse Coopers (PWC)  in tax evasion by NDTV of Rs 642.54 crores detected by Income Tax Department and confirmed by it. Earlier, PWC was involved in several other financial scandals like Satyam Computer. 

In response to email by Express and when contacted on phone, Managing Editor of NDTV Manika Raikwar Ahirwal said, “Our statement is on the NDTV website.”

The NDTV statement, “This is with reference to reports in certain section of the media as well as social media regarding the rejection by the Income Tax Appellate Tribunal (ITAT) of an appeal filed by the Company against the assessment order for tax demand of Rs. 450 crores for the assessment year 2009-10.”

“The ITAT order has not yet been uploaded. Once the order is uploaded, the Company will advise shareholders of the implications thereof. Meanwhile, the Company assures shareholders that it will seek necessary legal advice and appeal against any adverse ITAT order,” added the statement.

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