Sahara’s expense claim to income tax panel is over 100 times its RoC filings

An email sent to Sahara India seeking details of revision in their expenses and the huge gap in reporting of expenditure between RoC filings and that provided to the tax authorities, went unanswered.

Written by Ritu Sarin , Sandeep Singh | Updated: January 13, 2017 1:09 pm
Sahara, sahara tax, sahara modi, Sahara immunity, sahara income tax, sahara papers, sahara papers seized, sahara raid, sahara penalty raid, income tax settlement commission, ITSC, sahara india, Income Tax Department, Sahara, Sahara India, Sahara India income tax, Sahara tax, Income Tax Settlement Commission, ITSC, Sahara company, Tax, Sahara tax, Registrar of Companies, sahara news, india news, indian express news An email sent to Sahara India seeking details of revision in their expenses and the huge gap in reporting of expenditure between RoC filings and that provided to the tax authorities, went unanswered. (Representational image)

SAHARA India’s claims of its expenses filed with the Income Tax Settlement Commission (ITSC) are more than 100 times higher than what it filed with the Registrar of Companies (RoC).

READ | Sahara gets immunity, tax panel accepts its claim that seized papers not evidence

This massive upward revision of expenses, experts said, helped the company avoid taxes on the Rs 1,771 crore that the ITSC decided was its additional income — for the period between 2008-09 and 2014-15 — on account of alleged unexplained cash receipts seized during search and seizure raids in November 2014.

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A scrutiny of RoC records and the 50-page ITSC order, accessed by The Indian Express, reveals discrepancies. Consider the following:

* As against the total expense of Rs 2.9 crore reported by the company in its RoC filing for 2009-10, the Settlement Order notes that the operational expense for the company for that same year stood at Rs 400 crore.

* For 2010-11, the RoC filing shows an expense of Rs 3.08 crore. No corresponding figure is available in the Settlement Order.

* For 2011-12, RoC records show Rs 3.31 crore as expense but there is no corresponding figure in the Settlement Order.

* For 2012-13, RoC records show a total expense of Rs 38.3 lakh as against the expense of Rs 586 crore presented in the Settlement Order.

* While the total expense reported by the company with the RoC in the period between 2009-10 and 2012-13 aggregates to only Rs 9.7 crore, the aggregate of operational expense for four years (Assessment Years 2010-11, 2013-14, 2014-15 and 2015-16) provided in the settlement order amounts to Rs 2,173 crore.

Significantly, these revised expense figures exceed the total settled income of Rs 1,910 crore.

That’s why the company has been allowed to credit for, as the order puts it, for “loss up to 2013-14 in AY 2014-15 and 2015-16”.

Tax experts said that the Income Tax department uses its discretion on providing for deemed expense against the concealed income to the applicant and, therefore, in this case it may have accepted company’s revised expense figures against the concealed income.

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Said another top chartered accountant who did not wish to be named: “The objective of the revised and inflated expenses seems to be to set off the commissioned income. The point to raise is, whether expense audit was also carried along with the income audit, because, if the expenses are inflated then even if the concealed income is revealed, there will be no tax liability.”

An email sent to Sahara India seeking details of revision in their expenses and the huge gap in reporting of expenditure between RoC filings and that provided to the tax authorities, went unanswered.

On Thursday, The Indian Express had first reported that Sahara India has been granted immunity from prosecution and penalty in an ITSC order following raids conducted on November 2014 during which “diaries” listing alleged pay-offs to politicians were recovered.

Significantly, the ITSC has concurred with Sahara’s claim that the “evidentiary value” of the “loose sheets” recovered during the raids “could not be proved” by the Income Tax Department.

The order states that only Rs 137.58 crore — which was seized during the raids — will now be taxed. The company has been further allowed to pay the taxes, due on that amount, in 12 instalments.

The order shows that the ITSC had earlier rejected the application of the company and then on September 5, 2016 re-admitted it.

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The order reveals that the company made an error in its first application that led to it being rejected. While the minimum tax due should be Rs 50 lakh for an application to technically qualify for submission with ITSC, in the first application, the tax due fell short of that amount and hence the application was rejected on August 31, 2016.

However, within a week, the company submitted a second application where the tax due presented by the applicant was enhanced in a manner that it just crossed the Rs 51 lakh mark and thus could qualify for submission by ITSC.

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