Investigating a web of controversial land transactions in Bikaner involving Robert Vadra’s companies, the Enforcement Directorate has asked the Income Tax Settlement Commission for details on its proceedings in the case related to Bhushan Power and Steel Limited (BPSL) which gave a loan to a company that bought land owned by Vadra’s firm at seven times its acquisition cost.
Two months ago, then Director of Enforcement Directorate Karnal Singh wrote to the Commission asking for details of the file that contains deliberations on the BPSL case and the order that was reserved, The Indian Express has learnt. He also asked for details of the reconstituted bench that is alleged to have diluted the order to provide relief to BPSL.
This was a follow-up letter to a previous ED query on the same lines to which the Commission had said that records were destroyed in a fire, sources said.
In 2011-12, BPSL gave a loan of Rs 5.64 crore to Delhi-based Allegeny Finlease Pvt Ltd. Allegeny, as per its records, used the money to buy land in Bikaner from Vadra-owned Sky Light Hospitality.
Incidentally, around the same time in December 2011, the Settlement Commission passed an order, admitting BPSL’s application against the IT Department. The IT department had issued show-cause notice to BPSL and sought the company to make income additions for assessment years 2004-05 to 2011-12 on various accounts aggregating to over Rs 800 crore.
In its final order, accessed by The Indian Express, the Settlement Commission not only reduced the quantum of income addition for BPSL to Rs 317 crore, thereby providing relief on income of around Rs 500 crore, but also granted it immunity from prosecution and penalty. This was a sharp departure from the order issued by the previous bench barely two weeks earlier.
When contacted, Akhilesh Prasad, chairman of the Settlement Commission that passed the final order, said: “It’s been more than five years since that order was passed. It was a long time back and I don’t remember its details.”
Allegeny’s filings with the Registrar of Companies show no entry of repayment of the loan to BPSL. Emails send to BPSL and Allegeny Finlease seeking details of the repayment did not elicit any response.
On November 26, The Indian Express met BPSL executives and asked them about this loan and the Settlement Commission’s relief. A top executive said that BPSL would get back with a response, which is awaited.
Granting relief and immunity
A scrutiny of the Settlement Commission order dated June 30, 2013 shows a clear departure from the earlier draft order by the previous bench in mid-June, 2013. After the IT Department issued a show-cause notice and sought the company to make income additions for assessment years 2004-05 to 2011-12 on various accounts that aggregated to over Rs 800 crore, BPSL approached the Settlement Commission on December 12, 2011.
While the Settlement Commission admitted the application within 10 days of filing and termed it “not invalid” in February 2012, it issued a draft order in mid-June 2013, directing addition to applicant’s income and also ordered that “no immunity is granted from prosecution and penalty imposable under the IT Act to the issues arising from application and covered by this order”.
However, barely a fortnight later, the reconstituted bench in its June 30, 2013 order turned it around and said: “Our learned brother…has stated that the applicant’s prayer for immunity from prosecution and imposition of various penalties under various provisions of Income tax should not be considered favourably. We are not inclined to agree on this point…considering the facts and circumstances of the case and the co-operation extended to the Commission during the hearing, immunity is granted from prosecution and penalty imposable under various sections of the Income Tax Act.”
On the subject of addition of share capital of Rs 412 crore to the income of applicant company, while the original bench suggested it to be considered as “unaccounted income of the applicant company itself,” the reconstituted bench said that the advances amounting to Rs 412 crore made by four companies to the applicant company cannot be added in the hands of the applicant.
“In the draft order, our learned brother has discussed the issue relating to the addition of share capital of Rs 412.69 crores. However, we are not inclined to agree with him on this issue as the findings are not based on the correct appreciation of facts and are not borne out from the records… It appears that our learned brother has accepted in toto the report filed by CIT (central), Gurgaon on the 13th June, 2013, which was the last date of hearing. As this report dated 12th June 2013 was submitted on the very last date of hearing the facts narrated there could not be verified/rebutted either by the Commission or the applicant,” the order read.
The Bikaner land deals
Incidentally, the ED began probing the Bikaner deals in 2015 based on FIRs registered by Rajasthan police.
As first reported by The Indian Express, Robert Vadra’s Sky Light Hospitality Private Limited sold 69.55 hectares in two deals to Allegeny Finlease Pvt Ltd in January 2012 for Rs 5.15 crore — at Rs 7.41 lakh per hectare, seven times the purchase price of the same land two years ago.
In January 2010, Sky Light Hospitality had bought the land in two deals for a total of Rs 72 lakh, at a little over Rs 1 lakh per hectare. While Mahesh Nagar, the authorised representative of several companies linked to Vadra, purchased and sold the land on behalf of Sky Light Hospitality, his helper Ashok Kumar and Bikaner-based real estate agent Onkar Mal Yadav sold the two parcels of land as power of attorney for the local landowners to Nagar in 2010.
Another Bikaner-based real estate agent, Naveen Mahipal, signed as a witness in both the deeds between Sky Light Hospitality and Allegeny Finlease. Contacted by The Indian Express, both Yadav and Mahipal declined to comment.
Today, the land in question lies overgrown with weeds on the Jaipur highway near Gajner. In fact, of all the land acquired, sold or still held by companies linked to Vadra, only the parcel sold to solar major Fonroche in Gajner became operational as a solar plant.
Vadra’s lawyer Suman Khaitan wasn’t available for comment.