In what could be one of the quickest orders passed by the Income Tax Settlement Commission (ITSC), Sahara India has been granted immunity from prosecution and penalty 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 50-page order, accessed by The Indian Express, 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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After just three hearings, a final order — granting immunity — was passed on November 10, 2016. This was just three days after the last hearing in the case on November 7, 2016.
Usually, the ITSC is given about 18 months to pass final orders and insiders say rarely is an order passed in less than 10-12 months.
The final page of the order states that only Rs 137.58 crore — which was seized during the raids — will now be taxed, which too can be paid by the company in 12 instalments.
The order mentions that Sahara had claimed it was passing through “difficult times” and wanted to pay the tax and penalty in instalments.
On the very first page of the order, the ITSC mentions that “the applicant’s contention is that these are dumb documents written by some disgruntled employees…”
The evidence discussed by the ITSC at length in the order includes the loose sheets and computer print-outs which form so-called Sahara diaries that have alleged payoffs to over 100 politicians from more than 14 parties. A petition mentioning the Sahara diaries was filed by Prashant Bhushan in the Supreme Court on November 15, 2016 and the next hearing is scheduled for January 11, 2016.
The diaires were referred to by Delhi Chief Minister Arvind Kejriwal and Congress vice president Rahul Gandhi to allege payoffs to Narendra Modi when he was Chief Minister. The BJP denied the claims; Congress leader Sheila Dixit, one of those named in the diaries, questioned its authenticity. And the Supreme Court has observed that it would not order an inquiry on the basis of these papers unless there were credible material to suggest illegal pay-offs.
The ITSC order concurs with Sahara’s explanation that an employee and a friend of his got together to “implicate and malign” the image of another employee who was the head of Department of the office of Chairman of the Sahara Group. The duo “thought they were being ill-treated by him and he made them work for long and odd hours which in turn was affecting their family life and for various other personal reasons,” the order says.
The ITSC order mentions how initially the Income Tax Investigation Wing wanted to add Rs 2700 crore to the unaccounted income of Sahara India. Thus, the ITSC has noted, “The Investigation Wing had proposed a much higher amount (about Rs 2700 crore) for addition but reconciliation was carried out during assessment proceedings and a figure of Rs 1217 crore was worked out after consultation with the Investigation Wing.”
The ITSC also notes how “statements of third parties were taken by the Department who too have denied having any relation to such entries (in the diaries)…”
The order mentions names of the Sahara employees who it calls “authors” of the diaries but it does not mention the names of persons listed against alleged pay-offs who were purportedly questioned by the IT Department.
The ITSC also notes that initially the company had agreed to the calculation of Rs 1217 crore being its undeclared income but later challenged that.
The conclusion of the ITSC is that, “even though authors on loose papers have claimed fabricating documents…this self-serving claim has limited evidentiary value and the Income Tax has failed to corroborate or prove the correctness of notings on loose papers and electronic documents. No evidence with regard to sources of receipts and nature and purpose of payments were produced before us.”