Buta, kin have hidden income of Rs 10 cr: ED

The ED has already begun a “preliminary” inquiry into the foreign transactions of his two sons, Sarbjot Singh and Arvinder Singh. Four summons have been issued to them but so far they haven’t responded. Arvinder Singh, when contacted by The Indian Express, declined to comment. The ED has also asked for a copy of the assessment order passedby the Income Tax department against Buta Singh six months ago. This order puts the concealed personal and family income of Buta Singh – for a block period of 10 years – as around Rs 10 crore. Buta Singh is said to have appealed against the order but if the assessment remains unchanged, he will have to shell out 60 per cent of the amount in tax and penalties. Buta Singh was sent several notices by the Department but when he failed to respond, his residence was searched on November 6, 1996. When The Indian Express contacted Buta Singh, he said he had no comments to offer. “Dekha Jayega (Let’s see),” is all he said.

Soon after the November 1996 raid, IT officials passed on seized documents pertaining to foreign transactions of Buta Singh’s sons to the ED. Agency officials say the case is at a “preliminary” stage and that they may now begin investigations in Moscow and Mauritius, where Buta Singh’s sons had allegedly entered into business and banking transactions running into millions of dollars. Asummary of what the IT Department has described as “prima facie concealment by Buta Singh and his family members” is divided into eight categories of undisclosed income. These are:

The block IT assessment for Buta Singh was completed in November last year and sources say the assessment for some of the “satellite” firms being held by his family members is still in progress. When contacted, the family’s chartered accountant, V K Anand, declined to comment, but it is understood that the minister has filed an appeal against the Rs 10 croreassessment order. The appeal is pending with the Law Ministry’s tribunal for appeals.

The ED began its own probe even as the IT’s assessment was being finalised. Sources said Buta Singh has been sent a written questionnaire along with the summons for his sons. If the Union Minister’s sons fail to respond to the summons, the ED might be forced to file a criminal complaint in court, they said.

The ED’s case against Buta Singh mainly centers around the import of the deep-sea trawlers by Sarb Consulate Marine Products Pvt Ltd as well as the application for loans from foreign banks by Golden Crest, another company floated by his sons. Documents recovered during the raid show that Sarb Consulate had its office at 10, Ashoka Road, the Government bungalow Buta occupied earlier. Sarb Consulate was earlier negotiating for import of five trawlers, but only three were eventually mortgaged with the bank and landed on Indian shores.

Sources said that the ED will now have to investigate whether the trawlers wereimported on lease by Buta Singh’s sons or by an outright purchase. Sarb director Arora claims that the trawlers belong to the Russians.

While the value of the trawlers — according to documents with the ED — is $2.7 million, in the books of accounts of the company, the trawlers are described as assets valued at around Rs 30 crore. It is understood the ED has already approached the Reserve Bank of India to find out whether Buta Singh’s sons had complied with its regulations before entering into transactions involving huge amounts of foreign exchange.

Documents with the ED also show that barely a few days before the IT searches, Buta Singh’s sons were negotiating for hefty loans for Golden Crest, a company they had floated in Mauritius. Two loans, one for $20 million and another for $6.5 million from a bank in the Philippines, were said to be in an “advanced” stage of negotiations. A third loan — for an even bigger sum — documents indicate, was at an early stage of negotiations.

One summary reportsent by the Delhi unit in October last year states the inquiry had been initiated because of suspected money laundering for the import of the trawlers from Russia as well as efforts to arrange for foreign loans and other payments made in foreign exchange. The report states that progress in the case has been hampered because the “suspects” have failed to appear before the Department for questioning.