NEW DELHI, FEBRUARY 20: The income tax (I-T) department has imposed penalties on 25 multinational companies (MNCs) amounting to Rs 75 crore for tax evasion on salaries paid to their expatriated employees abroad and initiated proceedings against 16 others, the Delhi high court was informed by the department.Sixteen companies against which action for assessment of penalties had been initiated include Asian Hotels, Hyundai Corporation, Hyundai Engineering and Construction Co, Daewoo Motors, Colgate India Ltd, Alcatel South Asia Pacific and Ericsson Communication.The department said the case for launching prosecution against Business India Television was under process as the ``default'' by the company did not call for penalty as it had not deposited the tax after deduction.The department said it had called for records from Sakura Bank and Mitsubishi for examination and appropriate action though proceedings against them were earlier dropped as these companies were not covered under a special survey conducted by the Central Board of Direct Taxes (CBDT) in 1994.The cases of two more companies - Usha Martine Finance Ltd and Rice Daewoo Precision Industries Ltd - were also being re-examined for initiation of penalty proceedings, it said.Of the 41 cases examined by the department in the category of voluntary income disclosure scheme, proceedings against 29 were dropped as ``it was found that the companies have suo moto revised the tax deduction at source and paid the taxes with interests,'' the department said.Prashant Bhushan, counsel for petitioner - Azadi Bachaoandolan - an NGO, had submitted a list of 59 MNCs, which had allegedly not deposited taxes on employees' salaries fully despite the voluntary assessment.The department, however, said it had levied penalty on 12 companies in the `voluntary' assessment category and was examining the records of 18 others. The MNCs against which penalties were imposed in this category included Hitachi India Trading, Hitachi Corporation and Sumitomo Electric Industires.The department contested petitioner's claim that it was ``delaying'' prosecution under ``pressure'' from the MNCs, saying ``the facts and circumstances'[' in all cases were not identical and each case had to be examined on merit.``Under rules no prosecution can be launched where there is no deduction of tax. It can be initiated only when the tax has been deducted but not deposited,'' it said.The department said even if the penalties were imposed in all cases, the total amount would be around Rs. 300 crore. "As the penalty cannot exceed the amount of tax, the figure of Rs. 500 given by petitioner is inclusive of tax and the interest."However, the petitioner had claimed that the government was loosing around Rs. 1500 crore on this account as the companies were liable to pay penalties ranging between 100 and 300 per cent on the actual tax amount of Rs. 400 crore since 1994 apart from the interest.The department further said that the cases of individual employees were not reopened by it because taxes on account of under-statement in respect of their salaries ha been recovered from the employers with interest and the emoluments paid abroad were also "grossed up" while doing so, it said.The department denied that two senior officers - K C Jain and A Bhaskar Reddy - were shifted for initiating action against the MNCs and claimed that their transfer was a routine exercise and both of them were placed in senior positions."In a number of cases inquiries are still in progress to see the correctness of tax and interest paid by the MNCs," the affidavit said.The court had issued notices to secretary (revenue) in the finance ministry, the CDBT and IT department in November last year following the PIL.The petitioner had stated that even the CBDT circular issued in June 1994 mentioned that many foreign companies were not deducting taxes at source on the salaries paid to their employees abroad.
