Income Tax asks for ED probe into Amitabh’s forex receipts

However, sources in the Bachchan camp say that the FERA charges may not stick because the cine star had years ago become a Non Resident Indian (NRI) and also because there were only a few days left for the present FERA to exist as a statute. Under the new statute, the Foreign Exchange Management Act (FEMA), violations such as these will be regarded as a civil and not a criminal offence.

ED sources say that the IT Department’s report hints at Bachchan having set up a front company to route receipts from the pageant. The ABCL’s agreement with the Gillian Gamsy International (GGI), a South African firm for the pageant and the testimony given by the ABCL’s CEO to the IT Department have also been forwarded to the ED.

The allegations contained in the IT Department’s report are serious in nature and are largely based on documents recovered from the ABCL’s office. For one, the department has discovered a FERA angle in the non-remittance of $56,000 to India after ABCL entered into an agreement with Star TV for booking advertisements and commercial spots for the pageant.

Reminders were sent to him to explain the non-remittance but since no reply was forthcoming, the amount (calculated to Rs 20.16 crore) had been added to the company’s income and as the IT now says, this foreign currency was neither disclosed in the receipts of the company nor was it brought to India.

The second alleged violation pertains to the receipt of Pounds Sterling 50,000 paid by ABCL in Indian currency to Miss World (Jersey) Ltd. The IT auditors have said: “The agreement indicates that there was an Indian company behind the entire fiscal arrangement. As on 2/8/96 neither Miss World (Jersey) Ltd. nor GGI had any sources of income in India which would have yielded payment in Indian rupees in cash. Therefore, it appears that the amount equivalent to Pound Sterling 50,000 was paid by the assessee from its undisclosed sources.” Therefore, in all, Rs 27.50 lakh was added as the undeclared income of the company.

The third allegation is the most damning. A fax recovered from ABCL shows that TV rights for the pageant had been sold to South African TV for $1,10,000. A copy of the fax, sent by the GGI, is enclosed with the report, and shows that 80 per cent of the receipt of the sale of TV rights was to accrue to ABCL. However, none of the receipts was brought to India. According to the fax, a total of $3,44,325 (Rs 1.23 crore) was the total receipts from the rights, of which the ABCL’s share was Rs 99.16 lakh and this was being added to the company’s income.

In its summation, the IT has said that the details of these transactions were now being forwarded for “necessary action” against ABCL “for not bringing the foreign exchange to India which is a violation of FERA”. ED officials in the New Delhi headquarters say that their Mumbai office is yet to forward the reference to them.