In a survey carried out in Manjari Stud Farm, owned by reclusive construction baron Pallonji Mistry — head of the Shapoorji Pallonji group and a director on the board of Tata Sons — in Pune on July 20, the Income-Tax department found evidence of under-invoiced import of 22 horses.The evasion was to the extent of Rs 2 crore to the Income-Tax department and another Rs 1 crore to the customs and excise department.The I-T survey follows a two-year-long Directorate of Revenue Intelligence (DRI) investigation into a nationwide racket of duty evasion by stud farm owners who imported expensive horses on the basis of under-valued invoices.Alarmed by the high level of under-invoicing and foreign exchange payments made abroad, the IT department has sent showcause notices to almost all stud farms in the country seeking details about the sources of income for the undeclared amount.However, the spotlight is on Manjari Farm - and not only because it has the largest duty evasion in the country.Admitting that they were on the wrong side of the law, Manjari Farm even paid the duty to the Customs following an order by the DRI’s settlement commissioner. However, after the IT department moved in to demand the sources of income, Mistry moved a miscalaneous application seeking immunity from the Income-Tax Act.Mistry argued that one of their officials, Feroze K Bathena, had wrongly admitted before the settlement commissioner about their guilt, which was not the case.When contacted, Jimmy Parekh, a director on the board of Shapoorji Pallonji group admitted that an income tax survey was carried out in their farm, but said they have not violated any laws.‘‘We have nothing to hide. As we did not want to get into any dispute, we paid the penalty to the DRI. The Settlement Commission order gives us immunity from the I-T Act and we have applied for it.’’The I-T department, however, is arguing that once the company has admitted its guilt before the settlement commissioner, then they should pay up the income tax instead of moving the Settlement Commission. The matter will be heard again by Settlement Commissioner of customs and excise department in New Delhi.The modus operandi of the stud farms was simple. While importing live horses from abroad for breeding purposes, the stud farms submitted under-valued invoices issued by their foreign service agent at the time of Customs clearance.In the Manjari case, for instance, Senure was imported at $100,000 but declared for only $5,000. Similarly, $4,000 was shown as the value of Gumbaru Etsu, while it was actually imported for $30,000.Mistry, one of the richest Indians, runs the unlisted construction firm and has a 18 per cent shareholding in Tata Sons Ltd, owner of almost all Tata group of companies.
