Asim Ghosh faces I-T probe

The Hutch-Essar stake sale to Vodafone has now become the focus of a multi-agency probe.

Even as Vodafone's application seeking approval of the deal comes up before the Foreign Investment Promotion Board on April 12, Hutchison Essar Managing Director Asim Ghosh was issued a summon by the income-tax authorities in Mumbai.

The I-T department has posed 33 queries asking for such details as when Ghosh acquired the shares of Goldspot Mercantile Company, his source of investment in the company, reasons for the creation of a subsidiary, Plustech Mercantile Company, which in turn set up another subsidiary Centrino Trading Company.

The summon, under Section 131 of the Income Tax Act, 1961, was issued on March 27, around the same time the department asked the Hong Kong-based Hutchison Telecommunications International Ltd (HTIL) to pay capital gains tax on the sale of its holding in Hutchison-Essar to Vodafone.

While demanding extensive details on these companies (board composition, shareholders minute books, statutory registers, audited annual report, latest trial balance sheet of Plustech, etc), the investigating wing of the department has also asked Ghosh to clarify why he was given the opportunity to acquire shares in Hutchison-Essar.

Tax authorities have also sought to know the reason for the use of three layers of companies to acquire shares in Telecom Investments India Ltd (TIIL), which owns 4.7 per cent of Hutchison-Essar. They also want to know whether all of Ghosh's companies were registered as non-banking finance companies and whether this was in compliance with RBI regulations.

The department has also asked Ghosh, a stakeholder in Hutchison-Essar, whether HTIL, could purchase 100 per cent of Plustech's equity at formula price.

It also sought to know whether HTIL could acquire 97.5 per cent of Centrino's stake at par value.

Another question pertained to HTIL's right to acquire 51 per cent of TIIL's equity and whether this violated FDI guidelines. They also sought security details provided by Ghosh or his companies to HTIL, for latter's standby letter of credit to Plustech.

Yet other questions sought details of Ghosh's income, the year from which he became resident as per tax provisions and his investments.

The department has also sought bank statements and income tax returns filed in Canada and Hong Kong by Ghosh.

It is learnt that the matter will be taken up on April 12, after an adjournment was sought from earlier hearing on April 3.

Sources added that many questions were not concerned with Ghosh, but were being sought for more information about the deal.

For instance, three queries sought details on HTIL's 67 per cent stake sale to Vodafone, the rationale behind HTIL receiving 67 per cent of the value of Hutch-Essar, even though it owns only 52 per cent stake.

In addition, the department also wanted to know why Vodafone should be paying money to HTIL, when Ghosh owned the shares in Hutch-Essar.