Four defaulters owe income tax dues worth Rs 2,12,449 cr in Mumbai

Arrears by Hasan Ali Group, Harshad Mehta Group, Ketan Parekh Group & Manoj Punamiya Group constitute 69% of total tax arrears of Rs 3,09,721 cr

Fiscal deficit can be partially reduced if the tax authorities succeed in the recovery of tax arrears worth Rs 2,12,449 crore from four defaulters including Hasan Ali Group (Rs 1,65,663 crore), Harshad Mehta Group (Rs 39,740 crore), Ketan Parekh Group (Rs 4,477 crore) and Manoj Punamiya Group (Rs 2,569 crore).

I-T Department, Mumbai region, which contributes almost a third to the direct tax kitty, in its internal presentation said as far as recovery of Rs 1,65,663 crore worth from the Hasan Ali Group, the department’s appeal is pending with the Income Tax Appellate Tribunal while cases pertaining to Harshad Mehta Group and Ketan Parekh Group are pending before Special Court. In case of Manoj Punamiya Group, most of its is protective addition and not enforceable as of now. The tax arrears by these four groups constitute 69% of the total arrears of Rs 3,09,721 crore (as on December 31, 2012).

These tax arrears matters are classified into foreign tax jurisdictions (Hasan Ali Group and Manoj Punamiya Group) and scam related (Harshad Mehta and Ketan Parekh).
 
However, I-T official told Business Standard, “The department is utilizing technological tools like individual transaction statement, income tax department management system and procurement of information from Credit Information Bureau of India to recover arrears. This is in addition to department’s efforts to pursue legal and administrative cases at various levels.”

Meanwhile, I-T department observed that the main challenge comes from large scale cash transactions in the economy which hardly leaves any trail for investigation. “In many cases, accounted transactions at one stage become unaccounted at subsequent  stages such as in commodities like steel (scrap), cement, textiles (yarn, grey cloth) and diamonds. Cash component of investments in bullion and properties (more in lands), absorbs a large amount of “black” or undisclosed income. The economic and commercial activity needs to be regulated so that transactions are through banking channels and have an audit trail, reducing the need for cash to the extent possible,” the department said.

Moreover, the department also confronts with another challenge of illicit flows. “Whatever is priced can be misplaced with over invoicing of exports and new services, large amounts of funds can be moved abroad, to low taxed jurisdictions and tax havens. The department monitors such transfers through transfer pricing provisions in the I-T Act,’ the department said.