Mumbai: The Mumbai income-tax department has issued notices to Pune-based real estate consultant Hassan Ali Khan, the main accused in a case involving alleged money laundering to the tune of $8 billion (Rs39,120 crore), and two others for suspected tax evasion, a senior income-tax official said.
A show-cause notice—a request for information, backed by a legal threat—issued by the department on 31 December has raised a demand of Rs40,000 crore against Khan for not disclosing funds in several foreign bank accounts, including $8 billion in an account in UBS AG, Zurich, said the official, who didn’t want to be named.
Separately, the department raised a demand of Rs580 crore against Kashinath Tapuriah, a Kolkata-based businessman and alleged accomplice of Khan, and Rs20,000 crore against his wife Chandrika Tapuriah, the official said.
More trouble: Hassan Ali Khan.
“We have issued notices to Khan, Kashinath Tapuriah and Chandrika Tapuriah for tax evasion as they have not replied to the queries raised by us on the documents seized during the investigation,” the official said. “We have not received any communication from them on the matter since 2007.” The official declined to give details of the alleged tax evasion. A senior official at the Enforcement Directorate (ED), which has charged Khan with violating foreign exchange laws by holding $8 billion abroad, said Chandrika Tapuriah has an account at Credit Suisse and between 2001 and 2005, two transactions worth $1.6 billion were made through it.
“Being an Indian citizen, she should have declared these transactions,” said the ED official. He declined to be named as the case has been looked into by the income-tax department.
Khan, who also owns racehorses, declined to comment on the income-tax notice. Tapuriah said in a text message from Kolkata, “I have not been well and doctors have advised me not to take any tension or strain—physical or mental. As such, I am unable to talk.” He said he would get in touch with Mint when he gets better.
The trio has 30 days to reply to the income-tax notice.
Under income-tax law, if the department finds any incriminating document against a taxpayer, the onus lies with the taxpayer to prove his or her innocence. “Khan and others (Tapuriah and his wife) can appeal against the notice before the income-tax commissioner of appeals,” said the income-tax official. At the next stage, they can even move the income-tax appellate tribunal.
In January 2007, the income-tax department had first raided Khan’s residence at Koregaon Park in Pune and seized documents that revealed his $8.04 billion UBS account in Zurich. The department found that Khan concealed his income and had not filed income-tax returns since 1999. The department also raided his properties in Mumbai and Hyderabad.
Later, ED started investigating the case as the department suspected money laundering. ED has also been probing Khan and Tapuriah for violating the Foreign Exchange Management Act, or Fema, and laws against money laundering. On 29 December, K.N. Rao, special director of ED, issued a show-cause notice to Khan for the violation of Fema by holding $8 billion in his UBS account.
Mint reported on 10 January that ED, which investigates violations of the country’s foreign exchange laws, is preparing to issue another showcause notice to Khan, his alleged accomplice Philip Anandraj, a Switzerland-based hotelier, and Tapuriah. The ED investigation report claims Khan had $8.04 billion in his UBS account as on 8 December 2006.
The report quotes a letter by M. Rohner, a wealth management executive at UBS, in 2006 that said: “Khan can withdraw $6 billion and was free to invest this amount as and when he chooses to do so and that the balance amount of $2.04 billion would remain bound with UBS until 15 January 2007 and after which Khan was free to invest the same as and when he chooses to do so.”
ED’s findings have disclosed Khan’s plan to finance a $500 million project of Saudi arms dealer Adnan Khashoggi in a notarized document signed by him on 29 June 2003 in London. However, the report is silent on the nature of the Khashoggi venture in which Khan was expected to invest or, indeed, how he met the Saudi arms dealer.
Khan has been appearing before ED every alternate day after a Mumbai court granted him bail on 2 January in a fake passport case.