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Wednesday, March 9, 2011

Tax demand on Hasan Ali and associates pegged at Rs 71,845 crore

What exactly is the tax demand on Hasan Ali Khan and his associates? For a while, a figure of Rs 40,000 crore has been doing the rounds, though some tax officials were questioning the veracity of this amount. However, the income-tax department is now learnt to have raised a demand of Rs 71,845 crore.
This figure — which is larger than the country's health budget and its annual service tax collections — includes a demand of Rs 50,329 crore on Khan himself, Rs 49 crore on his wife, Rheema; Rs 591 crore on his alleged associate Kashi Nath Tapuriah and Rs 20,540 crore on his wife, Chandrika Tapuriah, revealed I-T department sources
Of the total tax demand of Rs 71,845 crore, the I-T department has adjusted only Rs 60 lakh which was recovered from raids on Khan and the Tapuriahs. The appeal is now pending before the Income Tax Appellate Tribunal. Even the Comptroller & Auditor General is learnt to be looking into the issue.
Although investigations have been on since 2007, tax authorities were not really seen to be pushing the case till the Supreme Court turned up the heat. Interestingly, the Centre had filed an affidavit in the Supreme Court in 2009 itself stating that the I-T department had raised a demand of Rs 71,848.59 crore against Khan, his wife Rheema and other associates (reported by TOI in a front-page article, 'Pune man holds secret billions' on May 3, 2009).
Government officials, however, said the recent demand was made following information collected by them from a pen drive and laptop recovered during raids on Hasan Ali and the Tapuriahs. They further said the scope of the probe has been widened to include at least six more countries, which may further push up the demand on Khan. The I-T department is investigating Khan's investment links in these countries.
At nearly Rs 72,000 crore, the tax demand is nearly half the amount locked up in all tax disputes (direct and indirect), which were estimated at Rs 1.43 lakh crore at the end of March 2010 — not including the demand on Khan.
The amount is more than what is being spent on food subsidy (Rs 60,000 crore), primary and secondary education (Rs 63,300 crore) or even the health ministry's budget (Rs 30,456 crore) in 2011-12. If the government manages to realize the amount from Khan and his associates, which officials admit is a remote possibility, it would be marginally higher than the Rs 69,400 crore that the government hopes to collect as service tax during the current financial year.

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