India’s Income Tax Department (ITD) has slapped a fine of Rs.525 crores on New Delhi Television Limited (NDTV) for fooling, concealing more than Rs.642 crore income earned through sham transactions in 2008. When caught for the unexplained money of how more than Rs.642 crores reached its kitty via Bermuda, NDTV claimed that they “sold a dream”. This curious answer was given to the ITD by NDTV by claiming that this unexplained money was through some inflated share transfer and dividend from a tax haven based firm.
18.1 It is pertinent to note that all agreements, whether pertaining to alleged subscription of stake by USBV in NNIH or alleged buyback by NDTV Networks BV, are invariably signed by NDTV itself.
The 14 page Income Tax notice was served to NDTV was on June 15, 2016. Till date it has not replied to the ITD. According to tax sleuths, NDTV staffers are saying that their head Prannoy Roy is unwell or staying at his mansion rejuvenating in South Africa etc. The Income Tax notice puncturing NDTV’s tax fraud is published at the end of this article.
The notice also shows an email trail between an auditor Vivek Mehra of Price Waterhouse Coopers (PWC) and Prannoy Roy on how to conceal this income. The emails are dated on or around 21st May 2008 and in that Vivek Mehra is advising Roy on how not to mention that NDTV is receiving this as a dividend or otherwise. The notice also reproduces seven email communications between Prannoy and others on how to creatively conceal the truth of this transaction. Vikram Chandra was also part of this elaborate scheme as he is listed as the CEO and the only employee in a shell company titled NDTV Networks PLC (NNPLC).
The hidden and unexplained money of Rs.642,54,2200 (150 million US $) was received from NBC Universal Inc and Universal Studios International BV. This money was routed through NDTV Networks International Holdings BV to ostensibly avoid paying income tax. See the graphic below:
Income Tax sensed a fraud in 2010 when this transaction was suppressed in the statements submitted to it. That Assessment Year 2009-10 claimed Rs.64 crore loss!
“Assessee’s theory of having sold a “Dream” to the investor has not been substantiated by any credible evidence as no details have been filed whatsoever for the so-called business projections and the basis of compulsion of the sale price of the share at the astronomical price of Rs.7015 which is 159 times of its face value of Rs.45. Needless to mention that the subject company whose shares were sold was incurring huge losses and there was hardly any worthy business to justify the above sale price.”
When caught NDTV said that they sold a dream and the dream later went bust, says the Income Tax notice detailing the questionable activities of the TV channel. NDTV boasts of a star-studded cast of media personalities such as Prannoy Roy, Barkha Dutt, Vikram Chandra, Nidhi Razdan and Sonia Singh who have been preaching ethics 24X7 to viewers for the past 25 years.
The notice further says that this deal was an active, deliberate and planned concealment and misrepresentation of facts and slapped 200 percent fine leading to Rs.525 crores for concealing the huge money received through Bermuda. The Income Tax directed NDTV to reply by June 22, 2016. Tax sleuths say that NDTV is requesting them for some more time till Prannoy Roy returns from his South African sojourn.
NDTV is already facing a FEMA (Foreign Exchange Management Act) notice of Rs.2030 crores and the matter is before the Adjudication forum of Enforcement Directorate. In Aircel-Maxis case, the Enforcement Directorate in its charge sheet details that NDTV also received around Rs.250 crores from Astro All Asia Networks, a subsidiary of Maxis during the scam period. The 2G Court had already issued a Letter of Rogatory to Britain in this regard.
1. Text in Blue points to additional data on the topic.