It’s a clear sign that the space Prannoy Roy used to claim that the raids on NDTV are part of a larger plan to muzzle the media is rapidly shrinking. Income Tax Appellate Tribunal (ITAT) officials have pointed out that it was the UPA regime that exposed the fraudulent declaration on subsidiary companies and its dubious financial transactions.
Roy, currently under the spotlight over NDTV’s financial dealings, had got a section of the media and eminences like Arun Shourie and several senior journalists to back his claim that his troubles are on account of a “hostile” government.
Take a look at what the ITAT said in its report of 2008-09 when the UPA, with whom the promoters of NDTV had a healthy relationship, was in power: “It is unfortunate that before making an application for exemption the assessee (Roy) has disclosed in its one of the most important statements i.e. Directors’ Report, the company has announced that it has been granted approval even when there was no application was made to the concerned authority and with such a blatant violation of law involving the fiscal and corporate liability of the assesse go unnoticed so far. However, the tribunal in the present case except expressing anguish cannot cross the limits laid down by the law. It is for other regulatory and supervisory agencies to get alarmed with such an act. In view of these glaring facts, we do not have any hesitation to say that the conduct of the assessee shows that assessee had never an intention to disclose the details of its subsidiary companies and its financial transactions to its stakeholders and to regulatory authorities including the income tax authorities.”
Tax authorities say that Roy made all efforts to hide financial details of his foreign subsidiary companies used for money laundering of Rs 1,100 crore so that tax fraud had remained undetected and had also lied to shareholders of NDTV and regulatory authorities- Income Tax, SEBI, etc. “The ITAT in its judicial order dated 14.07.2017 in the case of the NDTV for assessment year 2009-10, while dismissing the NDTV’s appeal as non-maintainable, has held that the assessing officer rightly made the assessment order by assuming jurisdiction u/s 144 of the Act.”
While addressing an “outrage session” at the Delhi Press Club, Roy had said that the $150 million that GE (USA) made in NDTV was above the board. “In 2014, the Income Tax Department of India - without any evidence at all - called this investment a "sham transaction", thereby accusing GE and NBC of being "fronts" or "name-lenders" for "money-laundering". ITAT that rejected this charge said that the issue was examined by a high-level body. “Examining the finding of Assessing officer and Dispute Resolution Panel (DRP), a body consist of three senior commissioners, noted that NDTV had introduced its own black money of Rs 642.54 crore ($150 million ) using its paper subsidiary company in the Netherland through complex web of transactions, the ITAT has confirmed the decision of Assessing Office and has also highlighted the role of Prannoy Roy, Radhika Roy and their top global audit firm PWC in the money laundering of Rs 642.54 crore.”
The Tribunal said its analysis of the financial statements of NHIH showed that this company “did not have any substance” but created for the purpose of issue of shares of Rs 642 crore from USBV by taking away the dividends from it to Roy’s group company. “It is vehemently claimed by the Roys that investor in NNIH is GE group. However, on looking at the structure of the investments in this company, it is part of NBCU group of which 80% stake is held by the GE group. There is no reference of the amount invested in the USBV by GE group for making investments in the USBV. No details have been placed by the Roys before us or before lower authorities except stating that the investor company is part of GE group and that group has made investment in this company which in turn invested in NNIH…. In any case credibility and genuineness of the investments cannot be solely determined by showing the names but only by showing the substance of the transactions…. It is apparent that transaction entered into by the parties lacks substance and therefore, whoever is the party and howsoever credible it is, heavier burden is cast on them to explain the purpose and rationale of so-called investment,” notes the ITAT report.
The ITAT report said that conversations between Prannoy Roy and M Vivek Mehra of PWC through emails exchanged barely two days before the signing of the agreement proved personal involvement of Roy in money laundering of Rs 642.54 crore.
Here are a few samples of the email between Roy and Mehra:
“Mr Vivek Mehra (PWC) to Dr Prannoy Roy & Others:
We must not mention that NDTV is receiving the 150 m as dividend or otherwise.
If asked a question what will the money be used for??? We need to decide how to answer this question carefully.
Dr. Prannoy Roy to M. Vivek Mehra (PWC):
If possible, it is important that the press release should make clear that the money comes in to NDTV and does not stay in Networks. It has been agreed that management control will always remain with NDTV Ltd.
Mr Vivek Mehra (PWC) to Dr Prannoy Roy & Others:
Appreciate your problems but honestly the problem could become worse if we give a handle to the tax authorities.”
Finally, the ITAT rejected the argument of NDTV that the money was routed through banking channels. “During the course of hearing before us the revenue department has produced the money trail as well as certain emails, which were not at all denied by the assessee. Therefore, in our view the assessee has submitted scanty details and also tried to hide certain facts by not denying or owning the emails exchanged. Further it is too naive to accept in the facts and circumstances of the case that any transaction carried out through banking channel should be believed as genuine. In fact the money mostly rout through banking channels only and for these transactions only various sections in the income tax act are incorporated dehorn the banking transactions such as section 69, 68 etc. It is only the banking transactions through which the tax evaders bring their unaccounted money into the books by creating or dealing with the entities/persons without substance.”
The “secular icon” that he is, Prannoy Roy has no difficulty getting senior editors and the Press Club after hours gang to sing chorus of protests about stifling of freedom of expression under the current regime. The tax authorities have enough on their hands to show that the case is at least eight years overdue.