Fresh trouble is brewing for Aditya Birla Group company Hindalco, on the income-tax front.
On the heels of the Rs 25-crore cash seizure at Hindalco’s office in Delhi on Wednesday, the Income-Tax Department has decided to re-open tax assessments of the company for the last six years.
Sources in the Tax Department said the total income for all the previous six assessment years would have to be re-assessed as the money seized was under a “search” operation and there was no explanation for the source of funds.
Meanwhile, it has emerged that it was the Income-Tax Department, and not the Central Bureau of Investigation (CBI), that made the cash seizure, although the investigating agency had separately searched the offices of Hindalco in connection with its investigations. However, the tip-off about the cash hoard certainly came from the CBI, a senior Income-Tax Department official admitted.
“The re-assessment of income will happen under Section 153A of the Income-Tax Act,” a source said.
Aluminium major Hindalco on Thursday had expressed surprise over the developments, saying that it was “taken aback” by the discovery of Rs 25 crore cash on its premises.
In a statement, the company said that it had set up an internal team of senior managers to make a thorough investigation and report the findings at the earliest.
Meanwhile, tax experts said the Income-Tax Department was moving on a predictable path after the cash seizure.
“Once the Income-Tax Department conducts a search and unexplained funds are seized, re-opening or re-assessing total income is mandatory. The Department has no other option and that is the law of the land,” said O. P. Bhardwaj, Senior Partner at Associated Law Advisers, speaking tol Business Line . Bhardwaj, who has over three decades of experience in income-tax law, pointed out that I-T searches are usually carried out only after proper enquiry and investigation. Nobody would or should go to search a business house without proper information or good reason to undertake such an activity, he added.
Birla says not worried about FIR, meets Chidambaram
The Aditya Birla Group Chairman, Kumar Mangalam Birla, met Finance Minister P. Chidambaram in his North Block office here on Friday.
On Tuesday, Birla was named by the CBI in its 14th FIR in a case relating to alleged irregularities in allocation of coal mining rights in Odisha..
A visibly tense Birla said he had done “nothing wrong” and that he was not worried by being named in the CBI’s First Information Report in the coal case “Obviously I brought this up with the Finance Minister, but there are so many other things to talk about. Life moves on and work goes on. That’s not the only industry we are dealing with. We have so many other industries, so many other things to discuss with the Minister,” Birla told reporters after the meeting.
Birla also said that he did not expect the development to impact the Group’s application for a banking licence.