I-T Dept attaches Mandi Parishad fixed deposits
INCOME TAX authorities have attached the Mandi Parishad?s fixed deposits (FDs) worth Rs 373 crore for recovery of tax liabilities. The Income Tax Department had earlier rejected the Mandi Parishad?s plea for tax exemption on the ground that putting hundreds of crores of rupees in fixed deposits was neither a ?welfare activity? for farmers, nor part of the cooperative movement. Sources did not rule out the possibility of a scam wherein a huge amount was put in FDs to get a ?legal? commission of five per cent.india Updated: Oct 11, 2006 01:22 IST
INCOME TAX authorities have attached the Mandi Parishad’s fixed deposits (FDs) worth Rs 373 crore for recovery of tax liabilities.
The Income Tax Department had earlier rejected the Mandi Parishad’s plea for tax exemption on the ground that putting hundreds of crores of rupees in fixed deposits was neither a ‘welfare activity’ for farmers, nor part of the cooperative movement.
Sources did not rule out the possibility of a scam wherein a huge amount was put in FDs to get a ‘legal’ commission of five per cent.
According to sources, the I-T Department would impose 30 per cent tax on the deposited amount from the day of deposit, with 23 per cent to 28 per cent annual interest on it. Besides, the department will impose a 30 per cent penalty for concealment, with an additional penalty of Rs 1 lakh per annum for not getting the accounts audited.
They said the tax, along with the penalties, could come to more than the total amount of the fixed deposits.
The authorities were shocked to learn that there was no regular system of auditing in the Mandi Parishad.
A separate scrutiny of the Mandi Parishad accounts in all its district units would soon be initiated, the sources added.
The Mandi Parishad has fixed deposits worth over Rs 500 crore in Lucknow alone and it has been earning interest on deposited amounts for the last many years.
As per rules, the IT sources said, the Mandi Parishad was supposed to spend 20 per cent of its total income from various taxes on meeting its own expenditures.
The remaining 80 per cent was supposed to be used mainly on activities related to farmers’ welfare, they said.
The Income Tax authorities said scrutiny of Mandi Parishad files revealed it had fixed deposits worth hundreds of crores of rupees and had been earning interest on the same, instead of utilising the money for welfare and co-operative activities. Hence, income tax was being imposed on the amount earned as interest on the deposits.
The Mandi Parishad officials did everything possible to convince the Income Tax authorities and even appointed a team of charted accountants, but to no avail.
The authorities here have sent a detailed report to the Union Finance Ministry, drawing its attention towards such Government bodies in other parts of the country. These bodies could also hoodwink the Income-Tax sleuths with the same modus operandi to earn easy money.
The department served similar notices on the Lucknow Development Authority (LDA) and the Samaj Kalyan Nirman Nigam (SKNN) for recovery of tax on ‘undisclosed income.’
First Published: Oct 11, 2006 01:22 IST