I-T dept issues prosecution notice to Anil Ambani for holding secret funds in 2 Swiss bank accounts

Anil Ambani. File Pic

The income tax department has sought to prosecute Reliance Group Chairman Anil Ambani under the Black Money Act for allegedly evading Rs 420 crore in taxes on undisclosed funds worth more than Rs 814 crore held in two Swiss bank accounts.

The department has charged Ambani, 63, with "wilful" evasion, saying he "intentionally" did not disclose his foreign bank account details and financial interests to Indian tax authorities.

A show cause notice in this context was issued to Ambani early this month. The department said he was liable to be prosecuted under Sections 50 and 51 of the Black Money (undisclosed foreign income and assets) Imposition of Tax Act of 2015 that stipulates a maximum punishment of 10 years imprisonment with a fine.

It has sought his response to the charges by August 31.

Ambani's office had not responded to a query sent on the matter till the time of this story being filed.

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The businessman has been charged with evading tax, by way of holding undisclosed assets abroad, for the assessment years 2012-13 to 2019-20.

According to the notice, a copy of which was accessed by PTI, tax officials found that Ambani was an "economic contributor as well as beneficial owner" of a Bahamas-based entity called 'Diamond Trust' and another company called Northern Atlantic Trading Unlimited (NATU) which was incorporated in the British Virgin Islands (BVI).

In the case of the Bahamas trust, the department found it had a company called Dreamwork Holdings Inc. This firm was the owner of a Swiss bank account, which had a peak balance of USD 32,095,600 (USD 3.2 crore) as on December 31, 2007.

The notice said the trust got initial funding of USD 25,040,422 (USD 2.5 crore). The department alleged that the "source of funding" for this was from Ambani's "personal account". It found that Ambani gave his passport as the KYC document for the opening of this trust in 2006. The beneficiaries of this trust were his family members too.

The BVI company, incorporated in July 2010, has an account in Bank of Cyprus, Zurich. The department claimed Ambani was the "ultimate beneficial owner" of this company and the funds that it has.

The company is also alleged to have received USD 10 crore in 2012 from a Bahamas registered entity called PUSA, whose "settlor and beneficial owner" is stated to be Ambani, as per the department.

"From the evidence available, it is obvious that you are the economic contributor as well as beneficial owner of the foreign trust Diamond Trust, the bank account of underlying company Dreamworks Holding Inc, settlor and beneficial owner of NATU and PUSA. Therefore, the funds/assets available with the above entities belong to you," the department said.

The department alleged that Ambani "failed to disclose" these foreign assets in his income tax return (ITR) filings and hence contravened the provisions of the Black Money Act, brought by the Modi government soon after it was first elected to power in 2014. Tax officials said such "omission was not bona fide in nature and is intentional".

"Thus, you have wilfully attempted to evade tax, penalty or interest chargeable or imposable under this Act (Black Money) on the undisclosed foreign asset....since you have wilfully attempted to evade tax you are liable to be prosecuted under section 51 of the Black Money Act, 2015," the order said.

The total value of the undisclosed funds in the two accounts has been assessed by tax officials at Rs 8,14,27,95,784 (Rs 814 crore) and tax payable on this amount at Rs 4,20,29,04,040 (Rs 420 crore).

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