The Nirav Modi scam does not only shed light on the Punjab National Bank scam, it has also brought out the incidents of tax evasion by high net worth individuals (HNIs) who purchased jewelry from his company. The Income Tax department has decided to reassess Income Tax Returns (ITRs) of over 50 HNIs who purchased costly jewelry from firms owned by absconding diamantaire Nirav Modi. The taxman started the process after it found that many people purchased costly jewelry form his firms in cash and cheque, and the tax department has asked these people to disclose their source of income.
The individuals have denied that any cash payment was made to the firm, while the department has gathered documents that indicate that these select buyers of high-end jewelry had split the total payment for diamond jewelry, by paying a part through cheque or card (debit/credit) and the rest in cash. The tax department officials said it has been found from the company books that payments were received after splitting them into cash and cheque/card transactions. Hence, it is essential to re-assess the income tax returns (ITRs) of these over 50 people beginning from the 2014-15 assessment year.
The method used by Nirav Modi and his rich customers is the most popular technique of tax evasion. Most of the firms and individuals make a transaction in black money as well as white money. The ration depends on the firm and product. Suppose a homebuyer is purchasing a flat at the price of 1 crore, then the builder will tell him/her to pay 50 percent money in cash and 50 percent in cheque. Now the price of the flat in government records will be only the money paid in cheque. The cash paid is undisclosed by both the builder and homebuyer. This formula is prevalent in the purchase of real estate, costly jewelry, luxury products like paintings, imported watches etc.
One of the high profile persons who is accused in this case is the nephew of Yogendra Yadav who runs a hospital in Rewari, Haryana. The IT department found that Gautam Yadav allegedly paid Rs 3.25 lakh in cash, out of the total Rs 6.50 lakh, for the purchase of jewellery from the diamantaire’s firm. When the IT officials raided the hospital it found 22 lakh of cash at the residence of Yadavs. An IT official said, “The current cash limit in the hand of a person is Rs 2 lakh and the source of this recovered cash amount of Rs 22 lakh is being probed.” Yogendra Yadav, however, alleged that the raid was conducted at his sisters’ hospital-cum-nursing home premises with an intent to “intimidate” and “silence” him as he had launched an agitation for fair crop price for farmers and against liquor shops in that city in Haryana.
Jewellery worth Rs 12.85 crore was bought in cash in 2014-15 alone by the daughter-in-law of a senior Congress minister in Karnataka ex-Chief Minister Siddaramaiah’s government. She was the biggest purchaser of jewellery in cash from Nirav Modi.
Anita Singhvi, wife of senior Congress leader Abhishek Manu Singhvi is is also a high net worth client of Nirav Modi. Famous Bollywood star, Priyanka Chopra who also starred in a forgettable Hollywood series had a special love for Modi’s jewels.
Please note that we are not accusing the aforementioned individuals of any tax evasion, we are merely pointing out their connection with Nirav Modi.
Mehul Choksi and Nirav Modi are wanted by multiple criminal agencies of India for cheating of Rs 13,600 crore through fraudulent letters of undertaking (LoU) and foreign letters of credit as well as for tax evasion. Their company, Gitanjali Gems Ltd, got a letter of undertaking, or LoU (essentially a bank guarantee against which another lender gives a foreign currency loan), from Brady House PNB branch without any collateral with help of its senior official who is also charged in the case. When the senior official retired, the person from Gitanjali Gems again came to get LoU from some other bank official who refused to give it without collateral. Later on, an internal investigation in PNB revealed that many LoUs were issued to Gitanjali Gems without any collateral. According to investigation agencies, both of them have inflated the value of diamonds, pearls, and jewelry which they have in their stores. ED found the value of the stock inflated three times in case of Modi’s firms and about 10 times in the case of Choksi’s firms. The Modi government is dealing with corruption and black money with a very strong hand. It took steps like demonetization, Benami property act, and crack down on shell companies to curb tax evasion.
