The Commerce Ministry and Income Tax.Authorities Open up Cases of Financial Irregularity Against Amitabh Bachchan and His Brother Ajitabh
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SPECIAL REPORT THE BACHCHANS The Commerce Ministry and income tax.authorities open up cases of financial irregularity against Amitabh Bachchan and his brother Ajitabh. PRASHANT PANJIAR HE V.P. Singh Government their export commitment. has begun the expected The latest move came from Tcrackdown on the finan- the Finance Ministry on May 7, cial affairs of the Bachchan when Rajiv Nayar, standing brothers—opening old cases and counsel for the Enforcement Di- instituting new inquiries into rectorate, asked the FERA board allegations of improprieties com- to reopen the case against mitted over several years. Ajitabh for the acquisition of a Many ministries have issued flat worth over Rs45 lakh in near simultaneous notices to Switzerland in March 1986. film star Amitabh and his busi- The government actions nessman brother Ajitabh, now a promised to swell into a veritable Swiss resident, charging viola- anti-Bachchan blitzkrieg. And tion of income tax and foreign this was hardly surprising, least exchange laws. of all to the Bachchans who have The first shot was fired by the long maintained they would pay Commerce Ministry late last a "political price" for their close- month when it directed the chief ness to Rajiv Gandhi, should V.P. controller of imports and exports Singh come to power. There was to investigate their pharma- never any love lost between the ceutical firm's financial dealings Bachchans and Singh even in preparation for prosecuting when Amitabh and he were in the Bachchans for failing to meet the same party. And during the general elections Singh repeat- edly vowed to uncover the "misdeeds" of the Bachchans to get at Rajiv who, Singh said, was covering up for them. So, even though the entire megabuck film world has tradi- AMITABH m&xmtmikm tionaUy been suspect irl the eyes Disclosed Additional Income •HHHHH Amitabh's Films Year Receipts (Rs) Assessed (Rs)* Adalat, Alaap, Amar Akbar Anthony, Iman Dharam, 1976-77 4,34,005 5,30,450 Khoon Pasina, Parvarish Besharm, Don, Ganga Ki Saugandh, Kasme Vaade, Trishul, 1977-78 6,82,337 8,83,967 Muqaddar Ka Sikandar Jurmana, Kala Patthar, Mr Natwarlal, Ram Balram, Suhaag, 1978-79 15,60,618 19,07,459 The Great Gambler Do Aur Do Paanch, Dostana, Shaan, Naseeb 1979-80 24,94,883 30,49,301 Barsaat Ki Ek Raat, Laawaris, Silsila, Yaarana 1980-81 37,88,789 46,30,742 Bemissal, Desh Premee, Khuddaar, Namak Halal, Satte Pe Satta, Shakti 1981-82 18,25,000 22,30,556 Coolie, Mahaan, Nastik, Pukar, Andha Kanoon 1982-83 30,48,501 37,25,946 Inquilab, Sharaabi 1983-84 39,64,271 48,45,220 Mard 1984-85 68,23,393 83,39,702 Shahenshah, Ganga Jamuna Saraswati 1987-88 16,62,224 20,31,607 *By tax authorities 30 INDIA TODAY » MAY 31, 1990 of the tax authorities, Amitabh became a questions. Even if Ajitabh's claim that he 180 days prior to claiming NRI status, nor special target last month when an assis- had signed the contract with Arco- received, at least officially, any contract tant commissioner of income tax re- pharma on February 28 were accepted, payments until September. So the main opened his returns, going back 10 years. the record showed he had returned to issue that remained was that if Ajitabh The department's conclusions in a pre- India that very month; and that his con- was not a legal NRI, and had not received liminary report: the star's concealed in- tractual payments started in September. any payments from the Swiss firm until come between 1976 and 1987 (see chart) September, how could he have acquired could cross the Rs 3.2-crore mark. The HIS meant Ajitabh had neither es- the flat in Switzerland in March? dragnet covered the acquisition of farm tablished the NRI residency require- In a response dated December 14, properties by the Bachchans, apparently Tments that a person of Indian origin 1987, the accounting firm replied: "This at below market rates. Says an official: should be out of the country for at least was due to misinterpretation of instruc- "The exercise is on. We are GAURAV: tions given by our client to us." discovering how wide the Bach- That's not the only charge, chans had spread their empire." however. For more than six The controversy over the months before he changed his purchase of the flat by Ajitabh— residence to Switzerland in Sep- which simmered for three years tember 1986, Ajitabh received a after it broke in the Indian Express salary and benefits from several on June 17, 1987—has resur- Indian companies owned by him faced. In response to the Enforce- and his family. But during this ment Directorate's notices for very period he had also declared FERA violations, Ajitabh claimed himself an NRI. Under the law, he had become an NRI and had an NRI cannot receive an Indian acquired the flat as part of an salary without government agreement with his Swiss em- authorisation. Ajitabh also went ployer, Arcopharma. Under a abroad on trips financed in for- contractual obligation, dated eign exchange by his Indian February 28,1986, Arcopharma companies whereas, legally, an agreed to provide him the flat as NRI cannot withdraw foreign well as pay him Swiss Francs exchange. 1,00,000 (around Rs 6,20,000 Ajitabh's response was that at that time) annually as con- he had come to India in 1986 for sultation fees. "winding up" his commitments. Documents show that under But the record shows he stayed the previous regime, the direc- in India from March to June and torate had rejected Ajitabh's as- again from July to September, sertion of his NRI status (see box) spending 160 days in India dur- but it was overruled by the then ing the year, losing his entitle- special director, Krishan Kant. ment to the NRI status. In an order dated July 29,1988, The new petition charges he ruled that Ajitabh was a bona that even if Ajitabh's declared fide NRI as of February28, income during this period 1986, and, therefore, le- was taken at face value, gally entitled to benefits his expenses outweighed out of India. his known income. For But there was consid- THE CHARGES THE DEFENCE example, Ajitabh had erable confusion about • THE flat in Switzerland was • The flat was bought in his stated in late 1987 that exactly when Ajitabh be- bought in his name without the name by his employers; they paid he was paying Swiss came an NRI, and whe- RBI's prior approval. for it. Francs 90,000 annually ther he was entitled to for the education of his • He's failed to submit original • Mis Arcopharma was foreign currency benefits. ownership documents to Indian debarred by Swiss banks from four children studying in For example, Natwar Lai authorities. disclosing ownership papers. Swiss schools from 1986. Vepari & Co, a chartered But his stated income was accountants' firm repre- • While claiming to be an • His companies claimed only Swiss Francs senting Ajitabh, wrote to NRI he drew foreign exchange foreign exchange for his trips not 1,00,000. More, how did from Indian sources. understanding his NRI status. the directorate in 1987: he acquire "substantial "Our client has instructed • He claimed to be an NRI, but • He stayed in India to wind up ownership" in two Swiss us to state that since 1st was in India for 160 days out of 194 his business. But he kept going companies, Arcolab and September, 1986, our cli- from February to September, 1986. abroad for his Swiss employers. Arcopharma? ent has been rendering • He has been travelling to • His trips abroad were The previous govern- consultancy services to various countries as a tourist and technical errors and do not alter ment's files show that M/S Arcopharma Ltd and businessman resident in India. his NRI status. Kant, notwithstanding also holds a managerial • He wasn't an NRI since he was • The RBI permitted him the voluminous doubts and executive position of a director on Indian companies. retrospectively, to transfer shares raised by the directorate's Arcolab." of these companies as an NRI. inquiries, allowed the This raised troubling more substantial case to MAY 31. 1990 » INDIA TODAY SPECIAL REPORT slip away by exonerating abroad by Amitabh and his Ajitabh, while imposing mi- family. nor penalties on some of his The income tax authori- companies. This is now seen ties are now quoting as an attempt to give credibil- nitabh Amitabh's recent interviews ity to Kant's decisions. For claimed he had in which he stated that he example, IPCA, a pharma- had to go abroad every third ceutical concern, was im- spent just month for monitoring a posed a penalty of Rs 12,000 Rs 3 5, 000 on his chronic muscular disease. for paying Rs 80,650 to The department has asked Ajitabh as his salary for .long treatment him to furnish details of these March 1986 to August 1986 at Breach Candy. expenditures. His chartered and another Rs 2,500 pen- accountant explained: "All alty for acquiring $1,220 Banner announcing that is stated in the interviews in foreign exchange for his prayer for Amitabh is not necessarily facts or ma- business trip abroad. Then, terial which should be relied Lotus Investment was fined upon by the Income Tax De- Rs5,000 for making a payment of partment....Our client is a superstar and Rs 30,000 to Ajitabh while he was still several times certain statements are an NRI but living in India. Curiously, made for mass consumption and for none of the companies appealed the certain other reasons, but statements in penalties.