The mystery Rs 1 crore holiday

NDTV Tax storyâ€"- Part II. Was there a case of conflict of interest in Sumana Sen handling the tax assessments of NDTV?

PRANATI MEHRA and PARANJOY GUHA THAKURTA investigate

A serious allegation levelled by Indian Revenue Service officer S.K. Srivastava against the management of New Delhi Television Limited is that the company bribed an Income Tax officer, Sumana Sen, to allegedly influence the Income Tax Department’s assessment of NDTV’s income. Sen’s husband, Abhisar Sharma was employed with NDTV as a senior journalist.

Was there a case of conflict of interest in Sen handling the tax assessments of NDTV? Were Sharma and Sen "bribed" in the form of trips to Europe for which NDTV allegedly shelled out a handsome sum of Rs. one crore? Both these allegations are denied by sources in NDTV and a source close to Sen.

It has been alleged that Sen favoured NDTV by signing an order as assistant commissioner of income tax, Circle 13 (1) in February 2005 after which NDTV got a refund of Rs.1.47 crore. At that time, her husband Sharma was employed with NDTV. Srivastava has alleged that Sen had "stolen public money" by passing an "illegal" assessment under section 143(1)(a) of the Income Tax Act since NDTV's return had been picked up earlier for scrutiny assessment in December 2004. No summary assessment can be done during the pendency of a scrutiny assessment, Srivastava's lawyer S.K. Gupta claimed in a written communication to us.

Highly-placed sources in NDTV pointed out: "Issuing a refund under section 143 (1) when a notice under section 143 (2) is pending was perfectly legal as per circulars issued by the Central Board of Direct Taxes and this can be easily verified from the Income Tax Department."

In her affidavit in court, Sen has claimed that immediately after she joined Circle 13(1) as assistant commissioner, she orally informed her superiors in the Income Tax Department that her husband was an employee at NDTV. Thereafter, an order was passed by the commissioner of income tax that NDTV’s assessment would be done by the additional commissioner and not her.

When contacted, Sumana Sen told us that being a government servant, she could not talk to the media under her service rules. A source close to her said the order she had signed was an intimation under section 143 (1) which was a routine communication and that NDTV’s assessment was done not by her but by her superior officer, an additional commissioner.

"She could not legally have held back the refund because the department would have had to pay interest to the assessee," the source said, adding that the intimation under section 143(1) was statutory and there was no discretion in the hands of the officer and since the refund was in excess of Rs. one crore, it had to be approved by the additional commissioner.

NDTV sources said that subsequently, the order passed under section 143(3) in 2006 for the same assessment year by another officer virtually accepted the returned income (loss) of NDTV. "The refund was payable anyway," they said.

On her going on a trip to Europe with her husband in 2005, Sen told the Delhi High Court it was a yearly vacation which was part of the salary package given to her husband Abhisar Sharma (as well as other employees of NDTV).

This is what the company stated in a letter to Sen’s assessing officer: "We would like to submit that the company has not provided annual vacation abroad to any of its employees. Travel abroad was an entitlement which was given to Abhisar Sharma and other employees for official purposes.. … Abhisar Sharma was working with the company (as)... special correspondent/anchor and in the news media industry the special correspondents have to travel extensively. (The) amount of the expenditure which can be incurred on any entitled official trip is mentioned in the employment contract letter."

Sources in NDTV said there were rules regarding government servants availing of a 'companion scheme' which allow spouses to travel free in India and abroad when the government servant goes on official work. NDTV’s scheme was not very different for its senior employees who travelled overseas on official work. "If the Indian government can allow such a facility to its employees, what is wrong in NDTV doing something similar?" they asked.

We, the writers of this article, remain confused. Sen tells the Delhi High Court she went on vacation. NDTV tells Sen’s income tax assessing officer that her costs covered by her husband’s entitlement during an official trip. The company told us it was a companion scheme, similar to a government scheme, that she availed of. Was it work for him and vacation for her? Or was it vacation for both after his work was over?

Abhisar Sharma quit NDTV in 2007 and has since moved on to other media organizations, including those that run the Aaj Tak and ABP News television channels. The source close to Sen pointed out that she and her husband had been abroad not only in 2005 but in the previous year as well.

A source in NDTV said that Sharma had received approximately Rs. 71,000 plus $1,000 to spend on his family's foreign trip in 2005 as part of his salary package. This person then sarcastically remarked: "If we assume that during the four years he was employed with us, a total amount of roughly Rs 1.6 crore was spent on him by way of salaries, perquisites, employee stock options and a car, then we must be very stupid bribe givers to have spend such a lot of money for an income tax refund of Rs 1.47 crore which was legitimately due to us."

NDTV sources and the source close to Sen claim that she was the receiving end of S.K. Srivastava’s allegations because she was in the vigilance wing of the Income Tax Department which was examining allegations against Srivastava. NDTV sources further claim that a charge-sheet had been issued to Srivastava.

However, his lawyer Gupta refutes this claim and said the charge-sheet was issued against his client in 2006 only after he raised his voice in the department about NDTV being allegedly favoured. Besides, this charge-sheet relates to allegations of maligning his colleagues and using intemperate language against them, Gupta added, saying: "My client was victimized by a group of IRS officers in collusion with NDTV so that my client would not report theft..."

NDTV sources allege that Srivastava is not telling the truth. "If funds were raised by NDTV in May 2007 (through the issuance of step-up coupons or bonds) and in May 2008 (from NBCU), how could Srivastava have raised the matter in 2006?" they ask. However, Srivastava had started an inspection of NDTV as early as November 2005. The controversial refund of Rs 1.47 cr was also of March 2005.

Advocate Gupta said Srivastava was sought to be certified as "mentally disturbed" in a report prepared by VIMHANS (Vidyasagar Institute of Mental Health. Neuro and Allied Sciences), New Delhi, but the report was hurriedly withdrawn when the Medical Council of India decided to conduct an inquiry. Srivastava then voluntarily got himself examined at several other hospitals, including the All India Institute of Medical Sciences (AIIMS), which certified he was normal, though under stress. How the VIMHANS report was prepared remains a bit of a mystery.

As already mentioned, two of Srivastava's junior colleagues in the Indian Revenue Service, Sumana Sen and Ashima Neb, had moved court alleging that Srivastava had used intemperate and defamatory language against them. On January 4, 2013, Justice Rajiv Shakhder of the Delhi High Court held Srivastava guilty of civil contempt and ordered his imprisonment for 15 days and imposed a fine of Rs. 2,000 on him. Srivastava appealed against this order.

Thereafter, Sen and Neb moved the division bench of the same court complaining that Srivastava was continuing to use defamatory and scurrilous language against them. On January 10, 2014, the bench comprising Justices Badar Durrez Ahmed and Vibhu Bakhru upheld the judgment of the single judge. The court's registry thereafter issued a warrant of arrest against Srivastava.

One of the writers of this article met the Station House Officer of the Tilak Marg police station Rajesh Mishra, who confirmed that the Delhi High Court registry had indeed issued a warrant of arrest against Income Tax Commissioner S.K. Srivastava. He, however, declined to specify the date on which he received the arrest warrant and why it has not been executed till date.

The larger story of NDTV’s business transactions and the tax department’s scrutiny of it, is tinged by the mutual animosities these tax department officials had against each other, and the actions they took as a result.

Related links:

Part I: NDTV -- Sham transactions or legit deals?

Part III: NDTV--Targeted by the BJP?

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