MUMBAI: Of the three Swiss bank account holders named by the government, the case of Pankajkumar Chimanlal Lodhai is the most curious. The rotund gold and bullion dealer from Rajkot, of whom few outside Zaveri Bazaar had heard of till Monday, had lent his name to two overseas bank accounts and had advised a Sharjah resident to take large bets on gold, silver and platinum futures on offshore exchanges.According to a tax official, Lodhai — in a declaration to the income-tax authorities — has spelt out that one account is with a bank in Ras Al Khaimah, UAE, and the other with Standard Chartered Bank, Singapore. In August this year, he had approached the Mumbai bench of the Income-Tax Settlement Commission, declaring an unaccounted income of Rs 14.53 crore.The Settlement Commission is a statutory body set up under the Income-Tax Act to settle cases of disputed facts related to income liable for taxation. Lodhai has prayed before the commission, which has admitted his affidavit, for immunity from prosecution and penalty, a tax source told ET. Surprisingly, even as late as three months ago he had not declared holding any Swiss bank account.Lodhai did not respond to a text message from ET while his chartered accountant, JC Ranpura, refused to discuss the matter. Asked whether Lodhai had subsequently shared additional information with the tax department, Ranpura said (over telephone), "I don’t know. I don’t think so. He is my client and you must understand that I’m bound by confidentiality code." (As per income-tax records, the name of the person in question is Pankajkumar Chimanlal Lodhai.)According to the source and a person in the Mumbai bullion market, Lodhai has claimed that he provided only consultancy services in helping one Mehul Nandha, who is based in Sharjah, and Nandha’s associate firm Wingold LLC to put through derivative trades on precious metals in Dubai and Singapore. While no funds, according to the declaration, were transferred from India to Dubai, Lodhai carried out research and trade analysis. Nandha trusted Lodhai because of the latter’s "reputation" and "goodwill" in the bullion world and had also let Lodhai access his server in Dubai by sharing the login ID and password.Lodhai, in turn, allowed Nandha to use his name to open bank accounts for depositing margin money required to enter into derivative contracts. The unaccounted income for assessment years 2008-09 to 2014-15 was primarily in the books of Shreeji Trading & Co (of which Lodhai is the proprietor), followed by unaccounted stocks of fine gold and loose and studded diamonds with Shreeji Orna ments Pvt Ltd, and unrecorded cash receipts in real estate business.Lodhai’s affidavit provides a peek into the world of bullion trading. Bullion traders place orders with agencies such as STC and large bullion banks like StanChart London and often hedge the price risk as the delivery takes 24-36 hours. Sometimes, Lodhai used to keep the position unhedged and used the physical gold received to "influence demand and supply" in the local market. When there was shortage of gold and price rose, he sold the yellow metal in the local market. Sometimes, these were cash deals, and the money was used to replenish physical stock.Some of the transactions and the profits, Lodhai admits, were never recorded. According to a source, Lodhai mentions more than once in the affidavit that the money earned from dealings with his "business acquaintance" in Sharjah is purely commission income. Nandha shared 10% of profits (or Rs 1 lakh, whichever was higher) from a trade.The Reserve Bank of India prohibits traders in India from taking leveraged trades on overseas futures exchanges for deals that are not backed by any underlying physical stock. But bullion dealers in India say a few intermediaries continue to offer the service, having found a way to sidestep the restriction.Lodhai, however, is categorical that he has never been an investor as Nandha bore the loss whenever a deal backfired; moreover, UAE, according to him, has the first right to tax on gains made on deals that Nandha cuts. Some of these are finer points of tax. But with the Swiss bank story hitting the headlines, Lodhai’s declaration before the Settlement Commission raises a few questions: 1. Does he (or did he) have an undisclosed account with a Swiss bank? (Lodhai has so far denied that he ever had one); 2. How kosher are his deals in the eyes of the taxman; 3. Having admitted the affidavit, how will the Settlement Commission respond to his prayer for immunity?