A number of them denied their liability either by saying the information the department has obtained from foreign shores has no legal sanctity or simply that they are not the one.
Faced with a number of cases of denial of secret foreign bank account holdings, the Income Tax (I-T) department has decided to re-open past tax returns of such individuals in Mumbai and Delhi among others, in order to unearth black money stashed abroad.
The Central Board of Direct Taxes (CBDT) has decided to send the names of those taxpayers to the I-T assessment wing who have refused holding accounts in Swiss or Liechtenstein banks after India recently obtained their names during its fight to unearth illegal funds hidden in foreign shores. The I-T department (in Mumbai, Delhi, Bangalore and Ahmedabad) issued notices to those people, whose names appeared on the classified list obtained from foreign countries. But a number of them denied their liability either by saying the information the department has obtained from foreign shores has no legal sanctity or simply that they are not the one.
These names, about 70, will now be sent to the respective assessment ranges and the assessing officer will re-open the corresponding I-T returns of the year which is reflected on the classified list obtained from various countries.
“The taxpayers entire income and transactions in that year will be re-checked electronically and manually to see if the denial is true,” sources said.
According to sources, the list which the I-T department has received shows the name of the account holder, his passport number and the total amount held by him or her till recently in secret bank account. India has obtained data of over 700 HSBC accounts from the French government.
In 80 cases, the department has detected undisclosed income of Rs438 crore and taxes of Rs135 crore have been realised so far. In this context, the government has also imposed a penalty of Rs24.66 crore on 18 individuals who have bank accounts with LGT Bank of Liechtenstein on the basis of information provided by the German authorities. Germany had last year provided the names of some Indians, having secret accounts in Liechtenstein's LGT Bank. These names were part of about 1,400 stolen bank account details purchased by Germany.
India, according to the finance ministry, has so far received over 9,900 pieces of information from several countries regarding suspicious transactions by Indian citizens, which are now under different stages of processing and investigation.
"It was observed during inspection of the books of account of MMLF with reference to its financial position as on 31 March 2010, that the company has violated extant directions on the deposit acceptance:" RBI
The Reserve Bank of India (RBI) on Monday barred non-banking financial company Money Masters Leasing & Finance (MMLF) from accepting public deposits and selling its assets for six months for violation of directions on deposit acceptance.
“The RBI has prohibited with immediate effect Money Masters Leasing & Finance from accepting public deposits from any person in any form whether by way of fresh deposits or renewal of the deposits or otherwise as well as from selling, transferring, creating charge or mortgage or deal in any manner with its property and assets...” the apex bank said in a statement. The RBI said that the NBFC has been barred from undertaking such operations without prior permission of the RBI for a period of six months.
“It was observed during inspection of the books of account of MMLF with reference to its financial position as on 31 March 2010, that the company has violated extant directions on the deposit acceptance,” the statement said.
Besides, the city-based MMLF has been directed to repay existing deposits as and when they mature. It, however, has been allowed to carry on other business activities in accordance with law. The company, which specialises in hire-purchase and leasing, is also engaged in consumer finance and public vehicle finance. The firm had secured NBFC registration in 1998.
Moneylife has been in the forefront for highlighting frauds committed by MLM and Ponzi schemes. We hope the government brings a strong regulation to curb such schemes, in the interest of the public at large
If 2010 was the year of great Indian scams, 2011 was rather of ponzi and multi level marketing (MLM) frauds. SpeakAsia managed to top the chart, but soon many others joined the bandwagon, duping gullible investors for several thousand crores.
In India, MLM and schemes promising easy high returns are not unusual. Since the start of this year, Speak Asia was new a buzzword. From college students to housewives, everyone was ensnared by it and invested in the scheme on the promise of easy weekly returns, merely on filling online surveys. Though the company paid the promised income in the beginning, there were certain grey areas in its business model. SpeakAsia was registered in Singapore, and was working in India without any office, and was not registered with registrar of companies.
Moneylife was the first media organisation to raise a red flag regarding the business model of Speak Asia (http://www.moneylife.in/article/78/9864.html). Soon its dubious nature was exposed in the mainstream media during its Goa bash that was held in May. Despite ambiguities prevailing in the scheme, the regulators remained tight lipped. Moneylife repeatedly urged the Reserve Bank of India (RBI) to investigate the company’s money trail, since a lot of money was amassed and sent to Singapore. But nothing was done and finally the scheme collapsed, duping 19 lakh gullible investors. Currently the top bosses of SpeakAsia are absconding while other employees are arrested. The Economic Wings (EOW) Department, Mumbai is investigating the scheme. Sources from EOW tell us that already substantial amount of money has reached Singapore.
Stock Guru India, grabbed headline in April after its founder Lokeshwar Dev, duped investors for whooping Rs1,000 crore (http://www.moneylife.in/article/stockguruindia-allegedly-dupes-2-lakh-investors-of-over-rs1000-crore/15461.html). This fraud company, operating as a self-styled investment advisor, openly flouted norms laid down by the market regulator Securities and Exchange Board of India (SEBI) and offered 120% returns in a year through stock market investment. SGI was not registered with SEBI as an investment advisor, but still offered to trade on behalf of clients. It also operated without any trading licence from the RBI and SEBI. Moneylife, much before (in December 2010) the scheme collapsed, had pointed the dubious modus operandi of the scheme (http://www.moneylife.in/article/78/12686.html). Again SEBI ignored and remained silent.
In June 2011, frustrated with the mushrooming MLM schemes, the Kerala police started an investigation into these schemes and closed many of them. The police admitted noticing frauds amounting to over Rs1,000 crore in the state. Following the hue and cry from a number of investors, investigating agencies from Kerala started probing several multi-level marketing (MLM) companies—two prominent names among these were Tycoon Empire International and Bizarre group of companies. It arrested some of the promoters. Many of these cases had inter-state ramifications and were handed over to the crime branch in Kerala. Media reports have quoted Jacob Punnose, director general of police (DGP), Kerala, as saying that these investigations would be completed within five to six months. Chennai-based Tycoon Empire International had collected Rs370 crore from 50,000 investors, while Bizarre group collected Rs55 crore from depositors. Besides these two names, another MLM company cheated people of around Rs300 crore. It operated 14 accounts in a private bank, using false names and addresses. (http://www.moneylife.in/article/kerala-gets-tough-with-money-swindlers-and-mlm-companies/17571.html) MLM company Nano Excel came under the scrutiny of the Karnataka police after it cheated its investors for Rs9 crore.
In November, Jaipur-based multi-level marketing (MLM) company, Gold Sukh, has allegedly duped over 1.75 lakh investors for over Rs200 crore (http://www.moneylife.in/article/another-mlm-company-gold-sukh-dupes-investors-for-rs200-crore/21722.html).The company promised investors 27 times returns in just 15 months on their deposits for buying gold. Police arrested officials of the company and issued a red corner notice through Interpol against the absconding directors of the company.
The chief minister of Rajasthan has asked officials to draft a bill against fraudulent MLM schemes against the backdrop of the on going investigation in the multi-crore Gold Sukh scam.
Even while the EOW Mumbai was investigating SpeakAsia scam, it successfully arrested a fraudster of another MLM company. In October, EOW arrested Rahul Patil, managing director of Symbiosis Gold Trade. Interestingly, when Mr Patil was bought to the local court in Mumbai, some duped investors—mostly women—hurled chappals at him. It promised Rs1.20 lakh profit at the end of year apart from the actual investment of Rs1 lakh.
EOW Mumbai, in November 2011, unearthed another fraud by MLM scheme, Yellow Sapphire Multi-Trade Pvt Ltd, after it cheated around 2,000 investors. According to the company’s scheme, on investing a sum of around Rs6,000, one would get a gold pendant worth the invested amount along with additional Rs840 on introducing two new members to the scheme.
Despite the EOW’s strict action, many schemes continue to flourish. In fact schemes which in past have duped investors have made a come-back. For instance, Gold Quest, which came under the scanner of investigating authorities, is once again trying to spread its reach to the investor. The company, registered in Singapore, has been banned in many countries. It has re-launched itself in India and is said to be successful in attracting new investors from Mumbai. Gold Quest has now renamed as Q-Net or Quest Net, is selling a certain products including watches, holiday packages ranging from anything between Rs30,000 to Rs7 lakh. The company started by selling limited edition numismatic gold coins through a pyramid structure for Rs30,000. It claimed the coins were made in Germany and will appreciate in value, over a year, which will and fetch huge returns to the buyer.
Moneylife Foundation, a not-for profit organisation which spreads financial literacy, had send an memorandum to the Prime Minister’s Office urging the PM and others to completely ban MLM companies in India or bring these companies under the regulation of either RBI or SEBI. (http://foundation.moneylife.in/promotion/speakasia/index.html)
Hope in 2012 the government brings a strong regulation to curb MLM and pyramid schemes, in the interest of the public at large.