Even as IPL Commissioner Lalit Modi remained at the centre of a spreading I-T inquiry into the business of T20 cricket, the taxman prepared to scrutinize the fund flows of IPL franchisees, especially through the Mauritius route, says a Times of India report.
The report said, special attention was being directed at Modi's investments and business dealings, high-level officials said on condition of anonymity. The tax department is also interested in contracts awarded by IPL administrators at lower rates than they might have fetched and is zeroing in on some big deposits in Mauritius.
I-T records show a huge jump in Modi's income in the last couple of years.
The cricket entrepreneur, who paid a modest Rs 32 lakh as income tax for the financial year 2008-2009, shelled out Rs 11 crore as advance tax for the financial year ending March 31, 2010.
This meant his projected income this year would be upwards of Rs 40 crore. The taxman's growing interest in Modi coinicides with indications that he is in increasing trouble with the IPL's governing council. Most of the council's members appear to have turned against him.
On Friday, the Mumbai-based investigators issued notices to the cricket bodies asking them to furnish ownership and funding details of the eight T20 teams that took part in the first edition of the IPL.
They have been given a week to revert. The decision to send notices under section of 131/133 A of the I-T Act came a day after the sleuths went to the Mumbai offices of the T20 league organisers and collected large volumes of documents that are likely to throw up uncomfortable questions for flamboyant IPL commissioner Lalit Modi.
The department will scrutinise the bidding process of all the eight franchisees against the backdrop of allegations about the source of the teams' funding.
The eight teams of IPL-2008, whose details have to be furnished to the I-T department are Kolkata Knight Riders, Mumbai Indians, Royal Challengers Bangalore, Delhi Daredevils, Kings XI Punjab, Deccan Chargers, Chennai Super Kings and Rajasthan Royals.
Sources in the Central Board of Direct Taxes (CBDT), which supervises I-T departments across the country, said the investigators have got leads indicating that at least four IPL franchisees have received funds from tax havens such as Mauritius and British Virgin Islands and Cayman Islands, says a Mail Today report.
The investors who have sunk their money in the IPL know that the UPA government has no information-sharing agreement with nine tax havens with regard to black money Indian nationals have stashed in secret accounts, an I-T official said.
Modi, however, told reporters that the I-T officials were doing a job and he had no problems with that. “We have nothing to hide. The I-T department has asked us for information, that's fine. There is no reason to be upset about it.”
After getting the details from the BCCI and the IPL, the I-T officials will summon the franchise owners for their statements on bidding, the nature of investment and the purchase of players, specially overseas cricketers.
The I-T sleuths are probing how much of the contract money may have gone to expensive foreign cricketers — who are raking in the moolah by playing in the tournament — and the share their respective teams, if any, are keeping with themselves.
Sources said they wanted to crosscheck information, pointing out that the cricket body had given counter-guarantees for expat players which is against the Foreign Exchange Management Act. A core team of I-T (investigation) Mumbai officials is likely to hold a meeting on Monday to take a call on how to proceed with the probe and sift through important documents procured on Thursday.
The investigators are also going to write to other departments, asking them to look into irregularities, the money laundering aspect and other violations of the Companies Act.
The sweat equity offer of consortium Rendezvous Sports World Limited, which won the bid for the IPL Kochi team, to Sunanda Pushkar — a friend of minister of state for external affairs Shashi Tharoor — has also come under the scanner. The I-T officials are questioning Rendezvous's decision since it is against the Companies Act.
