Pay Rs 1,385 crore tax, Ketan Parekh told

The tax department has slapped a whopping demand of Rs 1,385 crore (Rs 13.85 billion) on Big Bull Ketan Parekh and his group entities, in the face of the Joint Parliamentary Committee probe that led to unearthing of undisclosed income of almost Rs 2,000 crore (Rs 20 billion).

The Central Board of Direct Taxes estimates the total demand raised in Ketan Parekh group cases at Rs 1,365.37 crore (Rs 13.653 billion) and the interest on it amounted to another Rs 41 crore (Rs 410 million), according to the second action taken report submitted by the finance ministry in Parliament.

"The gross demand comes to Rs 1,406.37 crore (Rs 14.063 billion). Out of this, there has been collection and reduction in appeal to the tune of Rs 21 crore (Rs 210 million). Hence, the total outstanding demand in Ketan Parekh group cases is Rs 1,385 crore as on May 28, 2004," says the report drawn up pursuant to recommendations of Joint Parliamentary Committee that probed the share scam.

The slapping of the notice comes after Income Tax departments searches conducted on Ketan entities soon after the scam surfaced in March 2001 and completed investigation by October 2003.

CBDT assessed undisclosed income of Ketan entities at Rs 1,993.26 crore raising tax demand of Rs 1,365.37 crore (Rs 13.653 billion).

As Ketan Parekh is a 'notified person' under the Special Court Act, CBDT can collect the dues only if the court releases the funds towards payment of tax.

"Officers of Income Tax department are in touch with the CBI, which is investigating this matter," the report said.

Meanwhile, Debt Recovery Tribunal has also initiated proceedings in respect of some of the individuals and major concerns of the group. "Therefore, recovery of taxes from such concerns is also subject to proceedings before DRT," the report said.

JPC had named Ketan Parekh as the 'key' person involved in all dimensions of the stock market scam of 2001, along with the payment crisis in Calcutta Stock Exchange and the crash of Madhavpura Mercantile Cooperative Bank.

The Sebi's probe have revealed that the amount outstanding from Ketan Parekh entities to certain corporate houses was over Rs 1,273 crore (Rs 12.73 billion) till April 2001, the report said.

Ketan's dues to MMCB was about Rs 888 crore (Rs 8.88 billion), while it was over Rs 266 crore (Rs 2.66 billion) to Global Trust Bank, it said.

"The funds received from corporate houses and banks have gone to three major broker groups in CSE and utilised in capital market operations," it said.

Ketan entities also used Overseas Corporate Bodies, foreign institutional investors and mutual funds for large transactions.