I-T dept to seek US help to validate seized $5-bn American bonds
Coimbatore/New Delhi: After it seized US government bonds worth Rs 28,000 crore (USD five billion) from a Tamil Nadu businessman, Income Tax department has decided to approach American authorities to get validated the authenticity of these securities.
The huge quantity of the US treasury bonds were recovered by the tax sleuths on New Year's eve during a raid of the premises of the businessman in Tamil Nadu. The businessman also happens to be a commodity broker.
These bonds will also be sent to the tax department's forensic laboratory in Mumbai to ascertain their "genuineness", I-T department sources said Thursday.
The tax department's investigation wing in Chennai has approached the Central Board of Direct Taxes (CBDT) in Delhi for issuing a formal request to get the seized bonds validated from the Internal Revenue Service (IRS) Department of the US, the sources said.
Individuals are not allowed to hold foreign securities worth such a large amount and the total amount seized in this haul represents nearly one-tenth of the total US treasury holding of the Indian government.
The Indian government's total holding of US treasury bonds is estimated at over USD 50 billion, while individuals are not allowed to hold foreign securities worth more than a few lakhs of rupees. The holdings of even institutional investors are capped at USD one billion.
The bonds were seized from Tirupur district in Tamil Nadu after the I-T sleuths raided the premises of the businessman, acting on a suspicious report generated by the Financial Intelligence Unit.
Senior I-T officials said the department wants all the information in this regard to be verified before any tax evasion-related action is initiated.
"The US has always cooperated in tax evasion related cases and we expect help from them in this case too," sources said.
The raids were carried out on the residence of Ramalingam at Upputhurai Palayam village on December 31.
The I-T action followed Ramalingam's reported application to the Petroleum and Chemicals Ministries, seeking sanction to set up a Rs 1,000 crore crude oil refinery in Ramanathapuram district of Tamil Nadu.
Ramalingam is involved in the business of groundnut peeling equipment and used to make frequent trips to countries like Australia, Malaysia, Indonesia.
A year ago, he had applied for sanction to set up the refinery in Thondi at a cost of Rs 1,000 crore.
The department was keeping a close watch on the movement and activities of Ramalingam for the last few months culminating in the raids, they said.
Three days after the seizure, the I-T officials from Chennai and Coimbatore again returned Wednesday and checked Ramalingam's accounts in various banks, sources said.