I-T dept to conduct a special audit of grounded Jet Airways books

The income-tax (I-T) department is set to appoint an independent auditor to conduct a special audit of the Jet Airways books in connection with the commission paid by the airline to its Dubai-based group entities for allegedly evading Rs 850 crore in taxes, according to an official privy to the development.

The move follows the tax survey report submitted by the investigation wing of the department, which had flagged discrepancies in transactions between Jet and its Dubai-based companies. 

“The department has reopened the airline’s tax assessment of the last six years. Simultaneously we have decided to do an independent audit based on the survey findings,” said the official. 

The assessment division of the department is examining suspected tax evasion, the official said, adding that the entire transaction was purportedly “weaved” to divert funds overseas. 

An email sent to Jet Airways went unanswered. During the survey operation, tax officials found that the commission paid by the airline to its sales agent in Dubai was quite high as compared to the allowable expenses prescribed under the I-T Act. Sources said there had been a lot of internal communication within the tax department in the last few weeks. The assessment wing has taken up the matter to raise tax demand against the airline. Certain documents have also been sought from the airline, the source added. The department has found evidence of inflated expenditure by Jet Airways in its survey carried out at the airline's Mumbai and Delhi offices.

According to sources, I-T officials are scrutinising the airline's records for the last four years to find out if there has been any siphoning of funds, and to also look at the issue of suspicious expenses

The Ministry of Corporate Affairs too examined the books of the airline and found evidence indicating violation of the Companies Act and unexplained transactions. Sources say the said findings have been shared with the SFIO.

Under scanner

• Commission paid by the airline to Dubai-based group entities
• I-T officials suspect tax evasion of Rs 850 cr by Jet
• The commission was quite high compared to what is allowed, they say