Income tax department conducts survey operation at Jet Airways

Airline is under tax lens for falsification of book of accounts, siphoning of funds

The income-tax (I-T) department has launched a two-day survey operation at the business premises of the Naresh Goyal-controlled Jet Airways in connection with alleged financial irregularities and suspicious transactions, said an I-T source privy to the development.

According to the source, the tax department is examining whether there is any falsification of the account books, siphoning of funds, and issue of suspicious bogus expenses booked to group entities. “Documents have been impounded and the books have been sent for verification,” said the source cited above.

The survey operation, being conducted by 50 tax officials, is taking place under Section 133A of the I-T Act at the airline’s four premises, including Andheri and Nariman Point, in Mumbai and Connaught Place in Delhi.

Sources said the I-T department is assessing whether the financial transaction would attract tax liability on the parties concerned. Accordingly, the evidence is being collected. Further, some of the top airline executives were being questioned during the first day of the survey operation, they added.  

Confirming the development, a Jet Airways spokesperson said I-T officials were conducting a survey at the Jet Airways office.

Meanwhile, the tax department is also examining the airline’s deal with Godrej Buildcon, where Jet is said to have received Rs 17.25 billion as monetary consideration.

This matter pertains to an agreement between Jet and Godrej in 2011, where they had planned to develop the airline’s 2.5-acre property at the Bandra Kurla Complex in Mumbai. According to the agreement, Godrej Properties will take on the airline’s Rs 3.6-billion debt obligation on the property.

The I-T department has also considered the goods and services tax council’s probe finding, which had issued an adjudication order and raised a service tax demand of Rs 2.37 billion on Jet in March.

Jet Airways has been in the spotlight since August 9, after it had deferred its quarterly results amid differences with its auditors, leading to queries by stock exchanges and the market regulator. The auditor did not modify its opinion and reiterated that the airline’s future was dependent on raising capital and generating sustainable cash flows.

Jet Airways had said last month that it would seek capital infusion and sell stake in its loyalty programme, after reporting a net loss of Rs 13.26 billion in the April-June quarter of 2018-19.

Jet Airways stock fell 3.7 per cent on the BSE to close at Rs 244.25 on Wednesday.