Income-tax department questions Yash Birla Group on 5 foreign accounts

NEW DELHI: The income tax department has asked the Rs 3,000 crore Yash Birla Group (YBG) for an explanation regarding five undisclosed foreign bank accounts, according to information accessed by ET. The accounts hold more than Rs 300 crore.

The IT department embarked on a six-month investigation based on a lead from the financial intelligence unit of the finance ministry. In January, the department conducted search and seizure operations at group companies in more than 15 locations in Mumbai and Delhi. Group officials have been by the IT officials under section 131 of the Income Tax on the issue.

One account is in Switzerland, while the other four are in Singapore. The HSBC bank account in Switzerland was opened by the late Ashok Birla, father of Yash Birla, prior to his death in 1990. Besides, the group is alleged to have three bank accounts with Barclays, one of which showed a balance of about $50 million (Rs 300 crore). The fourth Singapore account is with Credit Suisse. The Yash Birla Group didn’t respond to detailed queries sent by ET.

Except the balance in one bank account, cash in other bank accounts is not known as the company officials are not cooperating with the investigations, sources said. These accounts suspected to have more than Rs 600 crore. Two of these accounts are maintained in the name of a trust formed in 2010-11. The other two accounts are maintained in the name of Yashovardhan Birla. The trusts through designated trustees “operate” the bank account on the instruction of Yash Birla.

“The exact source of cash in these bank accounts are unknown as the company officials are not cooperating with the investigations,” said a source. Company officials are ignoring the department notice and are trying to mislead the investigation, he added.

The IT department has initiated proceedings to attach personal assets of Yash Birla and that of the other group companies in Singapore. The department has also written to the concerned authorities in Switzerland, Singapore and other countries through its foreign tax and tax research division seeking details of the accounts. However, the department fears that the money in the Singapore accounts has already been moved elsewhere.

The 150-year-old group is present in sectors such as auto, engineering, steel pipes, machine tools, iron castings, pumps and electrical appliances.