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Finger pointed at Morepen after Rathi firms' probe

George Smith Alexander

The income-tax (I-T) raid on the former Bombay Stock Exchange chairman Anand Rathi's companies has led to the unearthing of a 'default' in tax payment by Concept Credit & Investment Pvt Ltd. This is on long-term capital gains of Rs 61.7 million and speculative income of Rs 8.2 million.

The department identified the outfit as an investment company of the Morepen Laboratories group. However, Morepen chairman & managing director, Sushil Suri, said: "Concept is not an investment company of Morepen. In fact, Morepen does not hold even a single share in Concept. It is an investment company of the family."

According to an internal report of the department, an investment company of Morepen, called Concept Credit & Investment Private Ltd, had made speculative profits for which no tax was paid. The sales were done through Rathi Capital and Securities Pvt Ltd.

Concept had sold shares of Morepen for which advance tax was not paid for long-term capital gains made during assessment year 2000-01.

Suri said: "There is no tax evasion. We need to clear the tax liability by October and we will do this next week.

Some trades were done by this company in April-May 2000 much before the market crash and the ensuing controversy.

People from the I-T department had come to our office in May-June 2000 to tally the entries with the books and went back satisfied.

"In fact, after September 2000, this company has not carried out any trade at all."

Suri said Concept had an income of Rs 60 million for 2000-01 and has to pay a tax of Rs 700,000 on it.

The I-T department, after making a survey, also found speculative profit of Rs 8.2 million had been earned mainly in technology shares like DSQ, where sale of 43,000 shares were done.

The department has also said that the 43,000 shares of DSQ were delivered to Anand Rathi Securities Pvt Ltd from Niketan Traders Pvt Ltd of Chandigarh.

The department has asked the assessment officer to find out whether any element of transfer of profit is involved.

The department has also noted that a cheque of Rs 13.5 million was paid into the account of Anand Rathi Securities on the instruction of Rathi Capital and Securities.

"The whole transaction seems doubtful as it is not linked to the regular business of the assessees (Concept Credit & Investments) with Rathi Capital."

The department has asked the assessment officer to verify the objective behind the transfer. The report has also added that the assessing officer may consider prosecution proposal under 276 C of the I-T Act 1961.

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