Gujarat man declares Rs 13,860 cr cash, but whose money is it?

All that the Income-Tax (I-T) Department could unearth from the residence and office of Mahesh Shah, a land dealer in Jodhpur Cross Roads, Ahmedabad, was some documents on land deals, though Shah had declared Rs 13,860 crore in cash under the Income Disclosure Scheme (IDS).

The I-T department on Friday claimed to have recovered Rs 40 lakh in cash and jewellery worth Rs 30 lakh from Shah's business associates, besides seizing six bank lockers from them and his chartered accountant (CA).

The search operations were carried out two days before November 30, the last day for Shah to pay the first tax installment of Rs 1,560 crore. Shah had declared cash of Rs 13,860 crore on September 30 – the last day for disclosure under the scheme.

Shah not only missed the deadline but went missing as well, leaving many questions unanswered. His CA Tehmul Sethna said that he first met Shah in 2013 in connection with a land deal.

"I gave him some advice on his undisclosed income that time and won his trust. He later met me for advice on IDS. I told him it would be a win-win situation for both him and the I-T department," said Sethna. "I did not have doubts about his credentials because I knew of his networks and land deals. In the last week of September, we met an Income-Tax Commissioner to discuss the disclosure. On September 30, following his advice, Shah disclosed an income Rs 13,860 crore," added Sethna.

"We cannot rule out the possibility that some part of what he declared may belong to some bigwigs," said Sethna

He said that the I-T department then checked Shah's credibility and worthiness, and, on October 14, issued him the IDS Form 2 (the form to disclose income). Under the scheme, he was to pay 45 per cent income tax on the declared amount, and the first installment (Rs 1,560 crore) was to be paid by November 30.

"But, for some reason, the I-T department began to doubt his ability to pay. On November 28, for unknown reasons, they cancelled his IDS Form 2," said Sethna.

"They searched the offices and residences of Shah and his associates, including mine. What I learned during the search at my residence and office is that the I-T department suspected that some money-laundering may be done through the payment of Rs 6,240 crore tax (45 per cent on the declared IDS) and so cancelled the IDS," said Sethna.

Interestingly, I-T officials said the investigation wing of the department (which carries out search operations) had no clue about Shah's declaration under the IDS scheme. "Each wing of the department maintains confidentiality. o one wing does not know what the other is up to," said an official.

According to an official, the investigation department had information that Shah and his associates were helping in currency exchange (exchanging banned currency notes with acceptable ones for a commission). "We searched 12 places in the city, including the residences of Shah, his business associates and CA. It is just a coincidence that, on November 28, Shah's IDS form got cancelled and on November 29 the search operations began," said the official.

According to I-T department records, Shah's tax returns for the past few years showed his annual income between Rs 2 lakh and Rs 3 lakh. Sethna said that Shah is a big investor in land and has land parcels in Ahmedabad, Mumbai and its suburbs.

Who is Mahesh Shah?

The 67-year-old is a heart patient who has undergone a surgery. He has a wife and two children, a son who is unemployed, and lives with him at his residence in Jodhpur, and a daughter who is married and lives in Prahaladnagar. His wife is a cancer patient and is bedridden. For 59 days, after he first made the declaration under the IDS scheme on September 30, the I-T department thought of him as a 'genuine' assessee and waited for him to pay tax. "He lived in a 3 BHK, but otherwise he lived a luxurious life. When on tour, he would check in only to five-star hotels but whenever he visits me, he would take an auto," said Sethna.