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I-T Dept Woke Up to Nirav Modi Scam 8 Months Earlier, Didn’t Alert Other Agencies: Report

The Income Tax department findings reportedly red-flagged bogus purchases, huge over-valuation of stocks, suspicious payments to relatives and dubious loans.


Updated:December 3, 2018, 11:30 AM IST
I-T Dept Woke Up to Nirav Modi Scam 8 Months Earlier, Didn’t Alert Other Agencies: Report
Nirav Modi left India before the fraud came to light, but has claimed innocence in letters and statements.

New Delhi: A crucial Income Tax department report, that was not shared with any other agency, red-flagged bogus purchases, huge over-valuation of stocks, suspicious payments to relatives and dubious loans more than eight months before the Nirav Modi-PNB scam broke.

According to a report by The Indian Express, the Income Tax probe report on fugitive diamond jewellers Nirav Modi and Mehul Choksi, running into about 10,000 pages, was finalised by the agency on June 8, 2017.

It was not shared with other agencies like the Serious Fraud Investigation Office (SFIO), Central Bureau of Investigation (CBI), Enforcement Directorate (ED) and the Directorate of Revenue Intelligence (DRI) until February 2018, when the Punjab National Bank (PNB) scam became public.

Sources told Indian Express the tax department, before February 2018, also did not share its findings through the Regional Economic Intelligence Council (REIC), a mechanism for sharing of information between various law enforcement agencies.

Modi and Choksi, and their three partnership firms, Diamond ‘R’ US, Solar Exports and Stellar Diamonds, are accused of routing Rs 13,500 crore worth of fraudulent transactions through state-owned PNB. Both left India in the first week of January 2018, weeks before the scam broke.

The Income Tax department, on January 14, 2017, searched Modi’s firms and surveyed companies owned by his maternal uncle Choksi. The search and survey covered at least 45 residential and commercial premises across the country.

According to a senior tax official, the tax investigation appraisal report on Modi and Choksi was not shared with other agencies because there was “no protocol” for sharing such reports with other agencies at that time.

“After the Nirav Modi and Mehul Choksi scam, since July-August 2018, the tax department has been asked to share all investigation appraisal reports with the Financial Intelligence Unit (FIU), which in turn shares these with other agencies for investigation and appropriate action,” the tax official told The Indian Express. “Since July-August, we are sharing information and investigation reports on real time basis,” the official said.

Interestingly, the findings of the tax probe have now been mentioned by the CBI and ED in their chargesheets filed against Modi and Choksi between May and July 2018.

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| Edited by: Nitya Thirumalai
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