I-T tribunal upholds tax claim on Win Chadha, Quattrochi on Bofors kickbacks

The Income Tax Appellate Tribunal (ITAT) has come to the conclusion that late Win Chadha and Italian businessman Ottavio Quattrocchi had received kickbacks in the Howitzer gun deal and that they were liable to pay tax in India on that income.

Giving its order on an appeal by Win Catha's son against income tax department's claim of Rs52 crore and Rs85 lakh from his father for the assessment years 1987-88 and 1988-89, ITAT observed that the government had to pay an extra Rs41 crore, which was passed on to Chadha and Quattrocchi.
 
"Inaction in this regard may lead to a non-existent undesirable and detrimental notion that India is a soft state and one can meddle with its tax laws with impunity," ITAT said in its 98-page order.

The tribunal said the commissioner of income tax erred on facts and in law in confirming the additions at Rs52,60,34,469 and Rs85,31,425, respectively, made by the assessing officer on account of the alleged commission received by the appellant through Panama incorporated Svenska, alleged to be the front company of the appellant.  

Bofors had, meanwhile, denied the existence of middlemen in the 1986 deal, valued at Rs1,437 crore.

The CIT also failed in appreciating the fact that the payments were made without bringing on record any evidence to substantiate the allegation that the appellant had received any commission from AB Bofors.

The CIT relied on letters written by Sven Rabmkergar and the National Audit Bureau of Sweden (SNAB) without knowing that the report of SNAB and the basis of which the addition was made was only a press report and, therefore, no evidentiary value.