The Income Tax Department has invoked a rarely used power and arrested a Karnataka-based businessman for alleged tax default of about Rs 12 crore, a senior official said Tuesday.
The official said the man, who has not been identified, was arrested by the Tax Recovery Officer (TRO) of the I-T Department (Karnataka) from the Mumbai airport on Monday, when he was about to take a flight to a foreign destination.
The man has been "detained in civil prison for a period of six months", the department said in a statement. He was wanted by the department's Karnataka and Goa region office, headquartered in Bengaluru.
"He owed income tax and penalty arrears of Rs 11.94 crore plus interest," it said.
"Aside from non-payment of due taxes, the defaulter was found to have illegally transferred property situated at Yeshwanthpur in Bengaluru. "As per Rule 73 of the second schedule to the Income Tax Act, if a defaulter transfers his property after the service of ITCP-l (I-T notice), the certificate may be executed by arrest and detention of his person," the department said.
The statutory provision in Rule 16 prohibiting transfer of any property by the defaulter without the permission of the TRO is a stringent one and the defaulter must face the consequences of his wilful violation, it said.
The TRO is empowered to attach and sell assets, arrest a tax defaulter and also appoint a receiver to manage a defaulter's business. However, these powers have been rarely invoked by the department in the past and very few arrests have ever been made by the taxman.
The department said the businessman had "violated the provisions of section 222 of the Act and Rule 16 of the schedule by transferring immovable properties after the date of service of notice of demand".
Therefore, it said, the TRO held that "no further enquiry" is considered necessary and accordingly no custody pending hearing as per Rule 75 of the second schedule was ordered. It said the man "failed to make satisfactory arrangement for payment of the tax arrears and he has been committed to civil prison on Tuesday at Parappana Agrahara central jail in Bengaluru for six months".
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)