PW and Co under scanner for Rs 3,000 cr Nokia tax evasion scam

C Shivakumar

Chennai:

Global auditing firm Price Waterhouse and Company is under scanner for its role in the Rs 2,500-Rs 3,000 crore tax fraud by Nokia India.

Sources told Express that several incriminating documents have been seized by Income tax department while conducting investigations into the tax evasion by Nokia India pinpointing to the role of PW and co in allegedly giving wrongful advices and filing false statements for the company.

Sources said that Finance Ministry is likely to transfer the investigation to Central Bureau of Investigation to probe the role of PW and Co.

Interestingly, Income Tax officials have summoned PwC officials to Chennai on January 16 for an enquiry into their role in the tax fraud. PW and Co confirmed that they have been summoned by income tax department, "In the matter of the Nokia case, IT Department has called us as they are seeking our inputs on this. We will extend full cooperation to them on this matter."

Interestingly, this also comes in the wake of income tax department summoning Nokia executives in the north and also in Chennai for an enquiry on January 16, 17, 18 and 21. The officials include the chief financial officer and managing director of Nokia India.

The tax fraud by Nokia came into light following a survey carried out under Section 133 A of the Income Tax Act. It was found that the company has changed its accounting model and was in the process of re-organising the existing business model to bypass certain direct and indirect tax liabilities.

Surprisingly, Price Waterhouse Coopers was already in the loop over India’s biggest scam involving Satyam Computer services. Even the United States Securities and Exchange Commission has penalized the firm for its failed audits of Satyam Computer Services for falsely reporting more than $1 billion in profits. This also comes in the wake of PricewaterhouseCoopers consenting to cooperate with markets regulator Sebi in the Satyam scam to attempt a fast-track settlement. The consent application is a significant step ahead to clear the protracted legal cases surrounding the accounting fraud.

Sources said that Nokia tax evasion is a very grave issue as the Indian government is cheated worth Rs 3,000 crore of taxes. “When the nation is in need of funds for its many projects as well for the welfare schemes, such auditing firms by following unethical practices are helping firms to avoid taxes. This is a serious issue,” the source said.

Sources also said that the Income tax department is also likely to collect the Rs 2500 crore to Rs 3,000 crore worth tax evasion by Nokia India by the end of this financial year.