IPL owners could be questioned by tax officials soon

New Delhi: Owners of the Indian Premier League cricket teams could soon find themselves being questioned by income tax officials.

Sources in the income tax department confirm to NDTV that a complex inquiry has begun into the owners of IPL franchises, along with their funding. (Read: Taxmen reach Punjab Cricket Association offices)

But sources say this is the beginning of a complex investigation into the source of funds.  Describing it as a "document-based inquiry", officials say that it could take a couple of months to complete.

The case, they say, is against the Board of Control for Cricket in India (BCCI) with regard to IPL and existing tax issues of the board. This is because the IT department does not recognise IPL as a legal entity.

On Thursday, income tax officials visited the offices of the IPL, and its chief, Lalit Modi, in Mumbai. After a ten-hour search, described as a "survey", Modi said, "They did not know the bidding procedure and asked me about it. They also sought the names of bidders and final documents of successful bids for the Kochi and Pune teams. We have complied with all the information." (Read: Income Tax officials visit IPL, Lalit Modi offices) | (Read: IPL will fully cooperate with IT inquiry, says Lalit Modi)

The inquiry will also look at whether the BCCI and its sub-division, the IPL, have been following income tax guidelines. Sources say both cricketing bodies did not comply with statutory notices sent earlier on taxes.

Allegations of proxy owners and illegal funding have been in force this entire week after Modi went public with details of the stakeholders in the Kochi franchise, a consortium that Modi has alleged is not above-board.

Modi revealed that the franchise, which was mentored by Minister of State  Shashi Tharoor, had gifted equity worth 70 crores to Tharoor's close friend, Sunanda Pushkar.

The allegation led to the Opposition demanding that Tharoor be sacked.

The Taxman's IPL probe:

• Sources say IT officials have impound all IPL documents under Sec 131 of IT Act
• The IT department conducted an enquiry at the IPL premises on April 15
• The IT department wanted to ascertain the source of funds for franchisees
• All returns filed by franchisees in FY09 showed negative income
• The IT department expects FY10 net income to be positive
• The April 15 enquiry is a warning to IPL franchisees to pay appropriate tax
• The IT department's eye is on high valuation in auction of two franchisees
• The IT department expects stake sales in franchisees on high valuation
• The IT department wants to ascertain original value to compute capital gains tax

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