The Income Tax Department has slapped a Rs 87.70-crore tax demand on Chennai-headquartered Caruna Bal Vikas (CBV), an NGO working in child development sector, for alleged violation of Section 8(1)(a) of Foreign Contribution Regulation Act.
The IT Department’s investigation wing officials said that the organisation had diverted funds it had received from US-based Compassion International to 300 organisations. CBV received Rs. 100 crore funding per year.
A tax demand of Rs. 28.59 crore has been raised for Assessment Year (AY) 2010-11, Rs. 30.20 crore for AY 2011-12 and Rs. 28.91 crore for AY 2012-13, totalling to Rs 87.70 crore.
“CBV was utilising only 10 per cent of the funds it receives and the remaining 90 per cent was diverted. Some of the organisations where the funds where routed to were not registered,” said a senior Income Tax official, who wished anonymity.
The FCRA rules prohibit transfer of foreign contribution to non-FCRA account unless such an entity is also registered and has been granted the certificate or obtained prior permission under this Act.
Only one-third of the 300 recipient agencies were social organisations. The rest were religious and socio-religious institutions. Forty per cent of the organisations were in South. “In March 2013 we found out that there are too many discrepancies. Funds received for social purpose cannot be diverted for other religious activities,” the Income Tax official said.
During investigation, the IT officials visited the CBV office in Purasawalkam, which was under lock and key. In May 2014, Adhane Management Consultants Private Limited, a new firm, was incorporated and classified as an NGO, the official said, adding that the new NGO has the same management team and workers who were a part of the CBV.
According to IT officials, Aswin Paul, who was with CBV, was now with Adhane. And now Compassion International was routing the funds directly to those 300 organisations. Mr. Aswin Paul, who holds the power of attorney for Caruna Bal Vikas, could not be reached for his comments.
