Without naming BBC, India cites evidence of media firm's unpaid tax

India's tax authority said on Friday it found evidence of unpaid taxes and undisclosed income in the records of an "international media company", a day after inspectors concluded a three-day search of BBC offices in Mumbai and New Delhi.

The tax probe came after India reacted angrily to a documentary by the British broadcaster about Prime Minister Narendra Modi's leadership as chief minister of the western state of Gujarat during riots in 2002.

At least 1,000 people were killed in the violence, most of them Muslims. Activists put the toll at more than twice that number.

The government has dismissed the documentary as propaganda and blocked its streaming and sharing on social media. The tax inspection has drawn strong criticism from media bodies in India and abroad.

Without naming the BBC, the Central Board of Direct Taxes (CBDT) said in its first official statement since completing the office inspections that its "survey revealed that despite substantial consumption of content in various Indian languages (apart from English), the income/profits shown by various group entities is not commensurate with the scale of operations in India.

"During the course of the survey, the department gathered several evidences pertaining to the operation of the organisation which indicate that tax has not been paid on certain remittances which have not been disclosed as income in India by the foreign entities of the group," it said.

A government source said the CBDT was referring to the BBC but did not name it as the investigation was ongoing.

There was no response from the BBC to a request for comment on the CBDT statement.

The broadcaster has stood by its reporting for the documentary, "India: The Modi Question". It has said it is "fully cooperating" with the tax authorities during the inspection and also supporting its employees.

It called the situation stressful and disruptive for its staff and added that its journalists in India would continue to report without fear or favour.

The tax officers left the BBC's offices in New Delhi and Mumbai late on Thursday.

The investigation, the CBDT statement said, also threw up "several discrepancies and inconsistencies with regard to transfer pricing documentation".

It said it found that "services of seconded employees have been utilised for which reimbursement has been made by the Indian entity to the foreign entity concerned. Such remittance was also liable to be subject to withholding tax which has not been done".

"Even though the department exercised due care to record statements of only key personnel, it was observed that dilatory tactics were employed including in the context of producing documents/agreements sought," the statement said.

"Despite such stance of the group, the survey operation was conducted in a manner so as to facilitate continued regular media/channel activity," it added.

A government official has denied accusations that the tax survey was "vindictive" and said the BBC was served tax notices in the past but had not provided a "convincing response".