Generally, the cheats who amass enormous wealth in dubious activities, claim that they have been paying taxes including Income Tax. However, the Judgement delivered by the Division Bench of High Court of Karnataka has given a blow to this argument and made it clear that on the money accumulated from the unlawful activities, the tax payer cannot claim any exemptions.
In Re Commissioner of Income Tax vs. Amarjeet Kaur (c/w ITRC of 1999 decided on January 31, 2006), the Division Bench of High Court of Karnataka unequivocally reiterated that the appellant M/s Manjog Home which is running a money circulation scheme in the guise of sale of products like refrigerators, television sets, electric and electronic goods through a 'deposit-linked incentive scheme' is nothing but a money circulation scheme and stated that such schemes are prohibited by law and therefore, the assessee in view of the Explanation inserted by Finance (No2) Act, 1998 is not eligible and entitled to claim deduction or allowance of such expenditure as an expenditure for the purpose of business or profession.
Several persons being members of fraudulent companies like Amway India claimed exemptions from paying Income Tax through out the country. Corporate Frauds Watch is taking up this issue to the Income Tax Commissioners of various States in India and make sure that the exemptions enjoyed by these individuals cancelled.
Of course, these people include GoldQuest International, Herbalife, Tupperware, Hindustan Unilever Network Ltd and others.