Kathmandu-Businessman Raj Bahadur Shah who faced allegations of stock market manipulation, also involved in  tax irregularities.

An audit has found that his company, Himalayan Distillery Limited, claimed tax exemptions that the law does not allow.

Under the Income Tax Act, 2058 BS, listed manufacturing companies can get a 15 percent tax exemption. But the Industrial Business Act, 2076 BS, bars such benefits for alcohol and tobacco industries, except fruit based products like wine, cider, and brandy.

Despite this, Himalayan Distillery took a 4.5 percent tax exemption by citing its stock exchange listing.

The Office of the Auditor General reported that the company had taxable income of Rs 5.13 billion over four fiscal years from 2076-77 to 2079-80. The total tax exemption claimed reached Rs 238.98 million.

The auditor has called this a serious irregularity and recommended investigation and recovery.

Shah is also under scrutiny in a separate stock market case.

A probe into alleged market manipulation led by businessman Deepak Bhatta is ongoing. Bhatta  is currently in custody under the Department of Money Laundering Investigation.

A report by the Securities and Exchange Board of Nepal has also recommended action against Shah. It says he worked with Bhatta to influence the market.

The report shows Shah bought 1.51 million shares of Nepal Reinsurance Company through Bhrikuti Stock Broking. The total transaction value was about Rs 1.41 billion.

He paid only Rs 525 million. The remaining amount was left unpaid or treated as a loan.

Investigators found that he received a trading limit without depositing advance funds. Shares were credited to his account even without full payment.

This raises serious concerns about weak enforcement in the stock market.

Initial findings suggest Shah, Bhatta, and businessman Sulabh Agrawal coordinated to buy Nepal Re stocks. Investigators suspect they planned to push for a 1:1 rights issue, then sell at higher prices by influencing the market.