The accounts of Reliance Communications, one of India's biggest companies, have been questioned by a government-commissioned audit that alleges the group under reported its revenue to the government and paid too little in licence and spectrum fees.

The auditor, Parakh and Co, was asked by the government to examine a “gap” between revenue from wireless services that Reliance, the country's second- largest mobile operator, reported to investors in the financial year ending March 2008 compared with wireless revenue reported to the government.

“Our report reveals that there has been under reporting of revenue for the purpose of payment of revenue share, and underpayment of licence fee and spectrum fees,” said the executive summary of the report, seen by the FT.

Reliance Communications, controlled by billionaire businessman Anil Ambani, yesterday denied any “irregularity or discrepancy” in its accounts, describing the auditor's comments as biased and “instigated by corporate rivals”.

The auditor sent the report to the Department of Telecommunications last week. An official at the department declined to comment.

The government wants to check whether mobile operators have been correctly reporting wireless revenue from which the state extracts a share in the form of licence and spectrum fees. India is the world's fastest- growing mobile market.

The audit of Reliance Communications said the company reported wireless revenue to the stock market of Rs152bn for the year ended March 2008 but reported gross wireless revenue of Rs129bn to the government.

The auditor said one-off transactions partly explained the gap between the figures reported to the stock market and those reported to the government, including the sale of debt that was booked as wireless revenue.

Reliance said the proceeds from the debt sale were accounted for correctly.

People close to the company argued that it was only compelled to report to the government revenue on which it was required to pay licence or spectrum fees.