Nissan Motor Co. failed to declare some $700m in income with the Japanese tax-san during a three-year period through March 2007, the Nikkei [sub] reports today.

The Tokyo Regional Taxation Bureau has sent Nissan an order to pay back taxes, including unspecified billions of Yen in penalties. Nissan has appealed.

The tax bureau determined that Nissan gained profits from a capital increase related to a realignment of its group’s sales network. Under the realignment, Nissan split 52 sales subsidiaries into asset management firms and sales companies in April 2006. In July that year, Nissan’s wholly owned subsidiary Nissan Network Holdings Co. acquired the asset management firms, while obtaining shares in the sales companies.

Many of the asset management firms ran out of money. Nissan increased their capital and did debt-for-equity swaps. The bureau said Nissan failed to declare profits gained from increasing capital, because the liabilities of the asset management firms had been dissolved before Nissan Network absorbed the firms.