Category: Income Tax

The Income Tax Department carried out a search and seizure operation on 17.09.2021 in the case of a prominent public figure in Nagpur and his family members. The group is having wide business interest spanning the fields of Education, Warehousing and Agri-business in Nagpur and other parts of Maharastra. More than 30 premises were covered in the search and survey operations spread across Nagpur, Mumbai, New Delhi and Kolkata.

During the course of the search and seizure operation, many incriminating documents, loose sheets and other digital evidences were found and seized. These evidences clearly indicate the involvement of the group in unaccounted financial transactions made outside the regular books of accounts including inflation of expenses, money laundering, bogus donation receipts, unaccounted cash expenses etc. Evidence for receipt of bogus donation in the hands of the Trust run by the assesse group through money laundering, using Delhi based companies to the extent of Rs.4.00 crore has been found. This clearly substantiates the laundering of the unaccounted income of the assessee routed as donation to the Trust. Further, specific evidences have been unearthed which reveal that three Educational Institutions of the Trust have indulged in inflation of expenses in which salaries paid to the employees were partly collected back in cash.  Such evidences were found for several financial years amounting to more than Rs.12 crore.  During the search, it was also detected that the Trust, apart from suppression of receipts, has paid substantial amounts to brokers for arranging admissions. Such payments, to the tune of about Rs.87 lakh have been paid in cash and are completely unaccounted.

Evidence found during the search clearly indicates concealment of income to the extent of about Rs.17 crore. Several bank lockers found during the course of the search operation have been put under prohibitory orders. The evidence gathered during the search is being examined and further investigations are in progress.

The Income Tax Department conducted a search and seizure operation at various premises of a prominent actor in Mumbai and also a Lucknow based group of industries engaged in infrastructure development. Total 28 premises spread over Mumbai, Lucknow, Kanpur, Jaipur, Delhi, and Gurgaon have been covered in the search operation. 

Video :

Tax Department conducts searches on prominent actor in Mumbai and other regions (Ministry of Finance Press Release dated 18-09-2021)

https://youtu.be/fgU4CVhwimQ

During the course of search at the premises of the actor and his associates, incriminating evidences pertaining to tax evasion have been found. The main modus operandi followed by the actor had been to route his unaccounted income in the form of bogus unsecured loans from many bogus entities. Investigations so far have revealed use of twenty such entries, the providers of which,on examination, have accepted on oath to have given bogus accommodation entries. They have accepted to have issued cheques in lieu of cash. There have been instances where professional receipts have been camouflaged as loans in the books of accounts for the purpose of evasion of tax. It has also been revealed that these bogus loans have been used for making investments and acquiring properties. The total amount of tax evaded unearthed so far, amounts to more than Rs. 20 crore.

The Charity Foundation incorporated by the actor on 21st July, 2020 has collected donations to the tune of Rs 18.94 crore from 01.04.2021 till date, out of which it has spent around Rs. 1.9 crore towards various relief work and the balance of Rs. 17 crore has been found lying unutilized in the bank account of the Foundation till date. It is seen that funds to the tune of Rs. 2.1 crore have also been raised by the Charity Foundation from overseas donors on a crowd funding platform in violation of FCRA regulations.

The simultaneous search operations carried out at various premises of an Infrastructure group in Lucknow in which the said actor has entered into a joint venture real estate project and invested substantial funds, have resulted in unearthing of incriminating evidences pertaining to tax evasion and irregularities in the books of account.

The search has revealed that the said Group is involved in bogus billing of subcontracting expenses and siphoning off of funds. Evidences of such bogus contracts found so far are to the tune of over Rs. 65 crore. Evidence of unaccounted cash expenses, unaccounted sale of scrap and digital data evidencing unaccounted cash transactions has also been found. Further, it has been unearthed that the said Infrastructure Group/company has entered into dubious circular transaction to the tune of Rs. 175 crore with an infrastructure company based in Jaipur. Further investigations are being carried out to establish the full extent of tax evasion.

Cash of Rs 1.8 crore has been seized during the course of the search and 11 Lockers have been placed under prohibitory order.

The search operation is still continuing and further investigations are in progress.

The Central Government, in continuation of its commitment to address the hardship being faced by various stakeholders on account of the Covid-19 pandemic, has, on consideration of representations received from various stakeholders, decided to extend timelines for compliances under the Income-tax Act, 1961 (hereinafter referred to as “the Act”) in the following cases, as under:

• Time limit for intimation of Aadhaar number to the Income tax Department for linking of PAN with Aadhaar has been extended from 30^th September, 2021 to 31^st March, 2022.
• The due date for completion of penalty proceedings under the Act has also been extended from 30^th September, 2021 to 31^st March, 2022.

Further, the time limit for issuance of notice and passing of order by the Adjudicating Authority under the Prohibition of Benami Property Transactions Act, 1988 has also been extended to 31^st March, 2022.

Notification no. 113 of 2021 dated 17^th September, 2021 has been issued in this regard and can be accessed at www.incometaxindia.gov.in.

The Central Government in exercise of the powers conferred by sub-section(1F) of section 197A of the Income-tax Act, 1961(“the Act”) notified that no deduction of tax shall be made on the following payment under section 194A of the Act, namely payment in the nature of interest, other than interest on securities, made by a Scheduled Bank (hereinafter the ‘payer’) located in a specified area to a member of Scheduled Tribe  (hereinafter the ‘receiver’) residing in any specified area as referred to in s.10(26) of the Act, subject to the following conditions:

1. the payer satisfies itself that the receiver is a member of Scheduled Tribe residing in any specified area, and the payment as referred above is accruing or arising to the receiver as referred to in section 10(26) of the Act, during the previous year relevant for the assessment year in which the payment is made, by obtaining necessary documentary evidences in support of the same;
2. the payer reports the above payment in the statements of deduction of tax as referred to in sub-section (3) of section 200 of the Act;
3. the payment made or aggregate of payments made during the previous year does not exceed twenty lakh rupees.

           For the purposes of the said notification, ‘Scheduled Bank’ means a bank included in the Second Schedule of the Reserve Bank of India Act,1934.

Notification no. 110/2021 dated 17^th September, 2021 has been issued. It is available on www.incometaxindia.gov.in and also on www.egazette.nic.in .

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Finance Act, 2021 has amended section 72A of the Income-tax Act, 1961 (the Act) to inter alia provide that in case of an amalgamation of a public sector company (PSU) which ceases to be a PSU (erstwhile public sector company), as part of strategic disinvestment, with one or more company or companies, then, subject to the conditions laid therein, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss, or as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected.

In order to facilitate the strategic disinvestment, it has been decided that Section 79 of the Income-tax Act, 1961, shall not apply to an erstwhile public sector company which has become so as a result of strategic disinvestment. Accordingly, loss incurred in any previous year prior to, and including, the previous year of strategic disinvestment shall be carried forward and set off by the erstwhile public sector company. The above relaxation shall cease to apply from the previous year in which the company, that was the ultimate holding company of such erstwhile public sector company immediately after completion of the strategic disinvestment, ceases to hold, directly or through its subsidiary or subsidiaries, fifty-one per cent of the voting power of the erstwhile public sector company.

The term “erstwhile public sector company” and “strategic disinvestment” shall have the meaning in Explanation to clause (d) of sub-section (1) of Section 72A of the Income-tax Act, 1961.

Necessary legislative amendments for the above decision shall be proposed in due course of time.

The Income Tax Department carried out a search and seizure operation on 08.09.2021 on a group based in Ahmedabad. The group is among one of the prominent business houses of Gujarat engaged primarily in the media and real estate sectors. The media arm of the group comprises of electronics, digital as well as print media while the real estate arm comprises of affordable housing projects and urban civic infrastructure. More than 20 premises were covered in the operation. 

During the course of the search operation, a large number of incriminating documents, loose sheets, digital evidences etc. have been found and seized, containing detailed records of the group’s unaccounted transactions, spread across multiple financial years. Majority of these evidences indicate huge unaccounted cash receipts in excess of Rs. 500 crore on the sale of Transferable Development Right (TDR) certificates. Evidences of on-money transactions in real estate projects and land deals, in excess of Rs. 350 crore have also been found along with corroborative documents. Incriminating evidences of unaccounted cash-based loan and interest payments/repayments worth more than Rs. 150 crore have also been found. Further, substantial incriminating evidences of unaccounted cash expenses, cash advances received and interest paid in cash has also been unearthed. So far, cash of more than Rs. 1 crore and jewelry amounting to Rs. 2.70 crore have also been seized from different premises.  A large number of original documents of properties of the group acquired over the years and held in the names of several dummy individuals and cooperative housing societies have also been found.

Overall, the search and seizure operation has resulted in the detection of unaccounted transactions in excess of Rs. 1000 crore spread over various assessment years so far. 14 lockers have also been found during the course of the search operation which have been put under restraint orders.

The search operation is still continuing and further investigations are in progress.

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The Income Tax Department conducted search and seizure operations on 08.09.2021 on three prominent Commission agent groups based in Punjab, covering many premises across Punjab & Haryana. These groups are also engaged in the business of running Steel Rolling Mill, cold storage, General Mills, Jewellery shop, Poultries, Rice Mills, Oil Mill, Flour Mill apart from the business of Commission Agents.

The search action revealed that these Groups are suppressing their business receipts and inflating expenses. They also do not account for most of the sums received and paid in cash. Further, certain documents showing payments of on-money in cash in acquiring immoveable properties have been recovered and seized. In one of the groups, it has been found that the purchases of fruits have been done during the harvest period at low cost, whereas the sales have been done in odd period at very high rates after storing the goods in cold storage. Similar modus operandi has been found in other Groups. Major findings are as under:

1. Books of accounts (Kacha Khata Bahi) in Laddo script have been found, which show substantial unaccounted transactions running into crores. These books of account are being deciphered with the help of an expert. Parallel sets of books of accounts of some of the business concerns have also been found which show suppression of gross business receipts running into crores on yearly basis.
2. It is found that advances in cash aggregating to crores are given to farmers and interest rates of 1.5 % to 3.00% per month is charged. The interest is received in cash and not shown in the books of account.
3. Cash purchase and sale related to poultry business and Rice sheller worth more than Rs. 9.00 crore has been found. Unaccounted purchases amounting to Rs. 1.29 crore have been found from one of the premises situated in Jalandhar. Details of unaccounted sales have also been found.
4. Two suspected benami firms in the names of employees have been unearthed, whose turnovers are in crores per year.
5. In one of the concerns, the main assessee has accepted that payments in violation of Section 40A(3) of the Income-tax Act, 1961 have been made running into crores over the years, by accounting the same after splitting the payments in the books of account.
6. In Steel Rolling Mills, discrepancy in stock of finished goods has been found and stock taking of raw material (scrap) is underway. Unaccounted stock of finished goods of more than Rs.25 lakh has been worked out as yet.
7. Unaccounted investment in immovable property amounting to Rs. 3.40 crore has been detected and has also been accepted by the owners of the properties covered during the search.
8. At some premises, the digital evidence found has been seized, analysis of which is in progress.
9. Diversion of business funds as interest free loans/advances to family members of one of the Groups has been detected by the search team.
10. Unaccounted Cash aggregating to Rs.1.70 crore has been found in these groups. Unexplained jewellery valued at Rs. 1.50 crore has been found. Unexplained stock of Flour valued at Rs.1.50 crore has also been found. Eight Bank lockers have been put under restraint, which are being operated today.

The search operation is still continuing and further investigations are in progress.

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On consideration of difficulties reported by the taxpayers and other stakeholders in filing of Income Tax Returns and various reports of audit for the Assessment Year 2021-22 under the Income-tax Act, 1961(the “Act”), Central Board of Direct Taxes (CBDT) has decided to further extend the due dates for filing of Income Tax Returns and various reports of audit for the Assessment Year 2021-22. The details are as under:

1. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st July, 2021 under sub-section (1) of section 139 of the Act, as extended to 30th September, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st December, 2021;
2. The due date of furnishing of Report of Audit under any provision of the Act for the Previous Year 2020-21, which is 30th September, 2021, as extended to 31st October, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 15th January, 2022;
3. The due date of furnishing Report from an Accountant by persons entering into international transaction or specified domestic transaction under section 92E of the Act for the Previous Year 2020-21, which is 31st October, 2021, as extended to 30th November, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st January, 2022;
4. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 31st October, 2021 under sub-section (1) of section 139 of the Act, as extended to 30th November, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 15th February, 2022;
5. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 30th November, 2021 under sub-section (1) of section 139 of the Act, as extended to 31st December, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 28th February, 2022;
6. The due date of furnishing of belated/revised Return of Income for the Assessment Year 2021-22, which is 31st December, 2021 under sub-section (4)/sub-section (5) of section 139 of the Act, as extended to 31st January, 2022, vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st March, 2022;

It is also clarified that the extension of the dates as referred to in clauses (9), (12) and (13) of Circular No.9/2021 dated 20.05.2021 and in clauses (1), (4) and (5) above shall not apply to Explanation 1 to section 234A of the Act, in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (i) to (vi) of sub-section (1) of that section exceeds rupees one lakh. Further, in case of an individual resident in India referred to in sub-section (2) of section 207 of the Act, the tax paid by him under section 140A of the Act within the due date (without extension under Circular No.9/2021 dated 20.05.2021 and as above) provided in that Act, shall be deemed to be the advance tax.

CBDT Circular No.17/2021 in F.No.225/49/2021/ITA-II dated 09.09.2021 issued. The said Circular is available on http://www.incometaxindia.gov.in.

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