Tag: Search & Seizure

The Income Tax Department initiated search and seizure operation on 03.12.2021 on a prominent group of Surat, engaged in the business of construction of residential and commercial complexes, land transactions as well as real estate financing. The search action covered more than 40 premises spread over Surat and Mumbai.

During the course of the search action, various incriminating documentary and digital evidences have been found and seized including a parallel set of books of account in the case of group entities. The transactions of certain group entities have been found to be maintained in a highly coded manner but were successfully decoded by the search team.  A preliminary analysis of these evidences indicates unaccounted cash receipt of on- money of more than Rs. 300 crore on sale of flats / land which is not found recorded in the regular books of account. Evidences of unaccounted cash infusion by partners, bogus accommodation entry loans by payment of cash and unexplained cash expenses etc. have also been noticed. Further, deeper examination of physical books of account and incriminating evidences seized during the search action shows unexplained investments of more than Rs. 200 crore in real estate and more than Rs. 100 crore by way of loan financing.  

The search action has led to the seizure of unexplained cash of Rs. 4 crore and jewellery valued at Rs. 3 crore while more than a dozen bank lockers have been placed under restraint. The search action has led to the detection of estimated undisclosed receipts and suspicious nature of entries aggregating to more than Rs. 650 crore.

Further investigations are under progress.

The Income Tax Department initiated search and seizure operations on a prominent business group, engaged primarily in the manufacturing of stainless steel and metal pipes, in Ahmedabad on 23.11. 2021. The search operation covered more than 30 premises in Ahmedabad and Mumbai.

During the course of the search operation, a large number of incriminating documents, loose sheets, digital evidence etc. have been found and seized. These evidences contain detailed records of the group’s unaccounted income on which due taxes have not been paid. A preliminary analysis of evidence indicates that the group is indulging in unaccounted sales of goods and scrap in cash which is not recorded in the regular books of account.  Further, incriminating evidence of various malpractices such as unaccounted cash loans advanced and interest earned thereon, expenses incurred in cash, bogus expenses and purchases, unaccounted land investments etc. has also been unearthed. The deleted WhatsApp chat of a key person, detected during the search, revealed evidence of obtaining huge accommodation entries by the group to reduce its taxable income. Certain benami properties have also been identified.

The search action has resulted in the seizure of unaccounted cash of Rs. 1.80 crore and unexplained jewellery valued at Rs. 8.30 crore. So far, 18 bank lockers have been put under restraint. The search action has led to the detection of total unaccounted transactions exceeding Rs. 500 crore.

  Further investigations are under progress.

The Income Tax Department has carried out search and seizure operations on 01.12.2021 in respect of 2 groups engaged in the Retail Sales of Jewellery, Textiles and Home Appliances through their popular chain of Stores in Chennai, Coimbatore, Madurai and Tirunelveli. A total of 37 premises were covered in this action.

In the case of the first group, seized documents and other incriminating materials gathered during the course of the search have revealed, that, the assessee had been actively involved in systematically suppressing sales by manipulating their books of accounts. The extent of suppression of sales is found to be more than Rs. 1000 crore, over a period of several years.  It was also found, that, the assessee had made unaccounted cash purchases of about Rs. 150 crore in textile division and jewellery division, during the past few years.

In respect of the second group, incriminating material seized during the course of search, has revealed that the assessee group had obtained bogus bills from a set of parties to the tune of Rs. 80 crore and thereby suppressed taxable income. Evidences relating to the unaccounted purchases of gold have also been gathered. Besides, the assessee group is found to be debiting inflated making charges of jewellery. In addition, unaccounted rental receipts and the unaccounted scrap sales aggregating to Rs. 7 crore have also been detected.

The searches on the two groups have led to a seizure of cash of Rs. 10 crore and jewellery/ bullion worth about Rs. 6 crore.

Further investigations are under progress.

The Income Tax Department initiated a search and seizure operation on a prominent Kolkata-based Group, engaged in manufacturing of TMT Bars and structural construction materials etc. on 01.12.2021.  The search action covered more than 20 premises spread over West Bengal and Odisha.

The action unearthed various methods of tax evasion adopted by the group. A large number of incriminating evidences in the form of documents and digital data demonstrating high value unaccounted cash payments, unaccounted cash purchase and sales, suppression of production, etc. have been found and seized. A preliminary analysis of these evidences reveals that many paper/shell companies are run by the group to provide accommodation entries to its flagship concerns. These shell entities were found to have routed back their unaccounted money in the guise of share capital/unsecured loan into books of account. Such modus operandi has been admitted by one of the key persons of the group.

The search action has resulted in seizure of unaccounted cash of Rs. 75 lakh and jewellery valued at Rs. 2.26 crore while certainbank lockers have been placed under restraint. The search action, so far, has led to the detection of total unaccounted income of around Rs. 100 crore.    

Further investigations are under progress.

The Income Tax Department initiated search action on 24.11.2021 on a taxpayer in Delhi who has created a beneficiary trust and an underlying company in low tax overseas jurisdiction. The residence and business premises of the assessee were covered in the search action.

The search operation revealed that these undisclosed entities in low tax overseas jurisdictions were holding assets worth Rs. 40 crore in the form of immovable and movable assets. The taxpayer was availing handling services of a foreign Bank having branches in India that offers wealth management, financial planning, asset allocation, equity research, fixed income, investment strategies and fiduciary services.

During the search operation at his residence, corroborating evidences in the form of e-mails and documents have been found establishing his beneficial ownership of the foreign assets. In his statement recorded during the search, he has admitted to ownership of foreign assets. At the business premises, one hard disk containing data in the form of parallel set of books of accounts has been found. A preliminary analysis of such gathered evidences indicate understatement of domestic income to the tune of Rs. 30 crore from business undertaken in India.   

Further investigations are under progress.

The Income Tax Department has initiated search and seizure operations on a leading group of Pune, engaged in dairy farming and milk products, on 25.11.2021.  The search action covered more than 30 premises spread over 6 cities in India.

During the course of search action, several incriminating documents and evidences of tax evasion have been found and seized. The preliminary analysis of these evidence clearly shows evasion of taxable income by adopting various malpractices such as claim of bogus purchases, unaccounted cash sales, cash loan transactions and their repayment, unexplained cash credits, etc. Instances of incorrect claim of loss on account of sale or death of livestock, etc. have also been noticed.

            Evidence has also been gathered revealing that the assesse group has not maintained proper and separate books of account for claiming specific deduction from its taxable income.

The search operation has resulted in the seizure of unaccounted cash and unexplained jewellery of about Rs. 2.50 crore while some bank lockers are yet to be operated. The search action, so far, has led to the detection of unaccounted income of more than Rs. 400 crore.   

Further investigations are under progress.

The Income Tax Department initiated search and seizure operations on a real estate group, engaged in the construction of residential and commercial projects, in Mumbai and Navi Mumbai Region on 25.11.2021. The group is mainly carrying out development of slum rehabilitation projects. The search action covered around 30 premises. 

The search action unearthed various methods of tax evasion adopted by the group. Several documentary and digital evidences have been found and seized demonstrating receipt of cash to the tune of Rs.100 crore, as part of consideration on sale of flats, which is not accounted for in the regular books of account. The fact of receipt of on- money on such transactions is also corroborated in the statements recorded during the search proceedings. The modus operandi adopted by the group includes issuing of promissory notes equivalent to the on- money component to the customers and these promissory notes are destroyed after registration of the flat.

Incriminating evidence regarding unaccounted cash payments made not only to the original tenants of the slums for vacating the dwelling unit but also to some other persons for facilitating vacation of the properties by slum dwellers has been found and seized. Further evidences suggesting irregularities and violation of guidelines of Slum Rehabilitation Authority (SRA) have also been detected.

The preliminary analysis of evidences revealed that the group has acquired controlling stake in a company by paying consideration in cash. Defaults on compliances to the provisions of tax deduction at source have also been found. The assessee group did not deduct tax at source on certain payments claimed by it which aggregate to more than Rs. 300 crore.

As a result of the search action, unaccounted cash exceeding Rs. 6.00 crore has been seized.

  Further investigations are under progress.

The Income Tax Department initiated search and seizure operations on a group engaged in manufacturing and export of jewellery and coloured gemstones at Jaipur on 23.11.2021. The search action covered more than 50 premises at different locations in and around Jaipur.

During the course of the search, it was found that the rough of semi-precious and precious stones is imported from African countries and the same is processed in Jaipur. The yield of cut and polished stones is suppressed and part of it is sold in cash, generating unaccounted income which is not recorded in the books of accounts. Such unaccounted income is then deployed to earn interest by providing cash loans through a finance broker. The search team has seized documentary and digital evidences of disbursements of such cash loans and interest earned thereon. The nature of these transactions has been admitted by the finance broker.

Apart from this, incriminating evidences relating to unaccounted sales and purchases, difference in stock, non-genuine unsecured loans and share application money, etc. have also been found. Further, documents have been found from entities of the group operating from Special Economic Zone (SEZ), indicating that they are indulging in unfair practices for declaring higher profits from these units as the income from these units is eligible for exemption u/s 10AA of the Income-tax Act, 1961.

The search action has resulted in seizure of cash of about Rs. 4 crore and jewellery valued at Rs. 9.00 crore. So far, detection of undisclosed income of more than Rs. 500 crore has been made in the group, out of which aggregate amount of Rs. 72 crore has been admitted by the respective group entities as their undisclosed income.

  Further investigations are under progress.

The Income Tax Department initiated search and seizure operations on two major real estate developers of Ludhiana on 16.11.2021. The search action covered around 40 premises in Ludhiana.

The major finding emanating from these search and seizure operations of both the groups is about the receipt of unaccounted cash by these groups by way of on-money on property transactions. During the course of search proceedings documentary evidences in the nature of ‘agreement to sale’, (popularly known as ‘Biyana’ in local parlance), for certain properties have been found and seized. These documents indicate that the ‘agreement to sale’ for plots has been executed at much higher amount/rate as compared to the consideration disclosed in registered sale deed of the plot. Further, incriminating documents such as loose sheets, excel sheets showing calculation of receipt of on-money of certain property transactions, soft data, chats from mobile phones of the persons concerned, etc. have also been recovered. A preliminary analysis of these evidences clearly indicates the receipt of unaccounted cash by way of on-money on property transactions. Besides, certain other corroborative evidences supporting the receipt of on-money have also been gathered.

Investigations have also revealed that unaccounted cash expenditure has been incurred on construction of residential house of one of the key persons. 

In one of the groups, defaults on compliances for the provisions of tax deduction at source have been detected with regard to payments made to the sellers of the land, etc.

The search action has resulted in seizure of unaccounted cash of about Rs. 2.00 crore besides foreign exchange, and unexplained jewellery of about Rs. 2.30 crore.

  Further investigations are under progress

The Income Tax Department has carried out search and seizure operations on certain Indian companies and their associate concerns, controlled by a neighboring country on 16.11.2021. These companies are engaged in the business of chemicals, ball bearings, machinery parts, and Injection moulding machinery.    The search action covered around 20 premises spread over Mumbai, Ahmedabad and Gandhidham in Gujarat and also in Delhi.  

 A large number of incriminating evidence in the form of digital data showing earning of huge unaccounted income by these companies has been found and seized. It has been found that these companies are indulging in tax evasion through manipulation of books of accounts.  The analysis of evidence has revealed that these companies have indulged in transferring funds by using a network of shell companies to a neighbouring country. An estimated amount of Rs 20 crore was transferred in the last 2 years through the above modus operandi.

Investigations have revealed that a Mumbai-based professional firm not only assisted in formation of these shell companies but also provided dummy directors to these shell companies. The investigations have also shown that these dummy directors were either the employees/drivers of the professional firm or they were persons of no means. On questioning, they admitted that they were not aware of the activities of these companies and that they had been signing on documents as per the instructions of the key functionaries.  The professional firm is also instrumental in assisting the foreign nationals by providing its addresses for banking and other regulatory requirements.

One of such companies trading in chemicals was found to be routing the claim of purchases through Marshall Island, a low tax jurisdiction. The company actually purchased items worth Rs. 56 crore from a neighbouring companybut the same has been billed from Marshall Island. However, payment for such purchases has been made into thebank account of the Marshall Island-based company which is held in the neighbouring country.  It was further unearthed during the search proceedings that this Indian company was also involved in taking non-genuine purchase bills to reduce its tax liability and also paid unaccounted cash for purchase of land in India.

The search action has already resulted in the seizure of unaccounted cash of about Rs. 66 lakh. Bank accounts of some of the companies, with aggregate bank balances of about Rs. 28 crore, have been put under restraint. 

  Further investigations are under progress.