Tag: Search & Seizure

The Income Tax Department initiated search and seizure operations in two groups based in several States on 12.10.2021.

The first group is engaged in digital marketing and campaign management wherein the search operations have been carried out at 7 premises located in Bengaluru, Surat, Chandigarh, and Mohali.

Incriminating evidence found reveals that the group has been engaged in obtaining accommodation entries using an entry operator. The entry operator has admitted to have facilitated transfer of cash and unaccounted income of the group through Hawala operators.

Inflation of expenditure and under-reporting of revenue has also been detected. The group has also been found to be indulging in unaccounted cash payments.  It is also found that personal expenses of the directors have been booked as business expenses in the books of accounts. Luxurious vehicles used by the directors and their family members are found to have been purchased in the names of employees and entry provider.

The second group searched is engaged in Solid Waste Management comprising solid waste collection, transportation, processing and disposal services across the country, primarily catering to Indian municipalities.

During the course of the search, various incriminating documents, loose papers and digital evidences have been seized. Evidence found reveals that this group has indulged in booking of bogus bills for expenses and sub-contracts. A preliminary estimate of such bogus expenses booked is to the tune of Rs.70 crore.

The search action has led to the detection of unaccounted investment in property of about Rs. 7 crore. Apart from this, the search action has resulted in seizure of unaccounted cash of Rs. 1.95 crore and jewellery of Rs. 65 lakh.

Further investigations are in progress in both the groups.

The Income Tax Department carried out search and seizure operations on an importer and trader of laptops, mobile phones and peripheral parts. The search operations commenced on 10.10.2021 and were spread across the National Capital Region, Haryana and West Bengal.

During the course of the search, several incriminating documents, diaries and digital evidences have been found which reveal that the group is entrenched into large scale under-invoicing and wrongful declaration of goods imported by it. Large number of evidences indicating unrecorded transactions, unaccounted investment in properties, bogus loans taken, etc. have also been gathered.

The modus operandi involves import of goods in the name of shell entities at under-valued and/or wrongful declaration of description of goods imported, with an intent to evade customs duty. Upon clearance at port(s), such goods have been found to be distributed throughout India by way of out-of-books cash transactions. This aspect has been fortified while searching one of the containers at Kolkata Port, where the bill of lading declared the goods as ‘HDMI cables’ valued at Rs 3.8 lakh. However, on de-sealing and searching the same, it has been revealed that the actual goods imported are high value items like laptops, mobile phones etc which are valued at Rs. 64 crore.

The evidences found and seized during the course of the search reveal that the payments for such under-invoiced goods to the foreign consigners have been made through hawala channels. Almost the entire business has been found to be run through such modus-operandi.

Though the value of imports declared at the port of entry by the use of such shell entities in the past 3 years is about Rs. 20 crore, it is estimated that the actual value during this period could be more than Rs. 2000 crore, given the scale of massive under-valuation detected.

The wealth, so generated, has been used for acquisition of high value immovable properties; disguising of cash introduced in the form of bogus rental income and bogus unsecured loans; and deposits in foreign bank accounts.

During the course of the search, unaccounted cash of Rs. 2.75 crore has been seized.

Further investigations are in progress.

Income Tax Department’s searches in Maharashtra reveal unaccounted income of over Rs. 184 crore ( Ministry of Finance Press Release dated 15 Oct 2021)

The Income Tax Department carried out search and seizure operations on two real estate business groups of Mumbai and certain individuals/ entities associated with them. The search operations commenced on 07.10.2021 and have been carried out at about 70 premises spread across Mumbai, Pune, Baramati, Goa and Jaipur.

The evidence gathered during the search has revealed several prima-facie unaccounted and benami transactions. Incriminating documents, evidencing unaccounted income of about Rs. 184 crore of the two groups have been found.

The search action has led to identification of transactions by these business groups with a web of companies which, prima facie, appear to be suspicious. A preliminary analysis of the flow of funds indicates that there has been an introduction of unaccounted funds in the group by way of various dubious methods like introduction of bogus share premium, suspicious unsecured loans, receipt of unsubstantiated advance for certain services, collusive arbitration deals out of non-existent disputes, etc. It has been observed that such suspicious flow of funds has taken place with the involvement of an influential family of Maharashtra.

The funds so introduced in a dubious manner, have been utilized for acquisition of various assets such as office building at a prime locality in Mumbai, flat in posh locality in Delhi, resort in Goa, agricultural lands in Maharashtra and investments in sugar mills. The book value of these assets aggregates to about Rs. 170 crore.

Unaccounted cash of Rs. 2.13 crore and jewellery of Rs. 4.32 crore have been seized.

Further investigations are in progress.

The Income Tax Department carried out search and seizure operations in the case of three major contractors based out of Bengaluru engaged in the execution of irrigation and highway projects. The searches commenced on 07.10.2021 have been carried out at 47 premises spread across 4 states.

During the search action, it was found that these three groups were involved in suppression of their income by resorting to bogus purchases; inflation of labour expenses; booking of bogus sub-contract expenses etc. The investigation revealed that one of the groups has booked bogus sub-contract expenses in the name of about 40 individuals of no means and unconnected to the construction business. Upon enquiry, these individuals have admitted to the said manipulation.

One of the groups admitted to having indulged in inflation of labour expenses amounting to Rs. 382 crore. Further, another group has been found to have taken accommodation entries, from non-existing paper companies, to the extent of Rs. 105 crore, which stands admitted by this group.

Various incriminating evidences in the form of physical documents, digital evidences, etc. have been found and have been seized. During the search, unaccounted cash of Rs. 4.69 crore; unaccounted jewellery & bullion valued at Rs. 8.67 crore; and silver articles valued at Rs. 29.83 lakh have been seized.

The search & seizure actions in these three groups have resulted in detection of undisclosed income of about Rs. 750 crore. Out of this, aggregate amount of Rs.487 crore has been admitted by the respective group entities as their undisclosed income.

Further investigations are in progress.

The Income Tax Department carried out search & seizure operations on 06.10.2021 on a major Pharmaceutical group based out of Hyderabad. This Pharmaceutical group is engaged in the business of manufacturing of intermediates, Active Pharmaceutical Ingredients (APIs) and formulations. Majority of the products are exported to foreign countries i.e. USA, Europe, Dubai and other African countries.  The search operation was carried out at about 50 locations in 6 States.

During the searches, hideouts were identified where second set of books of accounts and cash were found. Incriminating evidence in the form of digital media, pen drives, documents, etc. have been found and seized. Incriminating digital evidences were gathered from SAP @ ERP software maintained by the assessee group.

During these searches, issues relating to discrepancies in purchases made from bogus and non-existent entities and artificial inflation of certain heads of expenditure were detected. Further, evidence of on-money payment for purchase of lands was also found. Various other legal issues were also identified such as personal expenses being booked in the company’s books and land purchased by related parties below government registration value.

During the search, several bank lockers have been found, out of which 16 lockers have been operated. The searches have resulted in seizure of unexplained cash amounting to Rs. 142.87 crore so far. The unaccounted income unearthed is estimated to be in the range of about Rs 550 crore till now.

Further investigations and quantification of undisclosed income detected is in progress.

The Income Tax Department carried out search and seizure operations on 05.10.2021 in the case of two groups based in the North-East Region and West Bengal. A total of 15 premises were covered in the search action, which was spread across Kolkata, Guwahati, Rangia, Shillong and Patna.  

One of the groups is engaged in the business of cement manufacturing. During the search action, it was found that this group generated unaccounted income by indulging in out-of-books sales and booking bogus expenses. This unaccounted income is laundered back into the business through shell companies. Evidences found during the search revealed that many paper companies are run by the group to provide accommodation entries to its flagship concern. These paper companies were found to be non-existent at their given addresses. During the search, incriminating evidence indicating bogus unsecured loans, bogus commission paid, bogus share premium received through shell companies etc. was also found. These evidences indicate that an amount of more than Rs. 50 crore may be unaccounted. The group was also found to be wrongly showing tribal individuals as creditors, such amounts being to the tune of around Rs. 38 crore. Further, details of certain offshore entities/ bank accounts were found during the search, which are apparently not declared in the relevant returns of income.

The other group is actively engaged in executing railway contracts in Assam, Mizoram and other parts of North East. During the search action, incriminating documents, loose sheets and digital evidences were seized indicating undisclosed investments in land and properties. Large number of sale deeds pertaining to land and properties have been found, the valuation whereof could be in excess of Rs. 110 crore. During the search, corroborative evidence could not be produced to explain the source of acquisition of these assets. Further, documents containing details of cash transactions amounting to more than Rs. 13 crore in the sale of properties have been found.

These search and seizure actions resulted in detection of undisclosed income in excess of Rs. 250 crore. Unaccounted cash of more than Rs. 51 lakh has been seized. Nine bank lockers have been put under prohibitory orders and are yet to be operated.

Further investigations are in progress.

The Income Tax Department carried out a search operation that commenced on 23.09.2021 on a big syndicate involving certain businessmen/middlemen of Maharashtra and some persons holding public offices. The intelligence was developed over 6 months. In all, 25 residential and 15 office premises were covered under the search, while 4 offices were covered under survey. Some suites in Oberoi Hotel in Mumbai, permanently rented by two of the middlemen and used for meeting their clients, were also subjected to search. The syndicate, consisting of businessmen/middlemen/associates and persons holding public offices, used various code names in their records and in one case had back-dated records by 10 years. The total transactions detected during this search are to the tune of Rs. 1050 crore.

These middle men provided end-to-end services to corporates and entrepreneurs from land allotment to obtaining all governmental clearances. Despite using encrypted modes of communication and sanitising devices, the Income Tax teams were able to recover critical digital evidence and also located a secret hideout from where various incriminating evidences were recovered. The liaisoners also used ‘angadiyas’ for transfer of cash and Rs.150 lakh was seized from one of the angadiyas during the search.

The documents recovered include a summary of overall cash generated and disbursed giving the particulars of the amounts received and receivable, each being more than Rs. 200 crore. Key areas of generation of this money have been found to be cash paid by bureaucrats for getting key postings under a certain Ministry, cash paid by the contractors for getting payments released etc. Major amount of cash collected had been distributed to various persons, including someone who is mentioned under a code name.

Furthermore, one of the businessmen/middlemen had also amassed huge unaccounted income by purchasing lands from farmers and transferring the same to Government undertakings/big corporates. Many senior bureaucrats/their relatives and other prominent people have been found to have invested in these schemes.

During the search, evidence unearthed at the office premises includes date-wise transactions for a certain period of cash deposits of around Rs. 27 crore and cash payments of around Rs. 40 crore. Further, evidences have been found of cash payments to the tune of Rs. 23 crore made to various persons, whose names are prefixed with various code words. The said middle man receives payments from various businessmen and industrialists for getting lands under the schemes of Government undertakings, extension of tenders/mining contracts, etc. Further, in a WhatsApp chat, particulars of cash transactions have been found showing receipts of cash of around Rs. 16 crore and outflow of around Rs. 12 crore.

Some of the persons searched have their own real estate and construction businesses, in respect of which evidences of cash receipts/payments have also been found.

Voluminous digital data has been recovered and seized from mobile phones, pen-drives, hard drives, iCloud, e-mails etc. which is being examined and analyzed.

So far, cash of more than Rs. 4.6 crore and jewellery valued at Rs. 3.42 crore have been seized. 4 lockers found during the search operation have been put under restraint orders.

Further investigations are in progress.

The Income Tax Department carried outa search and seizure operation on 30.09.2021 on 37 premises spread across multiple cities including Mumbai, Pune, Noida & Bangalore. These groups/individuals were in varied businesses such as cable manufacturing, real estate, textile, printing machineries, hotels, logistics etc.

During the course of the search operation, several incriminating documents, loose sheets, diaries, emails and other digital evidences etc. have been unearthed which indicates ownership of a large number of foreign bank accounts and immovable properties, unreported to the Department. These groups/individuals utilized the services of a Dubai based financial service provider to create a dubious and complex web of foreign companies and trusts based in tax havens such as Mauritius, UAE, BVI, Gibraltar etc. to hold their unaccounted assets.

The credits in the bank accounts of these groups and individuals maintained by the Dubai based financial service provider exceed 100 Million US Dollars  ( about Rs. 750 crore) accumulated over a decade and were found to be parked in bank accounts  in Switzerland, UAE, Malaysia and several other countries. Evidences gathered during the search operation reveal that the undisclosed funds parked abroad have been used by these groups for acquiring immovable properties in several countries such as UK, Portugal, UAE etc in the name of defunct companies incorporated abroad, with funds layered through foreign bank accounts, for meeting the personal expenses of the promoters and their family members abroad and routing back funds in their Indian entities.

During the course of the search, evidence related to bogus payments to suppliers for generating cash, unaccounted cash expenditure, hawala transactions, over-invoicing have also been gathered. Unaccounted cash and jewellery to the tune of over Rs. 2 crore has been seized from the residential and business premises respectively. More than 50 bank lockers have been kept under restraint.

Further investigations are in progress.

The Income Tax Department carried out search & seizure operations on 28.09.2021 on a real estate developer group and the brokers connected with this group. Total of 22 residential and business premises were covered in the operation.

In the case of the real estate developer group, a large number of incriminating documents, loose papers, digital evidences etc. have been found and seized. These evidences contain detailed records of the group’s unaccounted transactions spread across multiple financial years. Documents showing unaccounted investment in land of more than Rs. 200 crore and unaccounted cash receipts from sale of land amounting to more than Rs. 100 crore have been found and seized so far. A large number of original documents of properties purchased over the years which are apparently held in the name of benami individuals have also been found.

​In the case of the broker, documents showing details of payments in cash and in cheques relating to transactions of purchase and sale of land carried out through the broker have been found. Documents showing cash transactions of more than Rs. 230 crore in these land deals have been found and seized so far.

The documents found reveal unaccounted income of more than Rs. 200 crore in the hands of the real estate group and also unaccounted income of more than Rs. 200 crore in the hands of the parties recorded  in the documents found from the possession of the brokers. Over all, the search & seizure operation has resulted in the detection of unaccounted transactions of more than Rs. 500 crore.

24 lockers have also been found during the course of the search and seizure operation which have been put under restraint. Cash of approximately Rs.1 crore and jewellery worth Rs. 98 lakh have been seized so far.

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

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The Income Tax Department carried out a search and seizure operation on 23.09.2021 on a group of four major Steel Rolling Mills based in Jalna, Maharashtra. These companies are engaged in the business of manufacturing steel TMT bars and billets mostly using steel scrap as raw material. The operation was conducted in more than 32 premises spread across Jalna, Aurangabad, Pune, Mumbai 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 companies in large scale unaccounted financial transactions made outside the regular books of accounts, including inflation of purchases using entry providers, unaccounted cash expenses and investments, etc. The evidences found also indicate the laundering of substantial amount of unaccounted income earned by the companies in the guise of share premium and unsecured loans using shell companies. Evidence for unaccounted purchase in excess of Rs.200 crore has been found. Huge quantity of unaccounted stock was also found in the factory premises of the companies.

12 bank lockers were unearthed during the search operation. Unaccounted cash of more than Rs. 2.10 crore and jewellery amounting to Rs. 1.07 crore has been seized from different premises. Evidence detected so far, indicates that, unaccounted income is likely to exceed Rs. 300 crore and the four companies have already disclosed additional income to the extent of Rs. 71 crore consequent to the search.

Further investigations are in progress.