Tag: Search & Seizure

The Income Tax Department carried out a search and seizure operation on 01.09.2021 on a manufacturer and distributor of synthetic yarns and polyester chips having corporate office in Delhi and factories at Dadra & Nagar Haveli and Dahej.

During the course of the search, many incriminating documents, loose sheets, digital evidences etc. have been found indicating involvement of the group in unaccounted transactions. Substantial evidence of transactions outside the regular books of accounts, cash purchases, suppression of sales and booking of sales to bogus parties have also been found.

The group has routed its own unaccounted funds to the tune of Rs. 380 crore in its books in the form of bogus unsecured loans, through paper entities, over the past few years. Besides, an amount of Rs. 40 crore has also been introduced in its books through shell entities in the form of share premium. The directors and auditors of the shell entities, have, in their statement, admitted that these entities were essentially used to provide accommodation entries.

Substantial evidence of cash purchase and documents revealing movement of cash through “angadias” has been recovered. Evidence of booking bogus purchases of Rs. 154 crore has also been detected. During the search, unaccounted jewellery has been found and 11 lockers have been placed under restraint. 

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

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Ministry of Finance Press Release dated 28 Aug 2021

The Income Tax Department carried out a search and seizure operation on 25.08.2021 on a group based in Maharashtra and Goa. The group is a prominent steel manufacturer and trader of Pune, Nashik, Ahmednagar and Goa. More than 44 premises were covered in the search operation.

During the course of the search and seizure operation, many incriminating documents, loose papers and digital evidences were seized.

Evidence detected during the search revealed that the group was engaged in fraudulent practice of booking bogus purchases of scrap and sponge iron from various ‘fake invoice issuers’. Premises of fake invoice issuers were also covered during the search. Such invoice issuers have admitted that they supplied only bills but no materials and also generated fake e-way bills to show it as genuine purchases and to claim GST input credit. With the active support of GST Authorities, Pune, “Vehicle movement tracking app” was used to identify fake e-way bills. Total bogus purchases identified from these parties, so far, is about Rs.160 crore. The verification is still in progress and quantum of bogus purchases is likely to increase substantially.

Further, shortage of goods to the tune of Rs.3.5 crore and excess stocks of Rs. 4 crore was also found from the premises and the same has been admitted by the assessees. Unaccounted investment in property was also unearthed. Unaccounted cash of Rs. 3 crore and jewellery amounting to Rs. 5.20 crore has been seized from different premises. Unaccounted silver articles of 194 Kg valued at about Rs. 1.34 crore have been found during the search and have been accepted and declared as additional income by the assessee.

So far, a total of Rs.175.5 crore of unaccounted income has been unearthed including unaccounted cash and jewellery, shortage and excess of stock and bogus purchases.

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

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Release

Ministry of Finance

Income Tax Department conducts searches in Visakhapatnam

Posted Date:- Aug 27, 2021

The Income Tax Department carried out search and seizure operation on 25.08.2021 on a group based in Visakhapatnam at 17 different premises across Andhra Pradesh, Chhattisgarh, Nagpur and Kolkata. The group entities are engaged in extraction of vegetable oils, mining of manganese ore, and manufacturing of ferro alloys.

During the course of the search operation, hand written diaries/documents, loose sheets depicting undisclosed cash transactions were seized. The group is inflating expenditure, indulging in cash sales of oil and under invoicing of slag. Transactions in the form of suppression of sales and inflation of expenditure were unearthed.

Unaccounted cash of Rs. 3.0 crore has been seized so far. In total, the searches have resulted in detecting incriminating evidence relating to undisclosed financial transactions of about Rs. 40 crore.

Further investigations are in progress.

The Income Tax Department carried out a search and seizure operation on 24.08.2021 on a group based in Rajkot. The group is among Gujarat’s prominent real estate builders & developers and is actively engaged in real estate, construction and land trading businesses in and around Rajkot. More than 40 premises were covered in the operation. 

During the course of search and seizure operation many incriminating documents, loose sheets, digital evidences etc. were seized indicating involvement of the group in unaccounted transactions. Substantial evidence of transactions outside the regular books of accounts, unaccounted cash expenses, cash advances received and interest paid in cash, has been found. Evidence of on-money payments in real estate projects-flats, shops and land deals has also been found. Total unaccounted cash receipts in various projects of approximately Rs. 350 crore have been unearthed alongwith corroborative evidences. Further, evidence related to land purchase of approximately Rs. 154 crore has also been found, out of which, Rs. 144 crore was purportedly paid in cash.

Overall, the search and seizure operation has resulted in detection of concealment of income in excess of Rs. 300 crore spread over various assessment years, which is likely to go up. Unaccounted cash of more than Rs. 6.40 crore and jewellery amounting to Rs. 1.70 crore has been seized from different premises. Furthermore, promissory notes to the tune of Rs. 4 crore have also been found and seized. 25 lockers have been found during the course of the search operation which have been put under prohibitory orders. The search operation is still continuing. 

Further investigations are in progress.

The Income Tax Department carried out a search action on 29.07.2021 on a large group based in Kanpur and Delhi. The group is in the business of manufacturing Pan Masala and in real estate. A total of 31 premises were searched spread across Kanpur, Noida, Ghaziabad, Delhi and Kolkata.

The group has been earning huge amounts through unaccounted sale of Pan Masala and through unaccounted real estate business. This unaccounted income was laundered back into the concerns through a vast link of shell companies. Digital and paper evidence found during search revealed a nation-wide network of such paper companies created by the group. The Directors of these companies are persons of no financial means. While some of these persons are not even filing income tax returns, some others who file returns do so of extremely meagre amounts. Field investigations further revealed that these paper companies did not exist at the addresses mentioned and never conducted any business.

However, surprisingly these companies advanced so called loans and advances to the real estate group amounting to Rs 226 crore in just three years. A network of 115 such shell companies has been found. Forensic analysis of the digital data is in progress. The main ‘directors’ also admitted that they were only ‘dummy directors’ and signed on the dotted lines as and when required in return for commission for their ‘services’.

During the search, the income tax teams also discovered secret hideouts where troves of documents containing details of unaccounted money and their process of laundering have been unearthed. Analysis of such documents and evidence is also underway. The complete modus operandi has been uncovered by the team including the role of ‘cash handlers’ and their details.

The modus-operandi is similar with respect to the business of Pan Masala. They too have laundered back their unaccounted income through an extensive network of such shell companies. Unaccounted loans and premia received from such paper companies exceeding Rs. 110 crore in three years, have been detected. The group ploughed back their unaccounted money through such shell companies by showing bogus advances against property sale, bogus loans and share premia.

Forensic analysis of evidence is in progress. So far 34 bogus bank accounts of shell companies have been found. Deductions claimed under Income-tax Act, 1961 with respect to treatment of biodegradable waste are under detailed scrutiny. It has also been discovered that through some of these paper companies based in Kolkata, bogus sale and purchase of manure has been shown, amounting to Rs. 80 crore so that cash can be deposited into bank accounts.

During the search, cash of more than Rs. 52 lakh was found along with more than 7 kg gold. Preliminary figures indicate unaccounted transactions exceeding Rs. 400 crore.

Further investigations are in progress.

Ministry of Finance Press Release dated 30 July 2021

Income Tax Department carried out a search operation on 28.07.2021 on a prominent group in Jharkhand dealing in building construction and real estate. The search began on 28.07.2021 in Ranchi and Kolkata. More than 20 premises were covered. 

During the search, it was found that the group was not maintaining regular books of account. In view thereof, the audit certificates and statements submitted to the Income Tax Department are under investigation for genuineness. As per details found during the search operation, it was seen that the group has been undertaking huge outside-the-books transactions in the building construction business and a large portion of sale proceeds is received in cash which remains unaccounted. Part of the cash generated has been brought into the business through bogus share capital and unsecured loans from shell companies. Investigations have revealed that at least 8 shell companies were involved. Relatives and persons of no means were appointed as directors of these ‘companies’ which existed only on paper. These ‘directors’ have admitted that they were only ‘dummy directors’ and would sign wherever the group told them to do so. Transactions of unsecured loan and bogus share capital to the tune of Rs. 25 crore have been detected. Shell companies investing money in the group have been found to be non-existent in Kolkata. Incriminating documents about front companies having employees as directors that received share capital and unsecured loan from shell companies have been seized.

The group has purchased a very large tract of land measuring 1458 acres on the outskirts of Ranchi and is developing the same by constructing and selling residential apartments. It was seen that the land has been registered at a consideration of one-tenth of the value for stamp duty purposes. Brokers have been paid fee in cash running into crores. Other expenses with regard to the purchase of land also are in crores. The sellers of the land have also been searched and they have admitted that more than 25% of land included in the registered document is forest land, not owned by them and for which they have received no consideration. Evidence gathered during the search established that the group had fraudulently got more than 300 acres of forest land registered in its name.

Unexplained cash of Rs. 50 lakh has been seized and three lockers have been found and placed under restraint.  Preliminary evidence found suggests evasion of tax of more than Rs. 50 crore.

Post search investigations are going on and tax evasion figures may go up substantially.

Ministry of Finance Press release dated 29 July 2021

Income Tax Department carried out a survey operation on 08.07.2021 on two business premises in Bengaluru on one of India’s leading manpower services provider. The assessee has been claiming huge deduction u/s 80JJAA of Income-tax Act, 1961 which incentivises new employment generation, subject to fulfilment of certain conditions such as emoluments paid to the employee (which should be less than Rs. 25,000 per month) and number of days of employment etc.

During the course of the survey operation, evidences of tax evasion have been gathered regarding wrongful claims of deduction u/s 80JJAA of Income-tax Act, 1961. The investigations further revealed, that, even though the emoluments of new employees added were more than Rs. 25,000 per month, the assessee has been wrongfully claiming deduction u/s 80JJAA by excluding certain components of emoluments of such employees to fit into the eligible emoluments limit of Rs. 25,000 per month.

Further, it has been found that deduction u/s 80JJAA has been claimed in subsequent years, even though certain eligible employees were no longer on the payroll of the assessee.

Overall, the survey has resulted in detection of concealment of income to the tune of Rs. 880 crore spread over various assessment years.

Further investigations are in progress.

Ministry of Finance Press release dated 13 July 2021 ****

Ministry of Finance Press release dated Jul 09, 2021

Income Tax Department carried out a search and seizure operation on 06.07.2021 on a group based in Hyderabad. The group is engaged in real estate, construction, waste management and infrastructure. The activities of waste management are spread across India while real estate activities are mainly concentrated in Hyderabad.

During the course of search and seizure operation many incriminating documents, loose sheets etc were seized indicating involvement of the group in unaccounted transactions. It was found that the group had sold majority stake, to a Non-resident entity based in Singapore, in one of its group concerns during FY 2018-19 and had earned huge capital gains. The group subsequently devised various colourable schemes by means of entering into a series of share purchase/sale/Non arm’s length valued subscription and subsequent bonus issuance etc with related parties, creating a loss which was set off against the capital gains earned. Incriminating evidence/documents have been recovered, which indicate that the loss was artificially created to set off the respective capital gains. The search operation led to detection of artificial loss of approximately Rs. 1,200 crore, which is to be taxed in the hands of the respective assessees.

Further, during the course of the search, it was found that the assessee had incorrectly claimed bad debts to the tune of Rs. 288 crore on account of related party transactions, which was set off against the aforementioned profits earned. During search proceedings, incriminating documents relating to this artificial/incorrect claim were found. Unaccounted cash transactions with the associates of the group have also been detected during the search, and the quantum and modus of the same is under examination.

As a result of the search & seizure operation, and on the basis of various incriminating documents found, the entities and associates have admitted to having unaccounted income of Rs. 300 crore and have also agreed to pay due taxes.

Further investigations are in progress.

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Specific actionable intelligence was received by the Income Tax Department that a set of people were to carry out an outside-the-books cash transaction of a substantial amount at Raipur, Chhattisgarh. Upon further investigations, the input was found to be credible and the hawala dealer was identified.

As a result, the Department carried out search and seizure action on 21.06.2021 on a Raipur based hawala operator. Four premises at Raipur were covered in the action. The modus operandi involved not only giving accommodation entries of sale, purchase etc to people, but also transportation and end-use facilitation of unaccounted money.

During the course of the search, unaccounted cash amounting to approximately Rs. 6 crore has been seized. A number of digital devices in the form of a computer hard disc and pen drives having details of hawala transactions have been seized. The same are being analysed and quantification of the total amount involved is under progress. Preliminary estimates suggest that hawala transactions exceeding Rs. 100 crore may be involved.

Further investigations are in progress.

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MoF press release dated 24 June 2021

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