Income Tax Department conducts searches in Gujarat

The Income Tax Department carried out a search and seizure operation on August 09, 2022 on a business group primarily engaged in manufacturing and trading of ceramic tiles. The search action covered a total of 36 premises, spread across Rajkot, Morbi, Ahmedabad, Raipur, Guwahati, Gurgaon, and Kolkata. The search operation also covered persons engaged in providing finance.

During the course of the search operation, various incriminating evidences in the form of documents and digital data have been found and seized. The initial analysis of these evidences reveal that the group has been engaged in large scale tax evasion by adopting various methods, including, by way of unaccounted cash sales outside the books of account, under invoicing of sales and booking of bogus purchases. The group has also been found to be involved in layering of unaccounted sums through bogus unsecured loans from related parties and share capital from Kolkata-based shell companies.

Further, several evidences indicating the group’s involvement in routing of the unaccounted funds into the regular books of account using accommodation entries provided by a Gujarat based person engaged in providing finance, have also been found.

So far, the search action has resulted in unearthing of unaccounted transactions exceeding Rs. 300 crore including cash loans of more than Rs. 100 crore.

Further investigations are in progress.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1853958

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The Income Tax Department carried out a search and seizure operation on July 20, 2022 on a prominent business conglomerate engaged in diversified fields of Textiles, Chemicals, Packaging, Real estate and Education. The search action covered a total of 58 premises, spread across Kheda, Ahmedabad, Mumbai, Hyderabad and Kolkata.

As a result of the search operation, various incriminating evidences in the form of documents and digital data have been found and seized. These evidences reveal that the group has been engaged in large scale tax evasion by adopting various methods, including, by way of unaccounted cash sales outside the books of account, booking of bogus purchases and on-money receipts from real estate transactions. The group has also been found involved in layering of unaccounted sums through share premium from Kolkata-based shell companies. Certain instances of unaccounted income generated through cash based ‘sarafi’ (unsecured) advances made have also been found.

It was also found that the group has been involved in profiteering through manipulation of share prices of its listed companies through operators. Evidences seized also reveal that the group has been siphoning off funds through fictitious entities for personal use of promoters. Further, analysis of evidence suggests that the group is also involved in manipulation of books of account of its public limited companies.

The search action has resulted in unearthing unaccounted transactions exceeding Rs.1000 crore. So far, unaccounted cash of Rs. 24 crore and unexplained jewellery, bullion etc. valued at Rs. 20 crore have been seized during the course of search.

Further investigations are in progress.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1847364

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The Income Tax Department has carried out a search and seizure operation on a prominent group engaged in manufacturing of chemicals and development of real estate on November 18, 2021. The search action covered more than 20 premises spread over Vapi and Sarigam in Gujarat, Silvassa and also in Mumbai.

A large number of incriminating evidences in the form of documents, diary notings and digital data showing earning of huge unaccounted income by the group and its investment in assets have been found and seized. The evidences clearly indicate evasion of taxable income by adopting various modus-operandi such as suppression of production, use of bogus purchase invoices without actual delivery of the goods to inflate purchases, availing of bogus GST credit, claim of bogus commission expenses, etc. The assessee group has also received on-money in immovable property transactions. All these have resulted into generation of unaccounted cash. During the search proceedings, several incriminating evidences about cash transactions in investment in immovable properties and cash loans have also been seized.

The search operation has resulted in seizure of unaccounted cash of about Rs. 2.5 crore and jewellery of Rs. 1 crore. 16 bank lockers have been placed under restraint.

A preliminary analysis of the documents/evidence unearthed during the search has indicated that estimation of unaccounted income is likely to be more than Rs.100 crore.

Further investigations are in progress.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1773636

The Income Tax Department carried out search and seizure operations on September 22, 2021 on premises of a leading Diamond manufacturer and exporter from Gujarat, based on intelligence input about tax evasion. Apart from the diamond business, the group was also in the business of manufacturing of tiles. The operation covered 23 premises located in Surat, Navsari, Morbi, Wankaner in Gujarat & Mumbai in Maharashtra.

​The highlight of the search includes seizure of large volume of unaccounted data seized in paper as well as digital form, which was kept at secret locations under the custody of its trusted employees at Surat, Navasari, Mumbai. The data includes proof of unaccounted purchases, unaccounted sales, taking accommodation entries for purchases against which cash is received, the movement of such cash and stock through angadia firms, keeping the unaccounted cash with angadias, investment of such unaccounted income for purchase of property and stock, etc for the last five years.

The pri​mary analysis of data reveals that the assessee has made unaccounted purchase and sale of small polished diamonds of about Rs. 518 crore over the period. Further, the data reveals that the assessee has sold more than Rs. 95 crore of diamond scrap in cash generated from its manufacturing activities, which remains unaccounted for and represents its income. The assessee, over these years, has accounted for sale of about Rs. 2,742 crore of small diamonds in its books, against which, substantial part of purchases were made in cash, but the purchase bills were taken from accommodation entry providers.

​Furthermore, the assessee was also making its major purchases of rough diamonds through imports and making export sales of finished bigger diamonds through its company registered in Hongkong, which is effectively controlled and managed from India only. The data reveals that the assessee has made purchases of Rs. 189 crore and sale of Rs. 1040 crore in the last two years through this entity.

​During the search, the complete financial transactions of real estate deals were found which led to the detection of unaccounted income of Rs. 80 crore. Further, the sale transactions of shares pertaining to the business of tiles were examined, which led to the detection of Rs. 81 crore of unaccounted income.

During the search operation, unaccounted cash and jewellery of Rs. 1.95 crore has been seized, and unaccounted diamond stock of 8900 carat worth Rs. 10.98 crore has been detected so far. A large number of lockers belonging to the group have been identified, which have been placed under restraint and will be operated in due course.

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

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1757940