Income Tax Department conducts searches in Maharashtra

The Income Tax Department carried out a search and seizure operation on March 14, 2022  on a popular chain of educational institutes, running several schools and colleges at multiple locations in India and abroad. The search operation covered more than 25 premises spread over locations in Maharashtra, Karnataka and Tamil Nadu.

During the search, several incriminating evidences including hard copy documents and digital data have been found and seized, which reveal that substantial funds have been siphoned-off from the Trusts for the personal benefit of the group’s promoters and their family members, in violation of provisions relating to claim of exemption by the Trusts under the Income-tax Act, 1961.

The modus operandi of siphoning-off the funds from the Trusts includes debiting of bogus expenses in the guise of purchase of goods/services from various dummy companies and LLPs owned by the promoters, their family members, and some of their trusted employees. It was unearthed that no actual goods/services were delivered/rendered by these entities and the same have been corroborated by the employees in their deposition. The money so siphoned-off has been utilised for investment in acquiring benami properties and making unfair payments.

During the search, evidences of about two dozen immovable properties located in Maharashtra, Pondicherry and Tamil Nadu have also been gathered which are either benami properties or not disclosed in the respective returns of Income. These properties have been placed under provisional attachment.

The search also revealed evidences of borrowings on Hundi aggregating to Rs. 55 crore, and their repayment in cash in the form of discharged Promissory Notes/Bills of Exchange, which were found & seized.

The search action has resulted in the seizure of unaccounted cash of Rs. 27 lakh and jewellery worth Rs. 3.90 crore.

Further investigations are in progress.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1809225

The Income Tax Department carried out search and seizure operations on December 22, 2021 on two business groups of Nandurbar and Dhule districts of Maharashtra. These groups are engaged in the business of civil construction and land development. The search operation covered more than 25 premises spread across Nanndurbar, Dhule and Nashik. 

During the search and seizure operation many incriminating documents, loose papers, and digital evidences have been found and seized.

In the case of entities belonging to the first group, the seized documents clearly reveal that they have resorted to large-scale suppression of taxable income by inflating their expenses, primarily by way of the claim of non-genuine sub-contract expenses and unverifiable old sundry creditors. The search team has detected that these subcontracts have been awarded to family members and their employees who have not rendered services in this regard. Evidence has also been gathered about unrecorded expenses incurred in cash. The preliminary investigation indicates that this group has evaded income to the extent of Rs. 150 crore on account of the above malpractices.

In the case of the land developers, it has been found that a substantial part of the land transactions have been carried out in cash which are not accounted for in the regular books of account. Further, incriminating documents evidencing receipt of ‘on-money’ on land transactions and cash loans exceeding Rs. 52 crore have been found and seized. 

The search action has, so far, resulted in the seizure of unaccounted cash of more than Rs. 5 crore and jewellery valued at Rs. 5 crore. 

Further investigations are in progress.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1785759

The Income Tax Department carried out search and seizure operations on October 27, 2021 at the Headquarter and one of the branches of an Urban Credit Cooperative Bank located in Maharashtra. The residence of the Chairman and one of its directors were also covered.

The analysis of bank data on Core Banking Solutions (CBS) and the statements of key persons recorded during the search action has revealed the glaring irregularities in opening the bank accounts. More than 1200 new bank accounts were opened in the said branch without PAN. The investigations have revealed that these bank accounts were opened without following KYC norms and all account opening forms are filled in by the bank staff and they have put their signature/thumb impressions.

In these accounts, multiple cash deposits each of exact denomination of Rs. 1.9 lakh, were made totalling to Rs. 53.72 crore. Out of these, more than 700 bank accounts have been identified which were opened in series, where cash deposits of more than Rs. 34.10 crore were made immediately within 7 days of opening of bank accounts mainly during the period August, 2020 to May, 2021. These deposits have been structured to avoid mandatory PAN requirement for cash deposits over Rs. 2 lakh. The money has been subsequently converted into fixed deposits in the same branch.

Local enquiries in few cases of such account holders, has demonstrated that these persons are not aware of cash deposits in the bank and categorically denied any knowledge of such bank accounts or even the fixed deposits.

The Chairman, CMD and the manager of the branch, could not explain the source of cash deposits and accepted that these were done at the behest of one of the directors of the bank, who is a prominent local businessman engaged in trading of grains.

On the basis of the evidences gathered and statements recorded, the entire amount of Rs. 53.72 crore has been restrained. 

Further investigations are in progress.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1769680

The Income Tax Department carried out a search and seizure operation on September 23, 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.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1758527