Income Tax Department conducts searches in Tamil Nadu

Income Tax Department carried out a search and seizure operation on July 20, 2022 on two business groups; one engaged in real estate, and the other in contracts related to road and railway construction. The search operation covered more than 30 premises located in and around Madurai and Chennai.

As a result of search action on these groups, a large number of incriminating evidences including documents and digital data have been found and seized. In the case of the group involved in real estate business, these evidences have revealed that the group has indulged in large scale tax evasion by accepting huge unaccounted cash by way of on-money. The group was using a software to maintain parallel set of books of such unaccounted cash transactions. 

In the case of the other group involved in the business of construction contracts, it is found that the group was involved in large scale tax evasion by debiting bogus sub-contract expenses and inflation of purchases of various raw material through self-made vouchers. In the modus-operandi followed by the group, the contract amounts were paid to bogus sub-contractors through banking channels, and after withdrawal, the cash was returned to the assessee group.

The search operation in these groups has revealed unaccounted income exceeding Rs. 150 crore.

Unaccounted cash exceeding Rs. 14 crore and unaccounted gold and jewellery valued at over Rs. 10 crore have been seized during the course of the search action.

Further investigations are in progress.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1845970

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The Income Tax Department carried out search and seizure operations in Tamil Nadu in the case of a group engaged in the manufacturing of animal feeds, poultry farming, edible oils and export of egg products. The search action in the group was initiated on October 27, 2021 covering 40 premises located in Tamil Nadu, Karnataka and Kerala.

During the course of the search operation, several incriminating documents and materials in the form of electronic data have been found and seized. These seized documents indicate that the group is involved in suppressing its income by different ways such as inflating expenses including booking bogus purchases, by under invoicing of sales and also by non-reflecting scrap/by-products sales in the regular books of accounts. The analysis of seized documents also shows that unaccounted income so generated has been invested in acquisition and construction of various immovable properties and also incurred in meeting unaccounted expenses.

The search action has resulted in seizure of unaccounted cash of Rs. 3.3 crore and detection of unaccounted income exceeding Rs. 300 crore.

Further investigations are in progress.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1768838

The Income Tax Department carried out search and seizure operations on September 23, 2021 on two private Syndicate Financing groups based in Chennai. The search operation was carried out at 35 premises located in Chennai.

The evidence found in the premises of the financiers and their associates revealed that these groups have lent to various big corporate houses and businesses in Tamil Nadu, a substantial portion of which is in cash. During the search, it was detected that they are charging high rate of interest, a part of which is not offered to tax. The modus operandi adopted by the groups revealed that most of the interest payments by borrowers are received in dummy bank accounts and the same has not been disclosed for tax purposes. Further, the unaccounted monies are disguised and brought into the books of account of the groups as unsecured loans, sundry creditors, etc.

Other evidence found during the course of the search revealed numerous undisclosed property investments and other income suppression by these persons.

The searches, so far, have resulted in the detection of undisclosed income of more than Rs. 300 crore. Unaccounted cash of Rs. 9 crore has been seized so far.

Further investigations are in progress.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1757941

The Income Tax Department has carried out searches on 28.10.2020 at 22 premises in Coimbatore, Erode, Chennai, and Namakkal on a group engaged in the running of Educational Institutions and their associates, including a civil contractor. The search was carried out on the basis of information that fees collected from students were not fully accounted for in the regular books of accounts.

Evidences found during the search reveal that the allegations regarding suppression of fees received are true and the unaccounted receipts are siphoned off to the personal accounts of the trustees, which in turn are invested in real estate through a company. The other shareholders of the company, viz., an architect from Tirupur and a textile businessman were also covered. Electronic devices seized during the course of the search are being examined.

During the searches in the case of the civil contractors from Namakkal, inflation of expenditure by booking bogus expenses under labour charges, material purchase, etc. has been found.

The search has led to the identification of unaccounted investments and on-money payments to the extent of around Rs.150 crore. Cash amounting to Rs. 5 crore has been seized. Some lockers are yet to be operated. The search is still continuing.

The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1668340