Income Tax Department Alleges Tax Evasion By Two Business Groups

The Income Tax Department said it detected alleged tax irregularities in two business groups.

Search and seizure operations were carried out at over 40 premises of a real estate firm and a perfume manufacturer in Uttar Pradesh, Maharashtra, Delhi, Tamil Nadu and Gujarat, the department said in a statement. The names of the business groups weren't revealed.

In the case of the first group, primarily based in Mumbai and Uttar Pradesh, alleged tax irregularities and evasion by means of under-reporting sales, stock manipulation, fudged book-keeping and inflation of expenditure were reported, the statement said.

“Evidences found in the sales office and main office have revealed that the group makes 35% to 40% of its retail sales in cash by ‘kucha' bills and these cash receipts are not recorded in the regular books of account, running into crores of rupees,” the statement said. “Evidences of booking purchases from bogus parties to the extent of about Rs. 5 crore have also been unearthed.”

It was revealed that the unaccounted income thus created was invested in real estate acquisitions in Mumbai, India and U.A.E., the department alleged. Tax evasion to the tune of Rs 10 crore was detected on conversion of stock-in-trade to capital along with undeclared income of Rs 45 crore on the benefits paid to retiring partners, the department said.

“During the course of search action on another UP-based group, incriminating evidences substantiating unrecorded cash transactions of about Rs 10 crore have been found and seized... So far, unaccounted cash exceeding Rs 9.40 crore and unexplained jewellery of more than Rs 2 crore have been seized,” the department said. “Several bank lockers have been placed under restraint and are yet to be operated.”

Further investigations are underway, it said.