What Polycab Can Do After Tax Department Alleges Rs 1,000-Crore Unaccounted Cash
It can file a writ petition before the High Court challenging the search and seizure operation. It can also challenge the I-T Department assessment and file an appeal before the appellate authority.
The income tax department alleged unaccounted cash sales and non-genuine expenses by Polycab India Ltd.
The department said it detected unaccounted cash sales of Rs 1,000 crore and Rs 400 crore in cash payments made by a distributor on behalf of the flagship company.
While it's not a demand notice, the company denied tax evasion claims on Wednesday.
According to the Income Tax Act, the tax department ought to have “reason to believe” that there is “undisclosed income” in order to conduct a search and seizure operation. The department is also required to document all the evidence collected. Such evidence must also be disclosed to the company.
The department has the power to re-conduct assessment of the last six years prior to FY24.
Upon assessment, the department will:
Compute the tax shortfall.
Compute the interest payment on such a shortfall for the relevant period until the date of payment.
Compute a penalty of 50% (for misreporting) to 200% (for underreporting).
What Can Polycab Do?
Polycab India can file a writ petition before the High Court challenging the search and seizure operation.
It can also challenge the assessment by the Income Tax Department and file an appeal before the appellate authority.
Preliminary analysis suggests the company indulged in unaccounted cash sales, cash payments for unaccounted purchases, non-genuine transport and subcontracting expenses, etc., for suppression of its taxable income, the Income Tax Department said in a statement on Wednesday.
Apart from unaccounted cash sales of around Rs 1,000 crore, evidence of unaccounted cash payments of more than Rs 400 crore made by a distributor on behalf of the flagship company has also been seized, the statement said.
The department also identified non-genuine expenses, aggregating to Rs 100 crore, and inflated the purchase accounts through authorised distributors, aggregating to Rs 500 crore.
Shares of Polycab India was locked in the lower circuit of 20% at Rs 3,929.50 apiece, compared to a 0.25% advance in the NSE Nifty 50 as of 9:53 a.m.
