The Income Tax Department had conducted search and seizure operations in four states of eastern and northeastern India — West Bengal, Bihar, Assam and Meghalaya — during which it has recovered unaccounted money to the tune of Rs 250 crore.
The raids were conducted by the IT sleuths against two business groups based in the North-East Region and West Bengal, the Ministry of Finance informed on Friday.
According to an official statement, a total of 15 locations were searched during the search operation on Tuesday, which took place in Kolkata, Guwahati, Rangia, Meghalaya, Shillong, and Patna.
” The tax evaders had formed shell companies through which, they had diverted the funds and laundered the unexplained profits back into the firm,” a source said.
Shell companies are corporation that simply exists on paper, with no office or staff. It may have a bank account, passive investments, or be the registered owner of assets like intellectual property or ships. Shell companies can be registered at the address of a corporation that offers a service for forming shell companies and can also act as an agent for legal correspondence.
“One of the groups is engaged in the business of cement manufacturing. During the search action, it was found that this group generated unaccounted income by indulging in out-of-books sales and booking bogus expenses,” the release mentioned.
Many enterprises that exist only in papers are controlled by the organisation to give accommodation entry to its flagship concern, shreds of evidence that were discovered during the search revealed.
“These paper companies were discovered to be non-existent at the addresses they provided. During the search, incriminating evidence revealing fraudulent unsecured loans, bogus commissions paid, and bogus share premiums obtained through shell companies were found,” the Ministry presser mentions.
The data suggests that a sum of more than Rs 50 crore may have been missing, while another Rs 38 crore has been diverted through tribal individuals, by the Cement manufacturing group.
In the Northeast, scheduled tribes permanently residing and earning their livelihood in and from the Sixth Schedule areas of Dima Hasao, Karbi Anglong, Bodoland Territorial Areas District in Assam, Khasi hills, Jaintia hills and Garo hills in Meghalaya, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura are exempted from paying income tax under Section 10 (26) of Income Tax Act, 1961. They are entitled to claim exemption from tax in respect of income from any source arising therein and income by way of dividend or interest on securities, which, keeps them more or less, off the IT department’s radar, and hence, an easy conduit for diverting unaccounted money.
During the search, data of certain offshore businesses and bank accounts were also discovered, which were presumably not mentioned in the appropriate tax reports, according to the release.
The other group is working on railway contracts in Assam, Mizoram, and other parts of the North East, according to the Finance Ministry. During the search, incriminating papers, loose sheets, and digital data were discovered, revealing unregistered land and property investments.
A substantial number of sale deeds for land and properties have been discovered, with a potential value of over Rs 110 crore. There was no corroborating evidence to explain the source of these assets’ acquisition during the search. The Ministry also reported that documents detailing information of cash transactions totalling more than Rs 13 crore in the sale of properties had been discovered.