I-T raids on TN firms find more than Rs700 cr undisclosed income
13 Aug 2019
The Income Tax Department is reported to have detected undisclosed income of Rs700 crore in search operations in various parts of Tamil Nadu and elsewhere, besides recovering Rs4.5 crore cash from a car in which the money was concealed.
The I-T Department conducted search and seizure operation on 6 August on one of the major producers of beer and IMFL in Tamil Nadu. The search action was launched in the early hours of Tuesday at 55 premises in various places in Tamil Nadu, including Chennai, Coimbatore, Thanjavur, etc and also in Kerala, Andhra Pradesh and Goa. The premises included residences of the promoters, key employees and some of the suppliers of materials.
The search action was based on intelligence gathered over several months that the business group was indulging in large scale tax evasion by inflating its expenditure on materials used in its production processes. During the search action, the search teams found telltale evidence of the modus operandi of the group.
The modus operandi involved over-invoicing of purchase of raw materials and bottles which constituted a major portion of the cost of production. The suppliers received payment at the inflated value by cheque or RTGS, but paid back the excess value in cash to key confidante employees of the group. The search teams gathered evidence of such over-invoicing and return of cash by suppliers. Such inflation by over invoicing amounted to suppression of taxable income of almost Rs400 crore over a period of six years.
The search also resulted in unearthing of evidence of similar tax evasion by another leading business group in the same liquor industry. Consequently, the department launched search operation in the case of the second group also on 9 August. About seven premises of this group in Chennai and Karaikal were covered in the second phase of the search operation. The search is still in progress and the suppression of taxable income detected in this group has been estimated to be about Rs300 crore.
Based on a tip off during the search action, the tax officials tracked down employees moving with unaccounted cash and intercepted them and recovered Rs4.5 crore cash from the car in which they had concealed it. The search action has thus far resulted in detection of undisclosed income of Rs700 crore which had not been disclosed for taxation.