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January 14, 2021

Income Tax Dep Conduct Raids on Doctor and Medical professionals detect cash and fake entries

by CA Shivam Jaiswal in Income Tax

Income Tax Dep Conduct Raids on Doctor and Medical professionals detect cash and fake entries

In Assam, action on renowned doctors/medical professionals, ₹7.54 crs cash seized from homes/offices. >₹60 cr of turnover suppressed ₹100cr of unexplained investments.

In Hyderabad, action on civil contractor, ₹100 cr of fake accommodation entries detected.

The Income Tax Department carried out search and survey action on 08/01/2021 in the cases of renowned Doctors/Medical professionals of Assam. The search and survey actions were carried out at 29 locations in Guwahati, Nalbari and Dibrugarh in Assam.

The main allegations against the groups were that they had grossly understated their medical receipts both in their individual capacities and the turnovers in their hospitals/nursing homes, diagnostic centres and pharmaceutical business. 

During the course of the search & seizure operation, it has been established that the groups engage in out-of-books transactions. Many documents and cash receipt slips were found which highlight the hugely suppressed turnover in the case of medical professionals and their hospitals/clinics. The quantum of suppressed turnover detected in few cases alone appears to be upward of Rs. 50-60 crore. Further, the net profit shown in the medical/pharma business is also extremely low.

Total cash of approximately Rs. 7.54 crore was seized by the Department from various residential and business premises of the medical professionals and their allied business, with an amount of Rs. 1.76 crore cash seizure from a distant town of Nalbari in Assam. The cash seized was found to be unexplained in the hands of various hospitals and medical professionals. Papers of huge parcels of land/immovable assets purchased in cash were also seized. Hand written notes/diaries of investments made in immovable assets in cash of around Rs. 20 crore were also seized. The cash generated was found to be diverted in building of new hospitals, reconstruction of nursing homes and acquisition of undisclosed assets.

During the course of the search action, it was found that huge amount of Kachha Cash receipts and transaction were made outside the regular books of accounts, In one such case, it was  found  that  an amount  close to Rs. 20 crore was undisclosed.

Further, daily receipts were found to be digitally maintained in Excel/hard disk at Medical clinics that had not been recorded in the books of accounts. In the case of another assessee, the annual receipts were approximately Rs. 15-20 crore, while in the audited books, he had shown the gross receipt of around Rs.5 crore only. Hence, it is apparent that in the case of this particular assessee, suppression for each year should be around Rs.10-15 crore.

 In all, unexplained investment/receipts/expenses exceeding Rs. 100 crore has been unearthed due to the search & seizure action.

Further investigations are in progress.

The Income Tax Department carried out a search and seizure action on 07.01.2021 based on investigation in income tax evasion using bogus sub-contractors/shell entities along with enquiries made relating to entities flagged for providing fake Input Tax credit.

The search was carried out on a prominent civil contractor working in Telangana, generating cash through the use of bogus sub-contracts and bogus billers. The search has been conducted on 19 premises across Hyderabad. The search has also covered a network of individuals running the racket of entry operation and generation of huge cash through fake billing.

Several shell entities/firms were used by the searched entry operators for layering of unaccounted money and cash withdrawals against fake bills issued wherein bogus Input Tax Credit(ITC) was passed on. Statements of such entry operators, their dummy partners/employees, the cash handlers of the beneficiaries have also been recorded, clearly validating the entire money trail.

The search has led to seizure of evidences of bogus sub-contracts being given through intermediaries operating shell entities. Evidence of the use of this modus to generate huge unaccounted cash was found along with details of the entire network of the entry operators, intermediaries, cash handlers, beneficiaries and the firms and companies involved. Forensic analysis of digital data including pen drive, retrieved mails has given clinching evidences in this regard.

So far, documents evidencing accommodation entries of more than Rs. 160 crore have already been found and seized. The assessee company has also admitted the same in its statement.

Further investigations are in progress.

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