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December 11, 2021

I-T dept Searches in Surat and West Bengal find bogus purchases of around Rs. 250 cr

by CA Shivam Jaiswal in Income Tax

I-T dept Searches prominent real estate group of Surat

The Income Tax Department initiated search and seizure operation on 03.12.2021 on a prominent group of Surat, engaged in the business of construction of residential and commercial complexes, land transactions as well as real estate financing. The search action covered more than 40 premises spread over Surat and Mumbai.

During the course of the search action, various incriminating documentary and digital evidences have been found and seized including a parallel set of books of account in the case of group entities. The transactions of certain group entities have been found to be maintained in a highly coded manner but were successfully decoded by the search team.  A preliminary analysis of these evidences indicates unaccounted cash receipt of on- money of more than Rs. 300 crore on sale of flats / land which is not found recorded in the regular books of account. Evidences of unaccounted cash infusion by partners, bogus accommodation entry loans by payment of cash and unexplained cash expenses etc. have also been noticed. Further, deeper examination of physical books of account and incriminating evidences seized during the search action shows unexplained investments of more than Rs. 200 crore in real estate and more than Rs. 100 crore by way of loan financing.

The search action has led to the seizure of unexplained cash of Rs. 4 crore and jewellery valued at Rs. 3 crore while more than a dozen bank lockers have been placed under restraint. The search action has led to the detection of estimated undisclosed receipts and suspicious nature of entries aggregating to more than Rs. 650 crore.

Further investigations are under progress.

Income Tax Department conducts search operations in West Bengal

The Income Tax Department initiated search operation in the case of two major manufacturers and suppliers of refined lead, lead alloys and lead oxides on 07.12.2021. The search operation covered 24 premises spread over in the states of West Bengal and Uttar Pradesh.

During the search and seizure action, it has been noticed that these groups are involved in the suppression of taxable income by resorting to bogus purchases and inflation of purchases.

Investigations have categorically revealed that these two groups have booked bogus purchases of around Rs. 250 crore in the name of various individuals, proprietary concerns, and companies. Evidence gathered during the search operation further reveals that stock registers, transport documents, e-way bills etc. have been fabricated to make such bogus purchases. Several accommodation entry providers have admitted that they have supplied bogus bills without supply of material.

The analysis of documents seized from the business premises of one of the groups indicates the modus operandi of over-invoicing during the purchase of raw material in a systematic manner. The differential amount is received back in cash by the key persons of the assessee group. One of the employees of the group has admitted that invoices have been inflated by charging higher prices for better quality of goods than goods actually supplied.

Incriminating evidence in the form of physical documents and digital data indicating unaccounted investments made in cash in immovable properties has also been found and seized.

The search operations have resulted in seizure of jewellery valued at Rs. 53 lakh while four bank lockers are yet to be operated.

 Further investigations are under progress.

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