I-T searches unearth unaccounted cash of more than Rs 2000 crore

Hyderabad: The Central board of direct taxes (CBDT) on 17 February released new information regarding the searches conducted by the Income Tax department that had led to the detection of unaccounted income worth more than Rs. 2, 000 crore.

The CBDT said the I-T department bust a major bogus billing and hawala transactions racket. Major infrastructure and EWS projects in southern India are involved in bogus billings, the CBDT said, adding evidence regarding payment of more than Rs. 150 crore to a prominent person in Andhra Pradesh has also been unearthed during the search.

It may be noted that in the past week there has been a war of words between the ruling YSRCP and Opposition TDP in Andhra Pradesh over the same issue. In fact, on Sunday the TDP had warned YSRCP’s media for allegedly writing false stories. However, the latest communique of the I-T department has revealed several facts.

It may be recalled that in the first week of November 2019 the I-T department had searched the homes of a group of persons indulging in issuing bogus bills and carrying on hawala transactions. The search operations covered 42 premises across Delhi, Mumbai, Hyderabad, Erode, Pune, Agra, and Goa and had resulted in the busting of a major cash generation racket by leading corporate houses in the infrastructure sector through bogus contracts/bills. Funds meant for public infrastructure projects were siphoned off through entry operators, lobbyists, and hawala dealers. The companies involved in the siphoning of funds are mostly located in the NCR and Mumbai. One such company was earlier searched by the I-T department in April 2019.

Evidence of cash payment of more than Rs. 150 crore to a prominent person in Andhra Pradesh was also unearthed during the search, according to Surabhi Ahluwalia, commissioner of the I-T department (media & technical policy). The search had unearthed incriminating evidence and established a nexus between big corporates and hawala operators. It had also led to the identification of an entire chain of delivery, as well as siphoning of funds by way of bogus contracts to the tune of Rs. 3,300 crore. Unexplained cash of Rs 4.19 crore and jewellery in excess of Rs 3.2 crore was also seized during the search operation, he said.

In fact, the income tax department carried out search and seizure operations on 6 February in 40 premises across Hyderabad, Vijaywada, Cuddapah, Vishakhapatnam, Delhi, and Pune. The search action included three prominent infrastructure groups based in Andhra Pradesh and Telangana. Investigations also led to the busting of a major racket that generated cash through bogus sub-contractors, over-invoicing, and bogus billing. Several incriminating documents and loose papers were found and seized during the search, apart from emails, WhatsApp messages and unexplained foreign transactions unearthed during the search.

Close associates, including former personal secretary of a prominent person, was also searched and incriminating evidence seized. The search operations revealed that infrastructure companies had sub-contracted work to several non-existent/bogus entities. Preliminary estimates suggest that more than Rs. 2,000 crore was siphoned off through transactions that were layered through multiple entities with the last in the chain being small entities with a turnover of less than Rs. 2 crore to avoid maintenance of books of accounts and tax audits. Such entities were either not found at their registered address or were found to be shell entities. Several such sub-contractors were controlled by the principal contractors with all their ITR filings and other compliances being done from the IP addresses of the main corporate office. FDI receipts of several crores in the group companies of one of the infrastructure companies is suspected to be round-tripping its unaccounted funds. Unexplained cash of Rs. 85 lakh and jewellery worth Rs. 71 lakh was also seized. More than 25 bank lockers have been restrained, according to Ahluwalia.

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