Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, 18th October, 2019
PRESS RELEASE
Income Tax Department conducts Search on a “wellness group” in Chennai
On 16.10.2019, the Income Tax Department conducted search action under the Income-tax Act, 1961 in the case of a conglomerate of trusts and companies that run year-round “wellness courses” and training programmes in philosophy, spirituality, etc at various sprawling residential campuses in Varadaiahpalem in AP, and also in Chennai and Bangalore. The group which was founded by a spiritual guru in the 1980s with “oneness” philosophy has also diversified into several sectors including real estate, construction, sports, etc in India and abroad. The group is presently managed and controlled by the spiritual leader who laid the foundation of the group, and his son. The courses attract residential customers from abroad and the group earns substantial receipts in foreign exchange. There was intelligence that the group has been suppressing its receipts which are ploughed into investment in huge tracts of landed property in AP and TN and also in investments abroad. The search action which is still in progress has covered about 40 premises located in Chennai, Hyderabad, Bangalore and Varadaiahpalem.
During the search proceedings, evidence has been found that the group has been regularly suppressing its receipts at its various centres or ashrams. Evidence has been found with key employees who maintained record of cash collections that were kept outside the accounts for use in making investments elsewhere and also for paying for properties over and above documented values. It is learnt that the group also earned unaccounted income in receiving cash from property sales over and above documented values. A preliminary estimate of such unaccounted cash receipts is Rs. 409 crore from FY 2014-15 onwards. Such unaccounted cash receipts are also evidenced by huge quantities of cash and other valuables found at the residences of the founder and his son, and at one of the campuses. A total sum of cash of Rs. 43.9 crore has been found and seized by the Department at these premises.
Apart from the above, substantial sums of foreign currencies have also been found and seized. The total of such foreign exchange found at these premises is about 2.5 million USD in US currency which amounts to approximately Rs. 18 crore. Foreign exchange in other currencies has also been found and seized. Substantial quantities of undisclosed gold in the form of jewellery, about 88 kg approximately valued at over Rs. 26 crore, has also been found and seized. Undisclosed diamonds amounting to 1,271 carats valued approximately at about Rs. 5 crore were also found and seized. Total value of seizure so far is approximately Rs. 93 crore. The undisclosed income of the group detected so far is estimated at more than Rs. 500 crore. The search proceedings are still in progress.
An important finding of the search is that the group has been investing in a number of companies in India and abroad, including in tax havens. Some of these companies based in China, USA, Singapore, UAE, etc are found to be receiving payments from foreign clients who attend the various residential “wellness” courses offered in India. The Department is investigating into diversion of income taxable in India to offshore entities by the group in this process. Further, it is found that one of the group trusts may be providing accommodation entries for other parties by receiving donations from them and then returning the money back under the garb of expenses and receiving a small percentage as fee. Instances have also been found where the group is not accounting for money received from foreign clients in cash in foreign currency and then exchanging the same in the grey market. All these leads are being pursued and investigation is in progress.
(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT.
In the first sentence of the above the word ” role” is missing.
There is lopsided thinking on the part of policy makers- say for example the govt has introduced long time back section 44AD, where in for a turn over up to 2 crores under certain circumstances need not maintain books of account and declare income at a certain percentage, but provide the amounts under four heads – cash balance, sundry debtors, sundry creditors and closing stock. Is it possible to give those figures with out maintaining books of account? Is there a mechanism to cross verify the figures provided are correct? There is no corresponding provision in GST act.Why a difference in two sets of acts both administered by the same govt but under different boards more or less on the same object of raising revenue? There are dealers with connivance with each other not raising a bill but showing the amount received as advance and not paying both the income tax and GST. The advance received need not technically be shown as under the above heads. Where is the mechanism in the both the departments to unearth instances like this? The Govt thinking is – small dealers and amounts involved are small so let them go.Drops of water make an ocean. One more justification for this scheme is it is uneconomical to maintain staff required to oversee the working of the department. Yet one more reason is to ensure that the supposed small dealers are protected from the harassment and corruption from unscrupulous staff of the department. Are these valid grounds? Does one burn their home to get rid of a rat at home? Let the powers that be in the department take the initiative choose/ select officers with integrity and skill and send them on to the field for physical inspections and some of them being stationed at the offices itself conclude the assessments time bound unmindful of the pulls and pressures from any body. May be it is expecting too much and living in a fools paradise, in India that is my beloved country.
What is the chartered accountants who signed the reports over the years? Why is not the Department taking effective action – both civil and criminal? Why is not the Department complaining to the ICAI and vigorously following to the logical conclusion? Why is not the Department making the departmental officials also, accountable for routinely accepting the returns filed not exercising the due care diligence, expertise expected from them. In the absence of their dereliction of duty and/or negligence, why to maintain them at a very huge cost to the exchequer, an indirect burden on the hapless ordinary citizen of this country? Who will provide answers to this?