Introduction: On October 12, 2023, the Income Tax Department carried out a comprehensive search and seizure operation in the states of Karnataka, Andhra Pradesh, Telangana, and New Delhi. The operation targeted government contractors, real estate developers, and their associates, revealing a complex web of tax evasion and financial irregularities. This article delves into the details of the operation and its findings.
Detailed Analysis: The operation, based on credible information, covered approximately 55 premises across the mentioned states. According to a press release from the Central Board of Direct Taxes (CBDT), a significant volume of incriminating evidence was uncovered during the searches. These included loose sheets, hard copies of documents, and digital data, which shed light on the intricate tax evasion practices employed by these contractors.
One of the modus operandi for tax evasion that came to light involved inflating expenses by booking bogus purchases. Contractors were found making non-genuine claims of expenses with sub-contractors and attempting to claim ineligible expenses. These irregularities in the utilization of contract receipts had resulted in the creation of significant unaccounted cash and undisclosed assets.
During the search, evidence of inflated expenses was found in the form of discrepancies in Goods Receipt Note (GRN) validation. Further, glaring inconsistencies in the documentation related to purchases and actual physical transport of goods were discovered, particularly concerning bogus transactions with sub-contractors. Some of these sub-contractors were also investigated as part of the operation.
Contractors were also implicated in booking expenses for non-business purposes. Claims of liaison expenses that were not justifiable were found and seized during the operation.
Moreover, the search revealed large-scale unaccounted cash transactions, which were absent from the books of account. This unaccounted cash was found not only in the premises of the assessed individuals but also among sub-contractors and associates, including certain cash handlers.
In terms of seized assets, the operation resulted in the confiscation of unaccounted cash amounting to approximately Rs. 94 crore, as well as gold and diamond jewelry worth over Rs. 8 crore. The total value of the seized assets exceeded Rs. 102 crore. Additionally, a cache of about 30 luxury wristwatches of foreign make was unearthed from the premises of a private salaried employee who was not engaged in the business of wristwatches.
Conclusion: The Income Tax Department’s search and seizure operation in Karnataka, Andhra Pradesh, Telangana, and New Delhi has brought to light a complex network of tax evasion practices among government contractors and real estate developers. The evidence collected indicates a deliberate attempt to inflate expenses, create unaccounted cash, and accumulate undisclosed assets.
The operation, resulting in the seizure of substantial unaccounted cash and valuable assets, underlines the government’s commitment to curbing tax evasion and ensuring that individuals and businesses pay their fair share of taxes. Further investigations into this matter are ongoing, and more revelations are anticipated as the inquiry unfolds.
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Ministry of Finance
Income Tax Department conducts searches in Karnataka, Andhra Pradesh and Telangana State region
Posted On: 16 OCT 2023 2:43PM by PIB Delhi
Income tax department conducted a search & seizure action in the case of some government contractors, real estate developers and their associates on 12.10.2023. About 55 premises were covered during the search action in the States of Karnataka, Andhra Pradesh, Telangana and New Delhi.
As per CBDT Press Release, A large number of incriminating evidences in the form of loose sheets, hard copy of documents and digital data have been found and seized. The modus-operandi of tax evasion detected indicates that these contractors were involved in reducing their income by inflation of expenses by booking bogus purchases, non-genuine claim of expenses with sub-contractors and claiming ineligible expenses. The irregularities detected in utilization of contract receipts, has resulted in generation of huge unaccounted cash and creation of undisclosed assets.
Evidence indicating inflation of expenses in the form of discrepancies in Goods Receipt Note (GRN) validation have been unearthed during the search. Evidences of huge discrepancies in documentation related to purchases booked and actual physical transport of goods have also been unearthed, with regard to bogus transactions with sub-contractors, some of whom were also covered during the search. Further, these contractors were also involved in booking expenses for non-business purposes. Evidences of claim of liaison expenses have also been found and seized.
Large scale unaccounted cash transactions, which are not found recorded in the books of account, have also been found during the search, from the premises of assessees, sub-contractors, and associates including certain cash handlers.
The search has resulted in seizure of unaccounted cash of approximately Rs.94 crore and gold and diamond jewellery of over Rs.8 crore, aggregating to more than Rs. 102 crore. Further, a cache of about 30 luxury wrist watches of foreign make were unearthed from the premises of a private salaried employee, not engaged in the business of wrist watches.
Further investigations are in process.
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