Be Alert: Income Tax Department Conduct Searches at Entities Claiming Bogus Expenses and Routed Back into Business

Be Alert: Income Tax Department Conduct Searches at Entities Claiming Bogus Expenses and Routed Back into Business

Income Tax Department carried out search and survey action on 29.01.2021 in the cases of three leading businesses of Assam. The groups are engaged in construction, contracting and business of tea garden. The search and survey actions were carried out at 20 locations in Guwahati, Delhi, Gurugram, Kolkata, Siliguri Alipurduar, Tezpur and Nalbari (Assam).

The main allegations against the three groups were that they had been inflating expenses and had taken accommodation entries in the form of non-genuine unsecured loans and security premium. These entities had suppressed their net profits across the years by claiming bogus expenses and routed back the same into business in the form of share premium, share capital and unsecured loan.

During the course of search actions, hand written notes depicting unexplained expenses of approximately Rs. 87 crore were found. Entries from shell companies in the form of share capital and unsecured loans and by way of amalgamation to the tune of approximately Rs. 100 crore were also found. Further, extracts of digital evidences showing discrepancy in cash balance of Rs. 4.20 crore were found along with bogus booking of expenses at the end of financial year. Financial statement showing Rs. 32 crore profit with cash balance of Rs. 12 crore was found that did not match with the regular books. Digital back-up of servers, computers and phones were taken for further examination which will give actual picture of the business of the assessees.

Cash of Rs. 42 lakh has been seized. Total evasion of income in these cases exceeds Rs. 200 crore. 9 bank lockers have been found, which are yet to be operated.

Further investigation is under progress.


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