The Income Tax (I-T) Department has found ₹1,000 crore unaccounted for income during a search operation it conducted earlier this week on a Chennai-based information technology infrastructure group.
The searches were conducted at five locations in Chennai and Madurai.
“The search led to the detection of around ₹1,000 crore unaccounted for income, out of which, disclosure of an additional income of ₹337 crore has already been made by the assessee, besides actionable issues under Benami and Black Money Acts. Further investigations are on,” an I-T Department release said.
The search led to the unearthing of evidence relating to investments in a Singapore-registered company.
Its shares are held by two firms — one owned by the group searched, while the other is a subsidiary of a major infrastructure development and financing group.
“It has been found that the company belonging to the searched group has invested a very nominal amount, although it has a 72% shareholding, while the other company, having 28% shareholding, has almost invested the entire money. This has resulted in a benefit/gain of almost Singapore $7 crore, that is, around ₹200 crore in the hands of the company belonging to the searched group. This was not disclosed by it in its return of income and in the FA schedule,” the press release said.
Thus, there has been suppression of foreign income received in the form of share subscription, equivalent to ₹200 crore (present value ₹354 crore), which is taxable in India, in the hands of the shareholder.
Proceedings will be initiated under the Black Money Act, 2015, for not disclosing foreign assets/beneficial interest in the FA Schedule of the income tax return.
During the searches, it was also found that the group recently acquired five shell companies to siphon out ₹337 crore from the main company, by raising bogus bills, without doing any real business in these firms.
The siphoned money was transferred abroad and utilised for the purchase of shares, in the name of the son of the main assessee, the department’s press release added.
“One of the directors has admitted that they diverted funds through these companies. Evidence has also been found regarding the allotment of preference shares worth ₹150 crore, in 2009, in the group company, by passing accounting entries, only to project inflated capital before banks and financial institutions to obtain finances. Allotment of another ₹150 crore-worth preference shares in 2015, from funds from group companies, who in turn took loans/entries, is being examined,” the release said.
The group borrowed funds from banks, on interest, and diverted it to other group companies, free of interest, for investments in properties.
The total interest disallowance on this count works out to around ₹423 crore.
Further, the search also revealed that the group purchased about 800 acres of land, worth at least ₹500 crore, in the names of shell companies, from funds provided by the main group.