IT Department Conducts Searches in Jharkhand; Detects Undisclosed Cash worth Rs.2 Crore

The Income Tax Department initiated search and seizure action on few business groups engaged in coal trading/ transportation, execution of civil contracts, extraction of iron ore and production of sponge iron, on 04.11.2022.

Two people who are politically exposed as well as their associates were searched. More than 50 locations were searched, including those in Ranchi, Godda, Bermo, Dumka, Jamshedpur, Chaibasa, Patna, Gurugram, and Kolkata.

Many incriminating documents and digital evidences have been found as a result of the search operation. According to a preliminary analysis of this data, these organisations have used a variety of methods to evade taxes, including inflation of expenses, cash-only loan transactions, cash payments and receipts, and production suppression. In the course of the investigation, it was also discovered that investments in immovable property had been made, however the source of these investments was not entirely clear.

The search operation also revealed that one of the groups engaged in civil contracts was not maintaining regular books of account. The group has been inflating its expenses by entering into non-genuine transactions of purchase of raw material/ sub-contract expenses in lumpsum at the fag end of the year. Evidences seized also suggest that unfair payments in cash have been made to secure contracts.

A huge unexplained stock of iron ore has been discovered in the case of the other group involved in coal trading, iron ore extraction, etc. It has yet to be assessed. Through the use of shell companies, the aforementioned group has also disclosed its unexplained funds in the form of unsecured loans and share capital. Professionals connected to this group have acknowledged that they signed the audit report that the group’s accountant had prepared without performing any due diligence and without verifying any supporting documents.

During the search, undisclosed cash exceeding Rs.2 crore has been seized. A total of 16 bank lockers have been put under restraint. So far, the searches have revealed unaccounted transactions/ investments exceeding Rs.100 crore.

Further investigations are under progress.