Income Tax Department conducts searches in Delhi and Haryana

On November 9, 2021, the Income Tax Department conducted a search and seizure operation in the case of a Fintech company that offered an immediate short-term personal loan using a mobile app. The searches were carried out in Delhi and Gurugram at both commercial and residential locations.

During the investigation, it was discovered that the company had been collecting an extremely high processing fee at the time of loan issuance. As a result, the debtors’ reparation burden is effectively increased. The corporation is owned by a Cayman Island-based group that is ultimately managed by a citizen of a neighboring country. The company imported nominal initial cash into India through Foreign Direct Investment (FDI), but it needed significant working capital from Indian banks. The company’s business model results in a high level of capital rotation, as indicated by a turnover of Rs. 10,000 crore in its first year of operation.

It has been discovered that it has repatriated approximately Rs. 500 crore to its offshore group entities under the guise of purchasing services over the next two years. However, information uncovered throughout the examination revealed that such transfers to the group companies are either significantly exaggerated or fake. Internal web-based application for lending business was also controlled from outside India, according to evidence found. Key people’s comments, including those of foreign nationals, were recorded during the search process.

More research is being carried out.