Income Tax Department conducts searches over 40 premises in Uttar Pradesh and Maharashtra

On December 31, 2021, the Income Tax Department conducted a search and seizure operation on two organisations involved in the perfume manufacturing and real estate industries. During the search operation, around 40 locations in the states of Uttar Pradesh, Maharashtra, Delhi, Tamil Nadu, and Gujarat were searched.

The search action found that the first group, which is mostly situated in Mumbai and Uttar Pradesh, is involved in tax fraud by under-reporting perfume sales, stock manipulation, falsifying books of account to shift earnings from taxable to tax-exempt units, inflation of spending, and so on. Evidence discovered at the sales office and main office revealed that the group makes 35 percent to 40 percent of its retail sales in cash via ‘kucha’ bills, and that these cash receipts, which amount to crores of rupees, are not reported in the regular books of account. Evidence of booking purchases from fictitious persons totaling around Rs. 5 crore has also been discovered.

According to the study of incriminating evidence, the undeclared money is invested in numerous real estate developments in Mumbai, as well as the purchase of properties in India and the United Arab Emirates (UAE). The group has also been found to have dodged tax of Rs. 10 crore on the conversion of stock-in-trade to capital by failing to register equivalent income. In addition, the group has not recorded income of Rs. 45 crore from benefits granted to retiring partners.

It was also discovered that one of the group’s offshore businesses, based in the UAE, allegedly imported illegal share capital worth over Rs. 16 crore into an Indian entity at an exorbitant premium. This recipient group business also received a total of Rs. 19 crore in unlawful share capital from a number of Kolkata-based shell companies. One of the shell entity’s shareholder directors testified under oath that he was a dummy director who invested in the group company’s share capital at the promoters’ request.

Incriminating evidence substantiating unrecorded cash transactions of roughly Rs. 10 crore was discovered and confiscated during a search operation on another UP-based organisation. It’s also been discovered that the company doesn’t keep a stock registry for its inventory.

Unaccounted cash worth over Rs. 9.40 crore and unexplained jewellery worth over Rs. 2 crore have been confiscated thus far. Several bank lockers have been placed under lock and key, but they have yet to be used.

More research is being carried out.