IT Department searches Indian corporations and their affiliate concerns managed by a neighboring country

IT Department searches Indian corporations and their affiliate concerns managed by a neighboring country in Maharashtra, Gujarat and Delhi

Sushmita Goswami | Nov 26, 2021 |

IT Department searches Indian corporations and their affiliate concerns managed by a neighboring country

IT Department searches Indian corporations and their affiliate concerns managed by a neighboring country in Maharashtra, Gujarat and Delhi

On 16.11.2021, the Income Tax Department conducted search and seizure operations on specific Indian firms and their affiliated concerns that were managed by a neighboring country. Chemicals, ball bearings, equipment parts, and injection moulding machinery are all products of these businesses. Around 20 locations in Gujarat, including Mumbai, Ahmedabad, and Gandhidham, as well as Delhi, were searched.

A considerable amount of incriminating evidence in the form of digital data demonstrating that these companies earned large amounts of unauthorized income has been discovered and seized. These businesses have been discovered to be engaging in tax avoidance by manipulating their books of accounts. According to the evidence, these companies engaged in money laundering by transferring monies to a neighbouring nation through a network of shell companies. In the last two years, an estimated Rs 20 crore has been transferred using the above method.

According to investigations, a Mumbai-based professional firm not only supported in the construction of these shell firms, but also provided them with sham directors. The investigations also revealed that the dummy directors were either professional firm employees/drivers or low-income individuals. When questioned, they admitted that they were unaware of these businesses’ activities and that they had been signing on paperwork according to the top functionaries’ orders. Foreign nationals benefit from the professional firm’s assistance by using its addresses for banking and other regulatory obligations.

One of these chemical trading corporations was discovered to be passing purchase claims through Marshall Island, a low-tax jurisdiction. The corporation actually bought things from a neighboring company worth Rs. 56 crore, but it was billed from Marshall Island. Payment for such transactions, on the other hand, was made into a Marshall Island-based company’s bank account in a neighboring country. During the search, it was also discovered that this Indian company had used non-genuine purchase bills to decrease its tax liability and had paid unaccounted funds for the purchase of land in India.

The search operation has already resulted in the seizure of around Rs. 66 lakh in unaccounted cash. Some of the companies’ bank accounts have been frozen, with a total bank balance of around Rs. 28 crore.

Further investigations are being carried out.

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