Shell companies were set up to provide bogus entries to evade tax
The Income-Tax Department on Tuesday said its recent searches on various persons and their entities engaged in the business of civil construction, real estate and running educational institutes in Uttar Pradesh and Karnataka, led to detection of tax evasion and other financial irregularities.
The searches were carried out at more than 30 premises on December 18 in Lucknow, Mainpuri and Mau in Uttar Pradesh, Kolkata in West Bengal, Bengaluru in Karnataka and the national capital region. A Kolkata-based entry operator was also covered during the operation.
According to the agency, several entities into civil construction business were involved in claiming bogus expenditure running into crores of rupees. “In the case of one company, undisclosed income of over ₹86 crore of the directors of the company has been detected,” said the Department, adding that the person concerned admitted ₹68 crore as his undisclosed income and offered to pay tax thereon.
With respect to a proprietary concern, the books of accounts related to its turnover exceeding ₹150 crore during the last few years could not be produced. In another case, the agency said, the company used shell companies to route its unexplained income and investments. “Such unexplained investment to the tune of ₹12 crore has been identified. In the case of another person, unexplained investment of ₹11 crore in a shell company and investments in benami properties worth ₹3.5 crore have been identified,” said the agency.
The Kolkata-based entry operator had set up shell entities to provide accommodation entries of bogus share capital to the tune of ₹408 crore and bogus unsecured loan of ₹154 crore. “The entry operator has admitted to the above modus-operandi, and also disclosed unaccounted commission income of ₹5 crore,” it said.
As regards a Bengaluru-based Trust and related entities, the I-T Department said funds amounting to ₹80 lakh were transferred in the guise of donation, for non-trust purposes, to certain Kerala-based entities, including Markazu Ssaquafathi Ssunniyya Trust and Markaz Knowledge City Trust, connected with Gulf countries, for the personal benefit of the trustees.
“This, prima-facie, indicates violation of relevant provisions relating to registration of trusts under the Income-tax Act…for claim of exemption, as well as, FEMA (Foreign Exchange Management Act) provisions. Evidence with regard to collection of capitation fee of about ₹10 crore in cash, and expenses to the tune of over ₹4.8 crore incurred from the account of the Trust, for the trustees’ personal benefit, over the past three years, have also been gathered,” it said.
The agency seized ₹1.12 crore in unaccounted cash during the searches.
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