The Income Tax Department has conducted searches on November 27 for an IT SEZ developer, its former director and a prominent stainless steel supplier in Chennai. The search operation was carried out at 16 locations located in Chennai, Mumbai, Hyderabad and Cuddalore.
Evidence unearthed includes unaccounted for assets worth ₹100 million rupees, accumulated by the former director and his family members in the last three years.
The search further discovered that IT SEZ developer claimed bogus work-in-progress expenses of approximately ₹160 crore on a project under construction. The entity had also claimed capital expenditures of around ₹Rs 30 million on account of bogus consulting fees on an operational project and inadmissible interest expense to the extent of ₹The entity also claimed 20 crore.
The raids that were carried out also revealed certain share purchase transactions related to the developer of IT SEZ. The shares of this entity were sold by its former shareholders, a resident and a non-resident entity, who channeled their investment through an intermediary in Mauritius, for approximately ₹Rs 2,300 crore in fiscal year 2017-18, but the capital gains from this sale transaction were not disclosed to the department.
Ongoing investigation
An investigation is underway to determine the undisclosed capital gains held by both shareholders. Other land transactions, involving cash payments and an issue related to mandatory convertible bonds, are also being examined.
Evidence found at the stainless steel supplier’s facilities revealed that the supplier group has been making three sets of sales: posted, unaccounted for, and partially posted.
Unaccounted for and partially posted sales amount to more than 25% of total sales each year.
In addition, the group of evaluators has provided sales hosting invoices to several clients and received a commission of more than 10% on these transactions.
While the quantification of unaccounted-for income is currently carried out, it is estimated at around ₹100 crore.
The appraiser group’s related concerns are related to financing, money lending and real estate development. The unaccounted for transactions carried out by these entities and the infusion of capital / unaccounted loans at these entities is estimated to be around ₹50 crore.
Searches, so far, have resulted in the detection of undisclosed revenue of more than ₹450 crore.
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