Dentsu IT raids enter third day as tax sleuths scour financial and server data

The Income Tax Department’s search operation at Dentsu India has entered its third day, with officials continuing to examine the advertising group’s financial records, technology infrastructure and data stored across servers, people familiar with the matter said.

The searches, which began on Tuesday morning, are expected to continue through Thursday, although the exact timing of their conclusion will depend on the examination of records and data by the tax authorities.

Around 20 Income Tax officials entered Dentsu’s Mumbai office on Tuesday, according to people familiar with the operation. The officials remained at the company’s Worli premises until around midnight, intensifying scrutiny of documents, electronic devices and financial information.

The searches are part of a wider multi-city operation involving Dentsu-linked premises. The Income Tax Department has been examining offices associated with the Japanese advertising and media group in Mumbai, Delhi, Bengaluru and Pune.

Financial and technology trail under scrutiny

The focus of the operation has increasingly moved beyond physical documents, with sleuths examining financial records, technology data and information stored on company servers, people familiar with the developments said.

Examining servers and electronic records could give tax authorities access to a wider trail of transactions, communications and accounting information than physical records alone provide.

Officials have also been examining employee devices as part of the operation. Personal phones and laptops were taken for examination, while movement within the Mumbai office was restricted.

The emphasis on both financial and digital records could be significant because the tax department's inquiry appears to involve transactions and arrangements within Dentsu's India operations possibly linked to royalty pivots. However, the department has not publicly disclosed the specific transactions under investigation or established any tax liability arising from the current searches.

Employees released at 6 pm after phones were confiscated

The operation also disrupted normal functioning at Dentsu’s Mumbai office.

Employees were allowed to leave around 6 pm on Tuesday after their mobile phones were handed over to them, according to people familiar with the matter. Income Tax officials subsequently continued their examination at the premises until around midnight.

The restrictions have added to anxiety among employees, particularly because they have received limited information about the scope of the operation.

Employees have now been asked to work from home, following intervention from Dentsu's APAC leadership. The company has not specified how long the work-from-home arrangement will remain in place.

The intervention from APAC is notable because India has emerged as an important growth market for Dentsu at a time when several other international markets have faced pressure.

The searches therefore come at a particularly sensitive point for the Japanese advertising group. Any prolonged disruption to its India operations could potentially affect client servicing, internal operations and employee confidence.

Dentsu India has not issued a detailed public explanation of the ongoing searches.

Why the digital data matters

The examination of servers and technology systems could become one of the more consequential aspects of the operation.

For a large advertising and media network, financial flows are spread across multiple entities, client accounts, vendors, technology platforms and group companies. Tax investigators examining electronic records can potentially reconstruct transaction trails and compare them with accounting and statutory records.

The Income Tax Department's current action is understood to involve scrutiny of transactions connected with Dentsu's Indian operations. 

A fourth major regulatory episode

The latest Income Tax action also comes against a backdrop of repeated regulatory scrutiny involving Dentsu India.

The Income Tax Department had searched Dentsu's Mumbai office in 2022 in connection with an investigation involving one of its clients. In December 2024, the Enforcement Directorate searched premises linked to Dentsu India as part of a money-laundering investigation involving an alleged ₹137-crore embezzlement case. 

Dentsu had previously said that the matter involved alleged fraudulent activity by third parties and former employees associated with a specific business unit.

Dentsu was also among the advertising companies scrutinised during the Competition Commission of India's wider investigation into competition practices in the advertising industry in 2025. Dentsu had filed a leniency plea in the CCI matter. 

There is, however, no established connection between those earlier matters and the current Income Tax search.

Search likely to conclude Thursday

For now, the immediate focus remains on what investigators find in Dentsu's financial and digital records.

With officials continuing to examine servers, technology data and financial documents, people familiar with the operation expect the searches to continue through Thursday, unless the department completes its examination earlier.

The prolonged presence of IT officials at the Mumbai and Delhi offices—stretching from Tuesday morning until midnight on the first day and continuing into the third day—suggests that the department's exercise is considerably broader than a brief document verification.

For Dentsu employees, the immediate consequence is a work-from-home arrangement and continued uncertainty. For the company, the larger question is whether the current search remains a tax investigation focused on specific transactions or eventually develops into a wider examination of its India operations and financial arrangements.