Taxes on Rs 700 crore worth of income not paid: IT department on DB raid

The department noted that many employees were listed as shareholders and directors for 'booking bogus expenses and routing of funds'

e4m by exchange4media Staff
Updated: Jul 26, 2021 11:21 AM

The Income Tax Department has released a press statement on the raids conducted across India at various Dainik Bhaskar offices. Without naming the group, the department stated that the raids were carried out under section 132 of the Income - tax Act, 1961. 

"Income Tax Department carried out a search operation under section 132 of the Income - tax Act, 1961 on 22.07.2021 on a prominent business group, which is involved in businesses in various sectors, including Media, Power, Textiles and Real Estate, with a group turnover of more than Rs. 6,000 crore per annum. 20 residential and 12 business premises spread over 9 cities including Mumbai, Delhi, Bhopal, Indore, Noida and Ahmedabad have been covered," it noted. 

The department said in the statement that the Group had been operating several companies in the names of their employees, which have been used for "booking bogus expenses and routing of funds." 

Many of these employees, whose names were used as shareholders and directors, were oblivious to the practice and had submitted their Aadhaar card and digital signature to the group "in good faith," said the department. 

It also noted that many were relatives, who had willingly signed the papers but were not aware of the group's business activities. 

"Such companies have been used for multiple purposes namely; booking bogus expenses and siphoning off the profits from listed companies, routing of funds so siphoned into their closely held companies to make investments, making of circular transactions etc. For example, the nature of such bogus expenditures booked, vary from supply of man power, transport, logistics and civil works and fictitious trade payables.

"The quantum of income escapement using this modus operandi, detected so far, amounts to Rs. 700 crore spread over a period of 6 years. However, the quantum may be more as the group has used multiple layers and investigations are being carried out to unravel the entire money trail. Furthermore, these involve violation of S.2(76)(vi) of Companies Act and Clause 49 of Listing Agreement prescribed by SEBI for listed companies. Application of Benami Transaction Prohibition Act will also be examined," read the press note.

The department said that the group had practised cyclical trading and transfer of funds amounting to Rs 2,200 crore among group companies in unrelated businesses. 

The full text of the letter can be found here.

On July 22, the IT Department had conducted raids across Dainik Bhaskar offices in Mumbai, Delhi, Bhopal, Indore, Noida and Ahmedabad in connection with tax evasion. The move invited censure from the political quarters and was termed as an effort to silence the media.

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