Income tax department conducted a search operation in Tamil Nadu

New Delhi: In the case of IT SEZ developer, Income Tax Department conducted a search operation on 27/11/2020 against its former director and a major stainless steel supplier in Chennai. The search operation was conducted in 16 campuses located in Chennai, Mumbai, Hyderabad and Cuddalore.

The undisclosed assets of about Rs 100 crore accumulated by the former director and his family members in the last 3 years have been disclosed along with the evidence. In this search, it has been revealed that the IT SEZ developer had claimed to have incurred the expenditure of fake work of about Rs 160 crore in an under construction project. The unit also claimed capital expenditure of around Rs 30 crore due to fake consultancy fees in an operational project and also claimed unreasonable interest expenses up to a limit of Rs 20 crore by the unit.

The search revealed some share purchase transactions related to the IT SEZ developer. The shares of this unit were sold by its former shareholders, a resident and a non-resident entity, which had made an investment of approximately Rs 2300 crore through a Mauritius intermediary in the financial year 2017-18 but with capital gains from this sale transaction. The disclosure was not made to the department.

Investigations are continuing to determine undisclosed capital gains in the hands of both shareholders. An issue related to cash payments involving other land transactions and compulsory convertible debentures is also under investigation.

The evidence found in the stainless-steel supplier’s premises revealed that the supplier group was operating three sets of sales: unaccounted, unaccounted and partially accounted. Unaccounted and partially sold amount more than 25 percent of each year’s total sales. Further, the assessee group has provided sale housing bills to various customers and received a commission of more than 10 percent on these transactions. While the quantum of unaccounted income is currently being determined, it is estimated to be around Rs 100 crore. The related group concerns include financing, money lending and real estate development. The unaccounted transactions conducted by these institutions and the unaccounted capital / debt communication in these institutions is about Rs 50 crore.

The search so far has resulted in undisclosed income of over Rs 450 crore. The case is under further investigation.