Income Tax Department's Major Search Operation in West Bengal Reveals ₹700 Crore Fraud

Income Tax Department's Search Operation in West Bengal

On 17 September 2021, the Income Tax Department conducted a significant search and seizure operation targeting a well-known group involved in the manufacturing of steel products. This extensive operation encompassed 25 locations, which included 8 residences, 9 offices, and 8 factories across various districts such as Kolkata, Durgapur, Asansol, Purulia, and other areas in West Bengal.

Key Findings During the Search

The operation yielded a substantial amount of incriminating evidence, including:

• A significant collection of documents and digital evidence indicating the group’s involvement in:
  • The generation of unaccounted income through cash sales that had not been reported.
  • Unrecorded cash expenditures.
  • Purchases from fictitious entities.
  • Under-reporting of actual production.
  • Cash transactions related to scrap materials.
  • Documentation concerning the purchase and sale of land.

Evidence also suggested that the unaccounted income was being utilized in various forms, such as unsecured loans and transactions involving shares of shell companies, which facilitated the layering of this income. Furthermore, a considerable number of property documents belonging to one group member were seized, indicating real estate holdings registered under different names. Collectively, the incriminating evidence linked to this manufacturing group amounts to over Rs. 700 crore. During the operation, unaccounted cash totaling Rs. 20 lakh was seized, with two lockers pending operation.

Involvement of an Accommodation Entry Provider

The search operation also identified an accommodation entry provider who had been supplying entries to the targeted group. In his clandestine office, a vast array of incriminating documents was discovered, detailing the provision of accommodation entries through various methods, such as:

• The sale of shares from shell companies.
• Unsecured loans sourced from these shell entities.
• Fabricated billing practices.

The financial activities associated with this entry operator have reportedly amassed several hundreds of crores of rupees. Additionally, evidence revealed the existence of over 200 companies/entities that managed more than 200 bank accounts from the operator's location. Preliminary examinations suggest that these entities and bank accounts functioned as conduits for routing unaccounted income to multiple beneficiaries.