income tax
The Income Tax Department initiated search and seizure operations on November 16, 2021, targeting certain Indian companies and their associated entities, which are controlled by a neighboring country. These companies operate in sectors including chemicals, ball bearings, machinery parts, and injection molding machinery. The search encompassed approximately 20 locations across Mumbai, Ahmedabad, Gandhidham in Gujarat, and Delhi.
During the search, officials uncovered substantial incriminating digital evidence indicating significant unaccounted income generated by these companies. Investigations indicated that these entities are engaged in tax evasion by manipulating their accounting records. A detailed analysis revealed that these companies utilized a network of shell companies to facilitate fund transfers to a neighboring country, with an estimated Rs 20 crore transferred over the past two years via this method.
Further investigation brought to light that a Mumbai-based professional firm played a crucial role in establishing these shell companies. This firm provided fictitious directors for these entities, most of whom were identified as employees or drivers of the professional firm, or individuals lacking financial means. When questioned, these dummy directors confessed that they had no knowledge of the companies' activities and merely signed documents at the direction of key officials. The professional firm also assisted foreign nationals by providing domestic addresses for banking and regulatory purposes.
One company involved in chemical trading was discovered to be routing purchase claims through the Marshall Islands, recognized as a low-tax jurisdiction. Although this company acquired goods worth Rs 56 crore from a neighboring company, the transactions were recorded as if billed from the Marshall Islands. Payments for these acquisitions were directed to a bank account in the Marshall Islands, maintained in the neighboring country. Investigators also found that this Indian company claimed non-genuine purchase bills to lower its tax obligations and engaged in cash transactions for land purchases in India.
As a result of these operations, officials seized unaccounted cash totaling approximately Rs 66 lakh. Furthermore, bank accounts of several companies have been restrained, amounting to aggregate bank balances of around Rs 28 crore.
Investigations continue as the Income Tax Department seeks to uncover further evidence and details surrounding these companies and their operations.