Income Tax Department Uncovers Major Tax Evasion in Maharashtra Steel Sector

Income Tax Department Conducts Extensive Searches in Maharashtra

On August 3, 2022, the Income Tax Department undertook a significant search operation targeting two prominent groups involved in the manufacturing of steel TMT bars. This operation spanned over 30 locations across Jalna, Aurangabad, Nashik, and Mumbai.

Findings from the Search Operations

During the searches, a variety of incriminating evidence was uncovered and seized. Preliminary analyses of the evidence from both groups indicate substantial tax evasion activities, including:

• Inflated Expenditures: Engaging in artificial inflation of operational costs through fraudulent purchases from numerous entities.
• GST Frauds: The entities involved have also been implicated in fraudulent activities related to Goods and Services Tax (GST).
• Undeclared Inventory: Evidence of raw materials stock exceeding ₹120 crore that was not recorded in the official books of accounts has been identified.

Financial Manipulations

Further examination suggests that one of the groups has implemented a process of layering unreported income by means of fictitious unsecured loans and inflated share premiums obtained from shell companies based in Kolkata.

Locker Discoveries

Additionally, the search revealed a significant number of bank lockers associated with both groups, held in the names of the companies' employees at a Cooperative Bank. The search efforts were focused on over 30 lockers, including those in the Cooperative Bank, resulting in the seizure of substantial unaccounted cash and gold jewellery.

Seizures and Ongoing Investigations

Moreover, a clandestine room located on a farmhouse belonging to one of the groups was found to contain a significant amount of unaccounted cash.

To date, the search operation has led to the seizure of:

• Unaccounted Cash: ₹56 crore
• Bullion and Jewelry: Valued at ₹14 crore