Income Tax Department officials raided the offices and residences of several big-time granite quarry owners in the State on Tuesday and unearthed evidence which, they said, could point to possible large-scale evasion of Central excise, sales, and income tax.
The raids were ordered on the suspicion that some quarry owners, among other things, maintained ‘parallel or falsified books of account’ to fox tax enforcers.
Sleuths of the department said that tax evaders often maintained a ‘true book,’ which kept an accurate record of their transactions, and another falsified one to be submitted for tax assessment.
The department would also investigate whether these quarry owners indulged in ‘out-of-the-book transactions,’ a method of operation wherein fraudulent businessmen sold their goods without reflecting the transaction in their account books to avoid paying tax.
Earlier, the department’s intelligence wing had reported that certain quarry owners could be underreporting their production and manipulating sales receipts, particularly those relating to transactions with builders, to pay a lesser amount than they should as tax.
It was also possible that they had exaggerated their business expenses (the overhead cost of running mechanised quarries that employed hundreds of manual labourers and drew heavily on power) to evade tax.
One method of tax evasion was to inflate labour charges, submit falsified salary receipts, show personal expenses as business expenses, and make relatives ‘draw’ high salaries from the firm ‘just on paper’ to understate profits.
The sleuths raided the houses of the businessmen to check whether they had hoarded unaccounted wealth as ‘tangible objects’ such as jewellery art or expensive interior décor.
They would also investigate whether the crusher units used imported machinery and, if so, whether they had over-invoiced the price of the equipment to exaggerate their establishment cost to get tax concessions. Officials said it would take at least a month for the department to quantify the methods and extent of the suspected tax evasion by these quarry owners.