I-T searches 44 locations linked to tainted BMC contractors

The Income Tax Department has conducted search and survey operations at 44 locations connected to civil contractors working with the Brihanmumbai Municipal Corporation (BMC), based on intelligence inputs that the contractors were involved in money laundering and tax evasion to the tune of ₹735 crore.

There were reports that certain contractors had shown entries in the form of loans from entry providers and inflated expenses in the books of accounts to suppress income, senior officials said. Income Tax officials said they could not reveal the assessees’ names under the provisions of the Income Tax Act, 1961.

“The drive also led to detection of use of bogus companies floated by entry providers by giving entries to businesses in the form of loans or bills for expenses, etc.In the case of the entry providers, a systematic modus operandi of bank fraud and forgery has been detected whereby promoters have invested in immovable properties and shares of group companies by siphoning off bank loans,” said an official.

The surveys were carried out at seven locations in the suburbs and South Mumbai and searches at 37 locations across Mumbai and Surat on November 6. In the case of Mumbai-based contractors, several instances of inflation of expenses by bogus purchases or sub-contracts and taking of loans from entry providers have been identified. “So far, detection on account of the issue is to the tune of ₹735 crore and the extent of accommodation entries is being quantified. Investigations are in progress, including identification of the remaining beneficiaries,” said an I-T official.

This is not the first time municipal contractors have come under the tax scanner. But while drives have been carried out, the latest operation is a result of the increased exposure of infrastructure companies to the troubled IL&FS. “We have not received any directive from the government. We are looking into the matter. We cannot confirm who these contractors are,” said a senior BMC official.

Ravi Raja, leader of the Opposition in the BMC said, “We have heard that some raids have been conducted. The I-T (department) should send the details to the BMC based on which the BMC should undertake an internal enquiry. Meanwhile, no action has been taken against contractors for shoddy roads found within the defect liability period. Also, in the latest contracts for road construction, all contractors have quoted above estimates. This is a racket.”

Yashwant Jadhav, standing committee chairman said, “We had only heard of the raids but so far, we do not know if our engineers are involved.”

BMC commissioner Praveen Pardeshi was not available for comment.

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Printable version | May 11, 2021 12:51:38 AM |

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