Start-up accused of ₹400-crore fraud

Income Tax Department searches 23 locations of Pune/Thane-based group that is primarily engaged in the business of wholesale and retail of construction material

March 20, 2022 01:09 pm | Updated March 21, 2022 01:38 pm IST - NEW DELHI

File photo for representation

File photo for representation | Photo Credit: Twitter/@IncomeTaxIndia

NEW DELHI

The Income-Tax Department has accused a unicorn start-up group, having an annual turnover of over ₹6,000 crore, of showing bogus purchases, making huge unaccounted cash expenditures and obtaining accommodation entries, amounting to about ₹400 crore.

The group directors have disclosed an additional income of more than ₹224 crore in various assessment years, and offered to pay their due tax liability. During the probe, the agency also unearthed a complex “hawala” network involving some shell companies operating from Mumbai and Thane, which provided accommodation entries (bogus transactions) worth over ₹1,500 crore.

On March 9, the IT department conducted searches at 23 locations of the Pune/Thane-based group that is primarily engaged in the business of wholesale and retail of construction material. The premises were located in Maharashtra, Karnataka, Andhra Pradesh, Uttar Pradesh and Madhya Pradesh.

The agency gathered documentary proof showing that the group had booked bogus purchases, indulged in huge unaccounted cash expenditures, and arranged accommodation entries. It had also received huge foreign funding via the Mauritius route, by issuing shares at an exorbitantly high premium. Further inquiry into this aspect is under way.

According to the IT Department, the “hawala” network unearthed during the investigation involved the entities that existed only on paper and were created solely for the purpose of providing accommodation entries to various companies, to facilitate tax evasion and for evading detection of other financial irregularities.

During the searches, the agency has so far seized an unaccounted cash of ₹1 crore and jewellery worth ₹22 lakh.

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