IT Department conducts raids on Mumbai-based gutkha manufacturer


The Income Tax Department has carried out search and survey operations in the premises of a Mumbai-based group involved in manufacturing tobacco-based product including pan masala and gutkha.

The raids on the group, which is also involved in the hospitality sector, were carried out during February 8-13.

The search and seizure action has led to detection of foreign assets lying with a company registered in tax haven British Virgin Islands (BVI) with an office in Dubai and controlled and managed by the group’s Chairman. The net worth of the BVI company is Rs 830 crore created by siphoning of funds from India, said an official statement.

This fund has been round tripped to India in the form of share premium amounting to Rs 638 crore in the flagship companies of the group. During the search action, various digital evidences and forensic analysis have yielded email communications, establishing control and management of the company with the promoter of the group searched.

One of the employees, who was also a shareholder in the BVI company, was identified and cross-examined with the promoter. It has been accepted by the parties involved that the employee was not aware about being a shareholder in the company and he had signed papers on the instruction of the main promoter.

Further, it has been found that the group has availed bogus deduction under Section 80IC of the Income Tax Act, 1961 to an extent of Rs 398 crore. The group set up two entities in Himachal Pradesh and the group was found to indulge in sham transactions in order to claim the aforesaid false deduction.

Further, unaccounted production of pan masala of an amount of Rs 247 crore at two factory premises of the group has also been detected during the search.

It has also been seen that the assessee has falsely claimed deduction u/s 10AA of the Income Tax Act, 1961 of an amount of Rs 63 crore in the Gandhi Dham unit.

During the search action, cash of Rs 13 lakh has been seized and jewellery amounting to Rs 7 crore was found and has been put under prohibitory orders. Prohibitory orders have also been placed on 16 lockers and in 11 premises. Thus, the search action has led to detection of unaccounted transactions of around Rs 1,500 crore, so far.