The Income Tax Department has carried out search and seizure operations against two groups engaged in the business of perfume manufacturing and real estate, covering over 40 premises in Uttar Pradesh, Maharashtra, Delhi, Tamil Nadu and Gujarat in connection with the matter.
The first group is primarily based out of Mumbai and Uttar Pradesh. The search operations revealed that the group is found to be involved in tax evasion by under reporting sales of perfumes, stock manipulation, fudging books of accounts to shift profits from taxable unit to tax exempt unit, inflation of expenditure, etc.
Evidences found in the sales office and main office have revealed that the group carries out 35-40 per cent of its retail sales in cash by ‘kucha’ bills and these cash receipts are not recorded in the regular books of account, running into crores of rupees. Evidence of booking purchases from bogus parties to the extent of about Rs 5 crore has also been unearthed.
The analysis of incriminating evidence indicates that the unaccounted income generated is invested in various real estate projects in Mumbai, and acquisition of properties both in India and the UAE. It has also been detected that the group evaded tax amounting to Rs 10 crore on conversion of the stock-in-trade to capital as corresponding income has not been declared.
The group has also not declared income amounting to Rs 45 crore on the benefits paid to retiring partners. Evidence has been found which substantiate that the promoters of the group had incorporated some offshore entities. However, such offshore entities have not been reported in their respective I-Tax Returns.
The evidences collected during the search revealed that the offshore entities were run and managed by Indian promoters. Two of such offshore entities have also been found to own one villa each in the UAE.
It has also been unearthed that one of the offshore entities of the group from the UAE purportedly introduced illicit share capital of over Rs 16 crore in an Indian entity of the group at an exorbitant premium. This recipient group entity also obtained a further sum of Rs 19 crore in the form of illicit share capital from certain Kolkata-based shell entities.
One of the shareholder directors of these shell entities admitted on oath that he was a dummy director and invested in share capital of the group company at the instance of the promoters of the group.
During the course of search action on another UP-based group, incriminating evidences substantiating unrecorded cash transactions of about Rs 10 crore have been found and seized. It is also gathered that the group did not maintain any stock register for its inventory.