New Delhi: The Income Tax department carried out raids on civil contractors who work for the Brihanmumbai Municipal Corporation (BMC) in Mumbai as well as Gujarat’s Surat, wherein it detected alleged irregularities to the tune of Rs 735 crore.
The Central Board of Direct Taxes (CBDT), the policy-making body for the tax department, said in a statement that the search and survey operation was started at 44 locations in Mumbai and Surat on November 6, on entry providers and beneficiaries who have been engaged in execution of civil contracts mainly in BMC.
The CBDT said, “There were reports that certain contractors had taken entries in the form of loans among others from entry providers and also inflated expenses in the books of accounts to suppress income.
The department stated that incriminating evidence collected during raids, carried out on November 6, clearly shows “large scale tax evasion and money laundering”.
So far, it said, detection on account of above-mentioned issues is to the tune of Rs 735 crore and extent of accommodation entries is being quantified.
The operation “also led to the detection of the use of bogus companies (floated by entry providers) for giving entries to businesses in the form of loans or bills for expenses, among others”.
“In the case of the entry providers, systematic modus operandi of bank fraud and forgery has been detected whereby the promoters have made investments in immovable properties and shares of group companies by siphoning off the bank loans,” it said.
In the case of the contractor groups, several instances about inflation of expenses by bogus purchases/sub-contracts and taking of loans from entry providers have been identified, the statement claimed.
As of now, the investigation is in the progress, including identification of the remaining beneficiaries.
(With agency inputs)