The Income Tax department detected alleged stock manipulation, fudging of account books and tax evasion worth crores of rupees after it recently raided two Uttar Pradesh-based perfume manufacturing and real estate groups including that of Samajwadi Party MLC Pushpraj alias Pampi Jain.
The searches were carried out on December 31 at over 40 premises in Maharashtra, Delhi, Tamil Nadu, Gujarat and at some places in Uttar Pradesh, including Kannauj where Jain resides.
While a statement issued by the Central Board of Direct Taxes (CBDT), the policy-making body for the tax department, did not name any entity, sources said they were linked to Jain and another perfumer Fauzan Malik.
In the case of Jain, the CBDT said it was found that the group was "involved in tax evasion by under-reporting sales of perfumes, stock manipulation, fudging books of account 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 makes 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," it claimed.
The Samajwadi Party, on the day of the raids, had said that the I-T action was an "open misuse of central agencies by a scared BJP" ahead of the upcoming Uttar Pradesh Assembly polls.
SP president Akhilesh Yadav had recently launched a perfume called 'Samajwadi ittra' prepared by Jain in the run-up to the elections.
Countering these claims, Union Finance Minister Nirmala Sitharaman had said that the agencies were undertaking the action after they got "actionable intelligence." In its statement, the CBDT said that "evidence" of booking purchases from bogus parties to the extent of about Rs 5 crore have also been unearthed.
The analysis of the "incriminating" evidence indicates that "unaccounted" income so generated is invested in various real estate projects in Mumbai, acquisition of properties both in India and the United Arab Emirates (UAE), it said.
"It has also been detected that the group has evaded tax of 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," it added.
The CBDT claimed that the promoters of the group have incorporated some offshore entities.
"However, such offshore entities have not been reported in their respective income tax returns.
"The evidences recovered during the search reveal that the offshore entities are run and managed by the Indian promoters. Two of such offshore entities have also been found to own one villa each in the UAE," it said.
The statement said 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 has also obtained a further sum of Rs 19 crore in the form of illicit share capital from certain Kolkata-based shell entities," it said.
The CBDT said a shareholder director 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.
In the case of the second group, the statement said, "incriminating evidences substantiating unrecorded cash transactions of about Rs 10 crore have been seized." "It is also gathered that the group is not maintaining any stock register for its inventory.
"So far, unaccounted cash exceeding Rs 9.40 crore and unexplained jewellery of more than Rs 2 crore have been seized," it said, adding that several bank lockers have been placed under restraint and are yet to be operated.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
