Cash Sales Of Rs 1,000 Crore Found In Raids On Electrical Items Manufacturer

The Income Tax department initiated search and seizure operations in the case of a group engaged in the manufacturing of wires, cables and other electrical items on December 22, 2023, the agency said in a statement on Wednesday.

Some of the authorised distributors of the group were also covered in the search. The search action was conducted at more than 50 premises located in Mumbai, Pune, Aurangabad, Nasik, Daman, Halol and Delhi, the statement added.

During the search operation, a large number of incriminating evidence in the form of documents and digital data have been found and seized. This evidence reveals the modus operandi of tax evasion adopted by the group in connivance with some of the authorised distributors.

Preliminary analysis suggests that the flagship company indulged in unaccounted cash sales, cash payments for unaccounted purchases, non-genuine transport and sub-contracting expenses, etc for suppression of its taxable income, it said.

Credible evidence recovered during the search has established that the flagship company has made unaccounted cash sales of around Rs 1,000 crore which are not recorded in the books of accounts.

Evidences of unaccounted cash payments of more than Rs. 400 crore made by a distributor, on behalf of the flagship company towards purchases of raw materials, have also been seized.

Further, non-genuine expenses like sub-contracting expenses, purchases and transport expenses, etc aggregating to about Rs 100 crore have also been identified in the seized evidence from the premises of the flagship company, as mentioned in the official statement.

The search action also resulted in the determination of unexplained transactions undertaken by the distributor for issuing bills without a genuine supply of goods, whereas such goods have been sold in the open market in cash.

Thus, the authorised distributor facilitated certain parties to inflate their purchase accounts, which aggregated to about Rs 500 crore. This distributor exclusively sells products of the flagship company.

During the search operation, unaccounted cash exceeding Rs 4 crore has been seized and more than 25 bank lockers have been put on restraint. Further investigations are in progress.

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