New Delhi [India], July 24 (ANI): The government has said that searches by the Income Tax Department on a prominent business group has found "cyclical trading and transfer of funds among group companies engaged in unrelated businesses" and that companies have been operated "in names of employees which have been used for booking bogus expenses".
A Finance Ministry release said searches were conducted on July 22 under Section 132 of the Income Tax Act.
"During the search, it was found that they have been operating several companies in the names of their employees, which have been used for booking bogus expenses and routing of funds. During the search, several of the employees, whose names were used as shareholders and directors, have admitted that they were not aware of such companies and had given their Aadhaar card and digital signature to the employer in good faith," the release said.
It said some were found to be relatives, who had willingly and knowingly signed the papers but had no knowledge or control of the business activities of the companies, in which they were supposed to be directors and shareholders.
"Such companies have been used for multiple purposes namely; booking bogus expenses and siphoning off the profits from listed companies, routing of funds so siphoned into their closely held companies to make investments, making of circular transactions etc. The quantum of income escapement using this modus operandi, detected so far, amounts to Rs. 700 crore spread over a period of 6 years," the release said.
"However, the quantum may be more as the group has used multiple layers and investigations are being carried out to unravel the entire money trail," it added.
The release said that "cyclical trading and transfer of funds among group companies engaged in unrelated businesses to the tune of Rs 2,200 crore has been found".
"The enquiries have confirmed that these have been fictitious transactions without any actual movement or delivery of goods."
The release said that real estate entity of the group operating a mall had been sanctioned a term loan of Rs. 597 crore from a nationalised bank.
"Out of this, an amount of Rs. 408 crore has been diverted to a sister concern as loan at low-interest rate of one per cent. The listed media company does barter deals for advertisement revenues, whereby immovable properties are received in lieu of actual payments," it said.
It said 26 lockers have been found in the residential premises during searches and voluminous material found during the search operations is being examined.
The income tax held searches on 20 residential and 12 business premises spread over 9 cities including Mumbai, Delhi, Bhopal, Indore, Noida of the group involved in businesses in various sectors, including media, power, textiles and real estate, the release said. (ANI)