About two months after a criminal case filed by Reebok India against two of its former employees over a scam allegedly involving Rs 870 crore, the Income Tax department has found that it may not be a case of corporate fraud as made out and could involve tax evasion to the tune of Rs 140 crore.

The department, in its probe till now, has found that there do not exist signs of a clandestine “corporate layering” or veiled laundering in the finances of the company but the case qualifies under the category of manipulation and mis-representation of “discounts” offered by the firm to its dealers and manipulation of books of accounts, sources said.

The I-T is now checking the account books and financial documents of a number of select Reebok dealers in India, to whom it has begun issuing notices.

The much publicised case, where the FIR was filed in late May this year, is being probed by two other agencies, the Serious Fraud Investigations Office (SFIO), a department under the Corporate Affairs Ministry, and the Economic Offences Wing (EOW) of the Gurgaon police.

In the criminal complaint filed at the EOW, Reebok India had alleged that its former Managing Director, Mr Subhinder Singh Prem, and Chief Operating Officer, Mr Vishnu Bhagat, were involved in an Rs 870-crore fraud by indulging in “criminal conspiracy” and “fraudulent” practises over a period of time.

The I-T department, however, has not issued a clean chit to anyone at present.

“The case could have ramifications of tax evasion of close to Rs 140 crore or so. The probe does not show that it can be called a big corporate fraud as it was touted to be,” top I-T sources said.

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