The Income Tax department has detected over ₹ 700 crore undisclosed income in a search and seizure operations from two liquor manufacturing groups in Tamil Nadu.
The search action was launched on August 6 in one of the major producers of beer and Indian Made Foreign Liquor at various locations across Tamil Nadu and other states. It includes residences of the promoters, key employees and some of the suppliers of materials.
The search was conducted on the intelligence gathered over several months that the business group was indulging in large scale tax evasion by inflating its expenditure on materials used in its production processes, says a PIB release.
The modus operandi involved in the over-invoicing of raw materials purchase and bottles which constituted a major portion of the cost of production. The suppliers received payment at the inflated value by cheque or RTGS but paid back the excess value in cash to key confidante employees of the group.
The search teams gathered evidence of such over-invoicing and return of cash by suppliers. Such inflation by over-invoicing amounted to suppression of taxable income of almost ₹ 400 crore over a period of six years.
The search also resulted in the unearthing of evidence of similar tax evasion by another leading business group in the same liquor industry. The IT department launched a search operation in this case on August 9.
About seven premises of this group at Chennai and Karaikal were covered in the second phase of the search operation. The search is still in progress and the suppression of taxable income detected in this group has been estimated to be about ₹ 300 crore.
Based on a tip-off during the search action, the tax authorities tracked down employees moving with unaccounted cash and recovered ₹ 4.5 crore cash from the car in which they had concealed it.
The search action resulted in detection of undisclosed income of ₹ 700 crore which had not been disclosed for taxation, the release said.