January 20, 2022

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Searches on UP perfume makers revealed huge tax evasion: I-T

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Searches on UP perfume makers revealed huge tax evasion: I-T
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Searches on UP perfume makers revealed huge tax evasion: I-T
Searches on UP perfume makers revealed huge tax evasion: I-T

NEW DELHI: Income tax searches on two perfume manufacturers in Uttar Pradesh have revealed large-scale tax evasion, under reporting of sales, stock manipulation and creation of offshore entities which have not been reported in their returns. In the case of the one group, unaccounted cash exceeding Rs 9.4 crore and unexplained jewellery of over Rs 2 crore have been seized.
The tax department had carried out search and seizure operations on December 31 at multiple premises of perfume traders in Kanpur and Kannauj, including Samajwadi Party MLC Pushpraj Jain alias Pampi and Fauzan Malik. Over 40 premises in UP, Maharashtra, Delhi, Tamil Nadu and Gujarat were covered during the searches.
In the case of the first group primarily based in Mumbai and UP, the search action revealed that it is involved in tax evasion by under-reporting sale of perfumes, stock manipulation, fudging books of account to shift profits from taxable unit to tax exempt unit, inflation of expenditure, the tax department said.
It said evidence found in the sales office and main office have revealed that the group makes 35% to 40% 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. Evidence of booking purchases from bogus parties amounting to about Rs 5 crore have also been unearthed.
The analysis of incriminating evidence indicated that unaccounted income generated is invested in various real estate projects in Mumbai, acquisition of properties both in India and in the United Arab Emirates. 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.
The department said it has found evidence substantiating that the promoters of the group have incorporated some offshore entities. However, such offshore entities have not been reported in their respective I-T returns.
“It has also been unearthed that one of the offshore entities of the group from the UAE has purportedly introduced illicit share capital of over Rs 16 crore in an Indian entity of the group, at exorbitant premium,” it said.
During the search on the second UP-based group, incriminating evidence substantiating unrecorded cash transactions of about Rs 10 crore have been found and seized. The group is not maintaining any stock register for its inventory. Further investigations are in progress, the tax department said.

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