Income Tax department busts inter-state tax theft worth Rs 700 crore

The Income Tax department raided 62 locations to bust a tax theft worth Rs 700 crore in Tamil Nadu. The searches were conducted on properties belonging to SNJ Group, which is involved in liquor manufacturing business with bases across Tamil Nadu, Kerala, Andhra Pradesh and Goa.

As many as 55 places were raided by the Income Tax department in Tamil Nadu, including Chennai, Coimbatore, Thanjavur, etc and also in Kerala, Andhra Pradesh and Goa. The premises included residences of the promoters, key employees and some of the suppliers of materials.

According to a release by the Central Board of Direct Taxation (CBDT), the search action was based on 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. During the search action, the search teams found telltale evidence of the modus operandi of the group.

“The modus operandi involved over-invoicing of purchase of raw materials 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 Rs 400 crore over a period of six years,” the release further read.

About seven premises of this group at Chennai and Karaikal were covered in the second phase of the search operation. Raids continued till last report came in and the suppression of taxable income detected in this group was estimated to be about Rs 300 crore.

Based on a tip off during the search action, the tax officers tracked down employees moving with unaccounted cash and intercepted them and recovered Rs 4.5 crore cash from the car in which they had concealed it. The search action has thus far resulted in detection of undisclosed income of Rs 700 crore, which had not been disclosed for taxation.