The Income Tax Department carried out search and seizure operations on some Indian companies and their associate concerns, controlled by a “neighbouring country” in which Rs 66 lakh in hard cash has been seized and a sum of Rs 28 crore in bank deposits has been sealed as it was found to be unaccounted income, according to information provided by the finance ministry. 

The search action, carried out on Nov 16, covered 20 premises spread over Mumbai, Ahmedabad and Gandhidham in Gujarat and also in Delhi.

These companies are engaged in the business of chemicals, ball bearings, machinery parts, and injection moulding machinery.

The Income Tax Department has not disclosed the name of the neighbouring country involved.

A large amount of incriminating evidence in the form of digital data showing earning of huge unaccounted income by these companies has been found and seized.

It has been found that these companies are indulging in tax evasion through manipulation of books of accounts. The analysis of evidence has revealed that these firms have been transferring funds by using a network of shell companies to a neighbouring country. An estimated amount of Rs 20 crore was transferred in the last two  years through this modus operandi.

Investigations have revealed that a Mumbai-based professional firm not only assisted in the formation of these shell companies but also provided dummy directors to these shell companies. Investigations have also shown that these dummy directors were either the employees/drivers of the professional firm or they were persons of no means.

On questioning, they admitted that they were not aware of the activities of these companies and that they had been signing on documents as per the instructions of the key functionaries. The professional firm is also instrumental in assisting the foreign by providing its addresses for banking and regulatory requirements.

One of such companies trading in chemicals was found to be routing the claim of purchases through Marshall Island, a low tax jurisdiction.

The company actually purchased items worth Rs. 56 crore from a neighbouring company but the same has been billed from Marshall Island.

The payment for such purchases has been made into the bank account of the Marshall Island-based company which is held in the neighbouring country. It was further unearthed during the search that this Indian company was also involved in taking non-genuine purchase bills to reduce its tax liability and also paid unaccounted cash for purchase of land in India.

Further investigations are still in progress.