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Over Rs 850 crore black money trail unearthed in tax raid on Asset Reconstruction Company in Mumbai

Over Rs 850 crore black money trail unearthed in tax raid on Asset Reconstruction Company in Mumbai.(Photo for Representation)

The Income Tax Department has unearthed undisclosed cash transactions to the tune of a whopping Rs 850 crore in a search and seizure operation on an Asset Reconstruction Company in Mumbai, according to information provided by the finance ministry on Wednesday.

The company was found to be maintaining a parallel set of accounts on Tally accounting software, in a pen drive, recovered from the custody of the trusted employees of the promoter. Unaccounted cash amounting to Rs 4 crore has been seized during the search operation, the official statement said.

Handwritten diaries have also been found during the search, containing detailed entries substantiating the deliberate act of layering of transactions by the promoter group through a network of middlemen. same. There is also evidence of routing of funds through offshore structures to acquire the assets.

Large volumes of documentary and digital evidence seized are being further analysed for detection of violations under the Income Tax and allied Acts.

ARCs involved in fraudulent practices

The Income Tax Department had carried out search and seizure operations on December 8 against four Asset Reconstruction Companies (ARCs) covering as many as 60 premises spread across Mumbai, Ahmedabad and Delhi, according to the official statement.

The search action has revealed that the ARCs had adopted various unfair and fraudulent trade practices in acquiring the Non-Performing Assets (NPA) from the lender banks. It has been found that an unholy nexus existed between the borrower groups and ARCs and in the process, a maze of shell / dummy concerns have been used. The amount at which the NPA has been acquired by the ARC has been found to be far less than the real value of the collateral securities covering the said asset/NPA.

The search found that the minimum cash payout made out by the ARCs to lender bank(s) for acquiring the stressed assets/NPAs have usually been using the funds of the borrower group. Such funds have been routed through several layers of dummy companies controlled by the borrower group or through hawala channels.

It has also been found that the ARCs have been following non-transparent methods in disposal of assets that were acquired by them from the banks. More often than not, the underlying assets had been re-acquired by the same borrower group, albeit at a fraction of their real values. The ARCs are found to have concealed the profits on disposal of the underlying assets by diverting the actual profit to their related concerns, under the garb of consultancy receipts or unsecured loans/investments. Through this method, the ARCs have not only evaded the payment of due taxes but also deprived the lender bank(s) of their share of actual profits.

Further investigations are still in progress.

Also read:  Over Rs 150 crore in black money unearthed in tax raid on 4 Bengaluru Credit C-op Societies