After raids on the Balaji Group, which allegedly transferred Rs 1,500 crore belonging to former Jharkhand Chief Minister Madhu Koda to foreign countries, several other hawala (illegal money transfer) operators in Zaveri Bazaar are under the Income Tax (I-T) department’s scanner.
The Balaji Group operated out of Zaveri Bazaar.
There are 25 firms located in the vicinity of Balaji Group’s office. I-T officials say most of these are allegedly into laundering of unaccounted for money and undertake hawalatransactions for their customers.
The total annual turnover of these operators together, according to authorities, is a whopping Rs 2,500 crore to Rs 3,000 crore.
“It is a constant fight between law enforcers and law breakers,” said Shishir Jha, spokesperson of Central Board of Direct Taxes (CBDT), which governs the IT department.
“We keep taking action against such hawala operators. They are also into general businesses. When illegal wealth is generated, people use it (hawala) to route the same.”
Hawala operators are under the scanner after the I-T department claimed to have found that Balaji Group alone had a turnover of Rs 1,500 crore in the last two years.
“We have started collating information about other hawala operators. The volume of unaccounted for cash in this buzzing street is too high,” said an I-T officer from Mumbai requesting anonymity, as he is not authorised to speak to the media.
An I-T officer said hawala operators run their businesses out of small, 100-sq-ft offices. They also form many companies, which are into varied businesses like bullion and diamond trade, real estate, and foreign exchange.
“However, most of these companies are formed to cover up their illegal business,” the officer said.
To launder unaccounted for money, the companies accept cash from their customers and give back bank cheques for the same amount by creating fake bills.
They charge a commission of 10 to 15 per cent of the amount.
Sometimes, the real estate branch of these groups would show a big land deal brokered by their customer and the payment is shown as commission for the same.
The operators even deduct tax at source (TDS) so that the cheque payments seem accounted for.
“In some cases, the customers are made shareholders of or directors in the company and heavy profit is given through cheque which is actually in lieu of the cash,” said another officer involved in investigating these firms.
He added that the operators do not keep their companies floating for more than two years.
“They keep forming new companies so that they don’t come under our scrutiny,” he said adding that to illegally transfer the money out of the city or country the operators charge 2 to 3 per cent commission.