The income tax (I-T) department’s survey on onion traders on Friday was not limited to checking hoarding, but also to find out unaccounted for income diverted to obtain the onions in bulk.
I-T authorities suspect that large amounts of unaccounted for cash has been diverted to purchase onions, as they have been giving good returns these days. The department had conducted surveys and searches in various parts of the country including Maharashtra. The Mumbai unit of the investigation wing of the department had conducted surveys on three commission agents at the Agricultural Produce Market Committee (APMC) in Vashi.
Besides APMC, I-T surveys were also conducted on commission agents and onion wholesalers at Lasalgaon (in Nashik district), Pune, Akola and Nagpur. “The unaccounted for cash concealed remains the same and doesn’t increase,” a senior I-T officer said requesting anonymity, as he is not authorised to speak to the media.
He added that the department suspected such unaccounted for cash had been invested in onions because of the prevailing high prices. “It will take time to find out the total amount of unaccounted for cash invested in onions, as many traders do not maintain proper account books,” the officer said. In the absence of account books, the department would initially treat the income of traders as unaccounted for and start investigations by checking their returns that would show their income on record.
Another modus operandi being investigated by the department is conversion of unaccounted for income into legitimate income using high onion prices. Authorities are checking records of onion wholesalers and commission agents to find out if they bought onions when prices were comparatively low and showed purchases in records at a later date when prices went up.
“This way they could show onion purchases at a higher price even though they were bought earlier,” the officer said adding that using this modus operandi, the unaccounted for money would be adjusted with the differentiated cost (difference between the actual price at which onions were purchased and the high price shown in records).
In suspicious cases, the department will check all details of deals like bills of purchase, financial records of those from whom onions were purchased and records of those to whom it was sold. Besides, bank accounts of those suspected to have unaccounted for income would also be scrutinised. Meanwhile, the Mumbai I-T team submitted an initial report on the survey to the Central Board of Direct Taxes in New Delhi on Saturday. Officers said after receiving reports from all over the country, the CBDT will decide further course of action.