₹264 cr TDS fraud: ED seeks information from UAE to trace proceeds diverted to Dubai firms

ED seeks UAE's help in investigating ₹264 crore TDS refund fraud. Accused diverted funds through shell firms to Dubai, some via hawala. Assets worth ₹182 crore seized/attached.

MUMBAI: The Enforcement Directorate (ED) has approached the United Arab Emirates seeking certain details about a few Dubai-based firms the agency is investigating for an alleged fraudulent withdrawal of Tax Deducted at Source (TDS) refunds worth nearly ₹264 crore from the Income Tax (I-T) department. Agency sources said that some of the proceeds of crime (PoC) had allegedly been diverted via shell firms.

HT Image

The ED sent a Letter of Request to UAE authorities for assistance through legal channels. India and UAE had signed an agreement in October 1999 for mutual legal assistance in criminal matters. The assistance from the West Asian country in the case will strengthen the ED’s probe, sources said.

From May to August 2021, one of the accused, former I-T official Tanaji Adhikari, in connivance with a few other accused persons, had allegedly transferred ₹55.40 crore from the bank account of a co-accused into the accounts of three shell firms for eventually siphoning them outside India, the ED’s investigation has revealed. Some of the diverted funds were later allegedly routed to a few Dubai-based firms set up by some of the accused persons. A part of the PoC was allegedly also sent to Dubai through hawala channels by accused persons, sources said.

The ED’s probe is based on a January 2022 First Information Report filed by the Central Bureau of Investigation (CBI) against Adhikari and other accused of allegedly defrauding the I-T Department by illegally generating and issuing 12 TDS refunds amounting to ₹263.95 crore between November 15, 2019, and November 4, 2020. The agency filed a chargesheet against Adhikari and 10 others on September 11, 2023, which was subsequently acknowledged by a special Mumbai court dealing with cases under the Prevention of Money Laundering Act (PMLA).

The ED had last week provisionally attached movable and immovable assets worth ₹14.02 crore in the case belonging to a few accused persons and suspects. The attached assets comprise a flat in Malabar Hill, land parcels in Lonavala and Khandala, bank balances, insurance policies, and fixed deposits, estimated to be worth ₹14.02 crore. This action was taken under the provisions of the PMLA. Additionally, the agency attached ₹68.89 lakh from a firm’s bank account belonging to a suspect and insurance policies of two other accused persons.

Besides these, the ED also provisionally attached voluntarily repatriated proceeds of crime amounting to ₹1.7 crore through foreign inward remittances, and proceeds surrendered by relatives, friends, and associates of several accused persons. To date, the ED has seized/attached assets worth approximately ₹182 crore in this case.