IT department busts Rs 2000 cr tax evasion racket in Andhra, Telangana
The IT official did not name the persons associated with the infrastructure companies and the “prominent person,” whose close associates and ex-personal secretary are alleged to be involved in the tax evasion racket.Updated: Feb 13, 2020 22:37 IST
The Income Tax department on Thursday announced busting of a major tax evasion racket and the unearthing of unaccounted income of more than Rs 2000 crore during searches and seizures in the two Telugu states of Andhra Pradesh and Telangana.
Spokesperson of Central Board of Direct Taxes (CBDT) said the searches were conducted on three prominent infrastructure groups based in Andhra Pradesh and Telangana.
“Search operation was also carried out on close associates including expersonal secretary of a prominent person and incriminating evidence seized,” the statement from Surabhi Ahluwalia said.
The IT official did not name the persons associated with the infrastructure companies and the “prominent person,” whose close associates and ex-personal secretary are alleged to be involved in the tax evasion racket.
The IT department had conducted a series of searches at the residence and companies of Telugu Desam Party’s Kadapa district unit president R Srinivasulu Reddy, who owns an infrastructure company called R K Infra Private Limited, and the residences of P Srinivasa Rao, a senior official with the General Administration Department in Andhra government, who till recently served as the personal secretary of TDP president N Chandrababu Naidu.
Ahluwalia said the searches had been conducted at more than 40 premises in Hyderabad, Vijayawada, Kadapa, Visakhapatnam, Delhi and Pune since February 6 and the related investigations have led to busting of a major racket of tax evasion through bogus sub-contractors, over-invoicing and bogus billing, she said.
“Several incriminating documents and loose papers were found and seized during the search, apart from emails, WhatsApp messages and unexplained foreign transactions were unearthed during the search,” she said.
The search operations revealed that infrastructure companies had subcontracted work to several non-existent and bogus entities. Preliminary estimates suggest siphoning of more than Rs 2,000 crore through layered transactions with the last in the chain being small entities with turnover less than Rs 2 crore to avoid maintenance of books of accounts and tax audits etc.
“Such entities were either not found at their registered address or were found to be shell entities. Several such sub-contractors were controlled by the principal contractors with all their Income Tax Return filings and other compliances being done from the IP addresses of the main corporate office,” the official said.
FDI receipts of several crores of rupees by one of the infrastructure firms are suspected to be round-tripping of unaccounted funds.