Income Tax Raid Reveals ₹350 Crore in Unaccounted Funds in Delhi and Punjab

Income Tax Department's Search Operations in Delhi, Punjab, and West Bengal

On September 18, 2021, the Income Tax Department conducted a significant search and seizure operation targeting a prominent Indian business group engaged in the manufacturing of textiles and filament yarn, with corporate offices located in Delhi, Punjab, and Kolkata.

Key Findings from the Search Operation

During this extensive operation, the following items were recovered:

• Incriminating documents
• Loose sheets and diaries
• Digital evidence

These materials suggest the group's involvement in several illicit financial activities, including:

• Routing unaccounted funds back into its Indian operations.
• Maintaining foreign bank accounts that were not reported to the department.

Substantial evidence was uncovered regarding:

• Off-the-books transactions
• Cash transactions related to land deals
• Bogus expenses recorded in accounting books
• Unaccounted cash expenditures
• Accommodation entries sourced from entry operators

Financial Irregularities and Unaccounted Funds

The investigation revealed that the group has approximately ₹350 crore in unaccounted foreign funds. These funds have been funneled back into the business through shell companies situated in tax havens. The detected modus operandi involved:

• Investments by foreign entities controlled by the group in Foreign Currency Convertible Bonds issued by its primary concern.
• Subsequent conversion into company shares under the pretense of defaulting on payments.
• Payment of management fees to foreign companies and trusts for handling the unaccounted funds.

Despite the legal requirement to disclose foreign assets, as set forth in Schedule FA of the Income Tax Returns, the group failed to report these holdings to the Department.

Additionally, detailed records pertaining to unexplained personal expenditures in cash were uncovered at one of the company’s main offices. Investigators have established evidence indicating that around ₹100 crore was generated through the manipulation of company expenses and cash transactions related to land deals.