The Income Tax Department conducted a search and
seizure operation on 06.08.2019 in the case of one of the major producers of
beer and IMFL in Tamil Nadu. The search action was launched in the early hours
of Tuesday at 55 premises in various places in Tamil Nadu including Chennai,
Coimbatore, Thanjavur, etc and also in Kerala, Andhra Pradesh and Goa. The
premises included residences of the promoters, key employees and some of the
suppliers of materials.
Search action based on intelligence
gathered over several months
The search action was based on intelligence gathered
over several months that the business group was indulging in large scale tax
evasion by inflating its expenditure on materials used in its production
processes. During the search action, the search teams found telltale evidence
of the modus operandi of the group. The modus operandi involved over-invoicing
of purchase of raw materials and bottles which constituted a major portion of
the cost of production. The suppliers received payment at the inflated value by
cheque or RTGS, but paid back the excess value in cash to key confidante
employees of the group. The search teams gathered evidence of such
over-invoicing and return of cash by suppliers. Such inflation by over
invoicing amounted to suppression of taxable income of almost Rs 400
crore over a period of six years.
Search unearthed tax evasion by some in
The search also resulted in unearthing of evidence of
similar tax evasion by another leading business group in the same liquor
industry. Consequently, the Department launched search operation in the case of
the second group also on 09.08.2019. About seven premises of this group at
Chennai and Karaikal were covered in the second phase of the search operation.
The search is still in progress and the suppression of taxable income detected
in this group has been estimated to be about Rs 300 crore.
Based on a tip off during the search action, the tax
officers tracked down employees moving with unaccounted cash and intercepted
them and recovered Rs 4.5 crore cash from the car in which they had concealed
it. The search action has thus far resulted in detection of undisclosed income
of Rs 700 crore which had not been disclosed for taxation.