The Income Tax Department on Wednesday conducted raids against three "prominent" businessmen based in Srinagar and Kupwara in Jammu and Kashmir on charges of tax evasion linked to the cross-border trade with Pakistan, which was suspended by India last year, officials said.
"These operations have led to detection of a huge amount of undisclosed income, seizure of unaccounted assets and incriminating evidence and involvement in benami transactions by these three groups," the Central Board of Direct Taxes (CBDT) said in a statement.
While the statement did not identify those searched, sources said those raided include Hilal Ahmed, Ghulam Rasool Magray and Ishfaque Dar.
The CBDT, which frames policy for the income tax department, said it found that while in certain cases no income tax returns were filed by the businessmen, in some cases there were discrepancies in the returns.
Incriminating documents related to trade along the Line of Control (LoC) have been seized from the custodian of cross-LoC trade, indicating large-scale tax evasion, it said.
"The search action revealed that the key person of one of the groups, although engaged in cross-LoC trade until the suspension of trade by the government in April 2019, has not filed his tax returns. He was also found to be having two active permanent account number (PAN) cards," the statement said.
His firm made exports of over Rs 25 crore in the last few years, but no income tax has been paid at all, the statement said. "There is also evidence of unexplained expenditure on the education of his daughter in Pakistan," it said.
In another case, the raided businessman and his brother were engaged in trade and they "had made total exports of Rs 3 crore in the last two years."
"He (the main businessman) had filed his income tax return for only one year and that too showing meagre receipts," it said, adding the tax return does not match with the credits in multiple bank accounts which run into crores of rupees.
Evidence shows "illegal trade in violation of suspension of cross LoC trade" has been seized, it said. The passport of the taxpayer reveals that he travelled to Pakistan for 20-25 days every year since 2017 and the source of expenditure on this account is unexplained, it added.
The third business group is engaged in cross-LoC trade of vegetables and fruit. "In this case, unaccounted cash of Rs 15 lakh has been seized. The group is having multiple concerns. However, transactions of these concerns have not been reflected in their tax returns," it said.
In the case of a person related to this group, who is a non-filer, documents pertaining to unaccounted business transactions of about Rs 10 crore have been seized, it said.
In another case of a firm, it said one of the partners in the firm has admitted that his name was only being used and he was not involved in any activity of the firm.