Unpaid taxes on Rs 700 crore of income over six years, violation of stock market rules, and evidence of profits being siphoned off from listed companies have been found in searches at the Dainik Bhaskar Group, the Income Tax Department alleged on Saturday, two days after the raids on the conglomerate with media outlets critical of the government triggered outrage.
"During the search, it was found that they have been operating several companies in the names of their employees, which have been used for booking bogus expenses and routing of funds... Several of the employees, whose names were used as shareholders and directors, have admitted that they were not aware of such companies," the tax department said in a statement.
"Such companies have been used for multiple purposes namely booking bogus expenses and siphoning off the profits from listed companies, routing of funds so siphoned into their closely held companies to make investments, making of circular transactions etc," it said.
"The quantum of income escapement using this modus operandi, detected so far, amounts to Rs 700 crore spread over a period of six years. However, the quantum may be more as the group has used multiple layers and investigations are being carried out to unravel the entire money trail," it added.
The tax department said it had also found a violation of rules of the stock market regulator Securities and Exchange Board of India (SEBI) for listed companies. "Application of Benami Transaction Prohibition Act will also be examined," it said.
A total of 26 lockers have been found at the homes of the promoters and key employees of the group, which are being operated, the tax department said.
"Cyclical trading and transfer of funds among group companies engaged in unrelated businesses to the tune of Rs 2,200 crore has been found. The enquiries have confirmed that these have been fictitious transactions without any actual movement or delivery of goods. The tax effect and violation of other laws is being examined," it said.
"The listed media company does barter deals for advertisement revenues, whereby immovable properties are received in lieu of actual payments. Evidences have been found indicating cash receipts in respect of subsequent sale of such properties. This is under further examination," it added.
Along with the Dainik Bhaskar Group, an Uttar Pradesh-based news channel Bharat Samachar was also raided on Thursday by Income Tax officials who launched searches in their offices across the country around 5:30 am.
Raids took place at over 30 locations of Dainik Bhaskar in Delhi, Madhya Pradesh, Rajasthan, Gujarat and Maharashtra. The homes and offices of the group's promoters were also raided. Bharat Samachar's offices in Lucknow and the home of its editor were also searched.
Both the media houses had recently put out reports critical of the government's handling of the coronavirus crisis, particularly the second wave of Covid that swept through India in April-May.
Dainik Bhaskar Editor Om Gaur told NDTV that the raids were a surprise and an obvious attempt to suppress independent journalism. "We won't give in to pressure. We will stick to our journalism," Mr Gaur said.
In a separate statement about the raids on Bharat Samachar, the Income Tax Department claimed to have seized documents and digital records that indicate "unaccounted" transactions of about Rs 200 crore.
"Cash of more than Rs 3 crore has been seized and 16 lockers have been placed under restraint... Documents including incriminating digital evidence indicating nearly Rs 200 crore of unaccounted transactions have been seized," the tax department said
The statement claimed that evidence found during searches "establishes" that the business group has been earning huge outside-the-books income through mining, processing and sales in liquor, flour business, real estate and more.
"Unaccounted income emanating out of these transactions has been found exceeding Rs 90 crore as per preliminary estimates... This income has been brought back into the books through a network of shell companies and other bogus entities without paying any taxes, thereby creating a charade that the money has been accounted for," it alleged.
During the searches, more than 15 companies incorporated at Kolkata and other places were found to be "non-existent", it added.