700 Crores "Undisclosed Income" Found In Raids On Tamil Nadu Distilleries

The searches were carried based on reports that the business group was indulging in large scale tax evasion by inflating its expenditure on materials used in its production processes.

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700 Crores 'Undisclosed Income' Found In Raids On Tamil Nadu Distilleries

Searches were carried at 55 locations in Tamil Nadu. (Representational image)


Highlights

  1. Income Tax has seized Rs 700 crore during search operation in Tamil Nadu
  2. Income Tax Department searched 2 beer and liquor producers
  3. The search was carried at 55 locations in various places of the state

The Income Tax Department has detected Rs 700 crore unaccounted income during search and seizure operation on two major producers of beer and IMFL (Indian-made foreign liquor) in Tamil Nadu.

The search -- launched early on Tuesday -- was carried at 55 locations in various places of the state, including Chennai, Coimbatore, Thanjavur, and also in Kerala, Andhra Pradesh and Goa.

"The Income Tax Department conducted a search and seizure operation on August 6, 2019 in the case of one of the major producers of beer and IMFL (Indian-made foreign liquor) in Tamil Nadu," said the Income Tax department release which did not name the distilleries. 

The premises included residences of the promoters, key employees and some of the suppliers of materials, it said. 

The searches were carried 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, the teams found "telltale evidence" of the modus operandi that 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.

The search also revealed evidence of similar tax evasion by another distillery group. Based on this, search operation was launched at seven premises of this group. 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, it said.

Acting 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 department has so far detected undisclosed income of Rs 700 crore, it added.



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