In a shocking discovery, Income Tax sleuths have found that a businessman from Karur district in Tamil Nadu has evaded tax for an undisclosed income to the tune of Rs 435 crore. Searches conducted on his residence and his mosquito net manufacturing factories have further led to the seizure of Rs 32.6 crore in cash from a cupboard and 10kg of gold jewellery.
The Income Tax department began searches on businessman Sivaswamy's property on Friday. Named Shobika Impex Private Limited, the business reportedly employs over 500 workers. In addition to locally distributing mosquito nets, they were also exporting them. Based on intelligence that the company was indulging in substantial tax evasion, the search was carried out on about 20 premises, including his residences, factory premises and offices.
The major finding of the search action was that the company had systematically inflated its expenditure using 'bogus or fabricated invoices'.
“By showing such non-existent expenditure in its books of account, the company and its promoters have suppressed the true income of the company over the years. It was found that the company would pay for such bogus expenses by cheque or RTGS (real time gross settlement) and then receive the cash back,” said Surabhi Ahluwalia, Commissioner of Income Tax.
“The unaccounted income so generated has been parked by the company’s promoters as investments in immovable properties, by making unaccounted payments, further investments in the business itself as share capital and in fixed bank deposits, cash and other valuables,” he added.
The undisclosed income of the company and its promoters is estimated at about Rs 435 crore.
Further inquiries regarding the findings are currently underway. As the company is based in Karur, a tier-3 city in Tamil Nadu, the Income Tax Department conducted the search under section 132 of the Income Tax Act, 1995.