On October 5, 2023, the Income Tax Department initiated a comprehensive search and seizure operation targeting two distinct groups, primarily involved in operating educational institutions that offer professional courses. The raid uncovered unaccounted fee receipts of more than Rs. 400 crores.
These groups were found to be engaged in diverse business activities, including distilleries, pharmaceuticals, hospitals, and hotels, among others. The search operation covered approximately 100 premises located in Tamil Nadu and Puducherry.
During the search, a substantial volume of incriminating evidence was uncovered in various forms, including loose sheets, hard-copy documents, and digital data. The detected method of tax evasion employed by these educational institutions included the concealment of fee receipts and the fraudulent claiming of scholarship disbursements.
Significant evidence was seized, pointing to unrecorded fee receipts that amounted to over Rs. 400 crore and an incorrect claim of scholarship disbursements totaling Rs. 25 crore. In one of the groups, the seized evidence indicated that they utilised the services of agents to recruit students, resulting in unaccounted commission payments of approximately Rs. 25 crore.
In the context of one of the groups’ distillery business, it was discovered that they had falsely claimed expenditures of around Rs. 500 crore for the purchase of various inputs such as bottles, flavours, Extra Neutral Alcohol, and freight charges. These purchases lacked supporting purchase invoices or entries in stock registers. Moreover, the seized evidence revealed the issuance of checks to fictitious entities, followed by the receipt of cash, which was used for unaccounted investments and expenses not legitimately categorized as business expenses.
The documents seized during the operation indicated that over Rs. 300 crore had been diverted from the trusts for personal expenses of the trustees or redirected into various businesses. This included payments made by one of the groups for the acquisition of an industrial entity in Andhra Pradesh.
Thus far, the search operation has led to the seizure of unaccounted cash amounting to Rs. 32 crore and gold bullion valued at Rs. 28 crore, resulting in a cumulative seizure of Rs. 60 crore. The investigations are in progress.
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