The Income Tax Department conducted search action under the Income-tax Act, 1961 in the case of a group of trusts that are running educational institutions in and around Chennai for the past thirty years. The institutes run by the group include a number of engineering colleges, polytechnic institutes, dental college, nursing colleges, hospitals & schools. The group has interests in other sectors like the fishing harbour, cement, milk, bottled water and iron & steel etc.
There were reports of the group accepting fee/donations in cash, which were largely unaccounted and of the funds of the trust being diverted to other sister concerns. The action began on 7/11/2019 covering 32 premises in and around Chennai. During the search proceedings, evidence of suppression of fee receipts has been found. In addition, one group entity has adopted the modus operandi of showing the actual fees received as ‘advance fee collection’ in the liability side of the balance sheet and advancing the said amounts as payments, mainly, to its sister concerns against certain expenses/purchases, which were found to be inflated/ bogus. Thus, the money of the trusts is found to be diverted outside the trusts for the objects outside the scope of Trust.
Apart from the above, evidence has been found of unexplained cash debits, unrecorded cash expenditure, suppression of sale receipts in fishing harbour, loans advanced in cash, non-disclosure of income from the sale of property etc. Cash of approximately Rs. 5 crore and Jewelry of more than about Rs. 3 crore was seized in the said action. The preliminary estimate of the undisclosed income of the group detected so far is more than Rs. 350 crore. The search proceedings have been temporarily concluded and investigations into the findings are in progress.
