The Income Tax Departments carried out Search and Seizure action on 6th February 2020 at Hyderabad, Vijaywada, Cuddapah, Vishakhapatnam, Delhi, and Pune. More than 40 premises were covered.
The search action included three prominent infrastructure groups based in Andhra Pradesh and Telangana. Investigations led to the busting of a major racket of cash generation through bogus sub-contractors, over-invoicing, and bogus billing. Several incriminating documents and loose papers were found and seized during the search, apart from emails, WhatsApp messages and unexplained foreign transactions unearthed during the search.
The search operation was also carried out on close associates including ex-personal secretary of a prominent person and incriminating evidence seized.
The search operations revealed that Infrastructure companies had sub-contracted work to several non-existent/bogus entities. Preliminary estimates suggest a siphoning of more than Rs. 2000 crore through transactions that were layered through multiple entities with the last in the chain being small entities with turnover less than Rs. 2 crores to avoid maintenance of books of accounts and tax audits etc by income tax departments. Such entities were either not found at their registered address or were found to be shell entities. Several such sub-contractors were controlled by the principal contractors with all their Income Tax Returns (ITR) filings and other compliances being done from the IP addresses of a main corporate office.
Foreign direct investment(FDI) receipts of several crores in the group companies of one of the Infrastructure companies are suspected to be round-tripping of its unaccounted funds.
Unexplained cash of Rs. 85 lakh and Jewellery worth Rs. 71 lakh have been seized. More than 25 bank lockers have been restrained.