Income Tax Department Seizes Unaccounted Cash and Gold Bullion Worth Rs 60 Crore

New Delhi: The Income Tax department has seized unaccounted cash of Rs 32 crore and gold bullion worth Rs 28 crore after its recent searches against two business groups, including one linked to DMK MP S Jagathrakshakan, in Tamil Nadu and Puducherry. The raids were initiated on October 5 at about 100 premises of the two groups -- one of them running educational institutions that offer professional courses and the other is involved in distillery, pharmaceuticals, hospitals and hotels, etc.

Modus Operandi of Tax Evasion

The modus-operandi of tax evasion detected in running such educational institutions includes concealment of fee receipts, bogus claim of disbursement of scholarships, etc. Large scale evidences about receipt of fee which are unrecorded in the books of account and claim of non-genuine disbursement of scholarships have been seized. The preliminary analysis, so far, has resulted in collecting evidences for such unaccounted fee receipts of more than Rs 400 crore and incorrect claim of disbursement of scholarship to the tune of Rs 25 crore.

Evidence of Unaccounted Transactions

In one of the groups, evidence indicates that the trust was utilising the services of agents for garnering students, for which unaccounted commission payment of about Rs 25 crore has been made. In the distillery business run by one of the groups, it was found that bogus expenditure has been claimed for about Rs 500 crore towards purchase of inputs such as, bottles, flavours, extra neutral alcohol and freight charges, etc. Such purchases are not corroborated with purchase invoices or entries in stock registers. Several evidences have been recovered showing that cheques have been issued to various non-existent entities and the same have been received back in the form of cash for making unaccounted investments and for other expenditure which are not allowable as business expenses.

Diversion of Funds

The seized documents suggest that amount exceeding Rs 300 crore has been diverted from trusts either for personal expenses of the trustees or for deployment in diverse businesses. This also includes payments made by one of the groups for acquiring an industrial entity in Andhra Pradesh.

Political Reactions

Tamil Nadu Chief Minister and DMK President M K Stalin had reacted that day and said on Twitter: "The Union BJP Governments vindictive politics knows no bounds! Arresting AAP MP Sanjay Singh and raiding DMK MP Jagathrakshakans home are clear examples of their misuse of independent investigating agencies for political ends against INDIA bloc leaders."

The Income Tax department's seizures of unaccounted cash and gold bullion worth Rs 60 crore from two business groups in Tamil Nadu and Puducherry is a significant development in the fight against tax evasion in India. The modus operandi of tax evasion detected in running educational institutions and distillery business highlights the need for stronger enforcement of tax laws and regulations. The investigation is ongoing and further details are expected to emerge in the coming days.