Income tax raided the house of a well-known business group for two days on August 24 and 28 according to a statement from the Ministry of Finance. The group is said to be involved in making power distribution types of equipment. According to the statement, the raids were conducted across 28 locations spread across two states West Bengal and Jharkhand. The business group is said to be based in Kolkata. The IT department did not elaborate on the name of the business group.
What Has Been Found?
In a statement the Ministry of Finance under which the IT department functions said that it found pieces of evidence in a form in form of print and digital which pointed toward the group’s involvement in tax evasion and fraud.
The evidence found also showed data showcasing fake expenditures and sales. The raids also found the use of unaudited money for the purchase of immovable property and unaudited cash loans. The IT statement further added.
The first look at the evidence collected through the raids hinted toward the group using shell companies to adjust entries to its main issues. These shell companies have been mostly used to bring back unaccounted money to the business group. The business group allegedly took the shield of unsecured loans to do so.
According to the statement, the raids have led the authorities to discover an unaccounted income of more than 250 crores.
What Are Shell Companies?
According to reports shell companies are often used by business firms to conceal the tax or hide the ownership details of the start-ups, which remain in a dormant state for the majority of the time. Few other reasons for companies to set up shell companies to stack the illegal money abroad in banks. In the Indian context, there is no mention of shell companies in legal terms. Shell companies are often used to getting away with GST taxation in India. Government agencies like CBI, ED and IT are deployed to look after tax evasion through such methods.
Income Tax Deapartment
The Income Tax which comes under the ministry of finance is involved in the direct collection of taxes. The agency functions under the Department of Revenue, Government of India. The Income Tax department has a total of 19 regional offices including in Kolkata of West Bengal.