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The income tax department on Tuesday raided Rajesh Exports Ltd’s retail arm, Shubh Jewellers, which has stores across Karnataka. A source familiar with the matter confirmed the I-T department was conducting the search at a store in the central business district of the city.
“The I-T department is probing alleged tax evasion and understatement of profits by the company,” the source said. “As a result, the store has been half-shuttered, while the authorities are taking stock of the materials in the store.”
The I-T department did not comment on the matter. Jewellery manufacturer and retailer Rajesh Exports has declared a full year net profit of Rs 453 crore on annual sales of Rs 31,874 crore in financial year 2013. The company did not respond to calls seeking comment. A notice outside the store said the store would remain closed on
December 17 and reopen on Wednesday. It did not cite any reason for the holiday..
Meanwhile, I-T department officials are said to be perusing documents at the store as a routine procedure during such an investigation, according to the source. The I-T department did not comment on the matter.
The company operates over 80 Shubh Jewellers stores in the city and has plans to add 33 more to the count in this fiscal year. While Rajesh Exports derives about 95 per cent of its revenue from its exports business, the company has maintained that it derived more profitability from its retail initiative and plans to expand to other states in the South as well.
Rajesh Exports says the retail segment accounts for over 10 per cent of its net profits. The company has a jewellery manufacturing facility with a capacity to process 250 tonnes of gold into jewellery. The company imports raw gold, refines at its own refinery and manufactures jewellery from this refined gold.
Shares of the company closed at Rs 89.05 apiece, down 1.4 per cent on Tuesday on the Bombay Stock Exchange.
