Hero MotoCorp tax case: I-T finds Rs 800 cr siphoned off via shell firms

An expenditure of more than Rs 800 crore on the books of Hero MotoCorp was not for purposes of business but made for a service from an event management company, which allegedly siphoned off the amount, according to an income-tax department probe.

The siphoning off was done through shell firms.

“Such claims towards non-business purposes are inadmissible expenditure under the provisions of the Income-tax Act, 1961,” the Central Board of Direct Taxes (CBDT) stated on Thursday without naming the company.

The statement follows three days’ extensive searches on the premises of the company, its Chairman and Managing Director Pawan Munjal, and others.

“During the course of the search operation, various incriminating documents and digital evidence have been found and seized, indicating that the expenses ostensibly shown to have been claimed towards business purposes are not fully supported by evidences,” the CBDT pointed out.

The department also found that 10 acres of farm land in Delhi was purchased through a few paper companies. In such transactions, an unaccounted cash component of over Rs  60 crore was purportedly involved.

“The real beneficiary of the land deal is a prominent person of the automobile manufacturer group. The intermediary who facilitated the said deal has admitted in his statement that a major part of the sale consideration was paid in cash,” the statement said.

Apart from this, several incriminating documents have been unearthed from the premises of persons involved in the real estate business. These contain records of “on-money transactions” where cash was received in lieu of sales of units in their various real estate projects in Delhi.

In the case of the company operating chartered flights, evidence related to booking bogus expenses and non-recognition of income totalling over Rs 50 crore, rotating funds and suspicious loans through a dubious non-banking financial company floated by a key person, layering and re-routing funds through paper companies and claiming bogus interest expenses, etc — all these have been allegedly unearthed.

Besides, undisclosed cash exceeding Rs 1.35 crore has been seized and jewellery worth more than Rs 3 crore has been kept provisionally under restraint.