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The Income Tax Department has found alleged illegal business expenses of over Rs 800 crore, Rs 60 crore "unaccounted" cash used to purchase land in Delhi and role of some shell companies after it raided Hero Motocorp and two other groups, officials said on Thursday.
The raids were launched on March 23, and the country's largest two-wheeler maker had then said it was extending full cooperation to the tax authorities, who visited its offices in Delhi and nearby Gurugram, apart from the residence of its chairman and CEO Pawan Munjal.
The CBDT issued a statement saying the operation was carried out on a leading automobile manufacturer group, along with a company operating chartered flights and a real estate group of Delhi-NCR, covering more than 35 premises.
"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.
"Expenditure aggregating to more than Rs 800 crore has been booked in the guise of purchase of services from a specific event management entity," the policy-making body for the tax department said.
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This entity, it said, has siphoned off the money by way of layering.
Such claims towards non-business purposes are inadmissible expenditure under the provisions of the Income-tax Act, the CBDT said.
It was also found that 10 acres of farm land in Delhi was purchased through a few paper companies, it said.
In such transactions, "unaccounted" cash component of over Rs 60 crore was purportedly involved.
"The ultimate/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 major part of the sale consideration was paid in cash," the statement said.
The officials said this action was carried out against Hero Motocorp and Pawan Munjal.
While a statement from the company on the CBDT statement is awaited, it had said in a regulatory filing on Tuesday that it was a "law-abiding corporate, with robust internal financial controls" and its "financial statements are duly audited".
In the case of the real estate business entity, the CBDT said "several incriminating documents" have been unearthed from the premises of persons involved.
"These contain records of on-money (cash) transactions where cash was being received in lieu of sale of units in their various real estate projects across Delhi," it said.
In the case of the company operating chartered flights, the statement said "evidence" related to booking of bogus expenses and non-recognition of income totalling to over Rs 50 crore, rotation of funds and suspicious loans through a dubious NBFC (non banking financial company) floated by a key person, layering and re-routing of funds through paper companies and claiming bogus interest expenses, etc. were unearthed.
It said "undisclosed" cash worth more than Rs 1.35 crore has been seized and jewellery over Rs 3 crore has been kept provisionally under restraint.
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