The Income Tax department has detected tax evasion of more than Rs 1,350 crore during search and seizure operations conducted against Hindustan Powerprojects, a company owned by the nephew of Madhya Pradesh chief minister Kamal Nath, sources said.
The Central Board of Direct Taxes (CBDT) Monday said raids were conducted earlier this month at offices of the solar power group at several locations in NCR, Bhopal, Indore and Goa by the Delhi unit of the Directorate General of Income-tax(Investigation) based on "credible information" of large scale collection, possession and movement of unaccounted assets.
However, the CBDT statement did not name the group.
"The search action was undertaken on the basis of credible information and has led to detection of large scale tax evasion of more than Rs 1,350 crore," the CBDT said.
According to sources, the raids were conducted at Nath's nephew Ratul Puri's company, Hindustan Powerprojects Pvt Ltd on April 7.
Puri was also grilled by the Enforcement Directorate in Delhi earlier in connection with a probe into the controversial Rs 3,600 AgustaWestland helicopters deal.
According to the details provided by the CBDT, the group was operating through a maze of shell companies and indulged in bogus billings, over-invoicing of imports and round-tripping of funds.
During the search operation, taxmen found that a maze of shell companies was being used as conduits for providing entries to the group and 'accommodation entries' in the garb of bogus unsecured loans/share application money to the tune of Rs 370 crore was detected.
They also found evidence of inflating expenses through bogus billing of Rs 330 crore in the case of a power plant of the group and the money so siphoned off was collected in US Dollar through hawala operators.
A handwritten diary containing records of 'out of books' cash receipts worth Rs 240 crore was seized from the office.
With regard to over-invoicing of imports and round tripping of Rs 252 crore, the CBDT said "during the search, evidence was found indicating that the group grossly over-invoiced its imports from original manufacturers by re-invoicing it through a shell company of a person who is an accused in a major defence scam. The surplus so created was ploughed back in the books as FDI through another shell company of the same person".
Enquiries by taxmen also revealed that the group used the services of a Dubai-based operator to park unaccounted foreign remittances in overseas jurisdictions. Out of such remittances, about Rs 27 crore was paid towards credit card expenses and Rs 72 crore for purchase of a property abroad.
The CBDT also found bogus loans of Rs 30 crore in a group company and investigations revealed that the loan entry of Rs 30 crore in one of the group companies was an accommodation entry arranged by an entry operator against equivalent cash.
Besides, unaccounted payment of Rs 9 crore towards the purchase of a property has also been detected and unaccounted assets of Rs 3 crore has been seized during the search.
A controversy erupted on April 7 when the Income Tax officers raided 52 locations, including in Delhi and Madhya Pradesh, linked to close aides of MP Chief Minister Kamal Nath and others on charges of tax evasion and hawala transactions.
Taking note of the I-T raids, the Election Commission in a letter to the Revenue Department "strongly advised" that any action by its enforcement agencies during election time should be "neutral" and "non-discriminatory".
The Revenue Department in its reply to the Election Commission said that its enforcement actions are always 'neutral', 'impartial' and 'non-discriminatory' irrespective of political affiliation.
The investigation wing of the Income Tax department Monday said it undertook the search action based on "credible information" which has led to the detection of "large scale tax evasion of more than Rs 1,350 crore".
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