The Income-Tax Department has conducted a search and survey operation against a leading cattle feed producer in North India, on the suspicion that it took “accommodation entries” of over ₹121 crore from some Delhi-based shell entities.
Accommodation entry is a modus operandi of routing large amounts of money usually via the banking channel, using shell companies, and shown as legitimate income by making fake transaction entries, including unsecured loans and infusion of share capital.
During the operation, which was launched on November 18, searches were carried out at 16 locations in Delhi, Kanpur, Gorakhpur, Noida and Ludhiana.
Gold and diamond jewellery worth ₹52 lakh have been seized so far. The financial trail pertaining to the remaining jewellery and the sources of ₹1.30 crore in cash found during the searches are being verified. A total of seven lockers have been identified.
The Income-Tax Department alleged that the group took “accommodation entries” on the pretext of unsecured loans, had an unusually high sundry creditors and it suppressed its net profit.
Unsecured loans
A related group chit-fund company had received unsecured loans of several crores of rupees from unknown sources, as alleged.
During searches, the department found evidence, purportedly establishing that the shell companies, from which loans were taken, existed only on paper and had no real business and creditworthiness.
“Directors of these shell companies are dummy, non-filers and individuals of no means. One of the directors of these companies has been found to be a taxi-driver, having 11 bank accounts, showing huge routing of funds," said the Department in a statement on Friday.
One shell entity was a chit subscriber in the group’s chit fund concern, which was a violation of the provisions of the Chit Funds Act, said the Department .
Searches also revealed huge unaccounted investments in the construction of the residences of the key persons of the group. “The same is under verification and will be referred for valuation”, it said.
