Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 22nd April, 2019

PRESS RELEASE

Note on search conducted in NCR on a group in the Power sector

The Delhi unit of the Directorate General of Income-tax (Investigation) initiated search and seizure action on a group in NCR, Bhopal, Indore and Goa based upon credible information of large scale collection, possession and movement of unaccounted assets, a few weeks back.

CBDT had earlier issued a press note pertaining to searches conducted in MP. As some new developments have taken place, this press release is being issued pertaining to search and seizure operation carried out in NCR on 07/04/2019 on a leading Solar Power group connected in the matter.

Some of the significant transactions detected during the search operation are detailed hereunder:-

a) Accommodation entries of Rs 370 crore: During the search, a maze of shell companies used as mere conduits for providing entries to the group have been detected. Accommodation entries in the garb of bogus unsecured loans/share application money to the tune of Rs. 370 crore have been found.

b)  Bogus billing of Rs. 330 crore: Evidence of inflation of expenses through bogus billing to the tune of around Rs. 330 crore has been detected in the case of a power plant of the said group. The money so siphoned off was collected in USD through hawala operators.

c) Unaccounted diary transactions of Rs. 240 crore: A handwritten diary containing records of out of books cash receipts to the tune of around Rs.240 crore was seized from the office of the group. The entries therein have been admitted by the persons concerned.

d) Bogus loans of Rs. 30 crore in a group company: Investigations reveal that a loan entry of Rs. 30 crore in one of the group companies was an accommodation entry arranged by an entry operator against equivalent cash.

e) Over-invoicing of imports and round tripping of Rs. 252 crore: 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.

f) Unaccounted foreign investments/expenses: Enquiries reveal that the group used the services of a Dubai based operator to park unaccounted foreign remittances in overseas jurisdictions. Out of such remittances, approximately Rs. 27 crore was paid towards credit card expenses and Rs. 72 crore for purchase of a property abroad.

g) Apart from the above, unaccounted payment of Rs. 9 crore towards purchase of a property has also been detected.

h) Seizure of unaccounted assets of Rs. 3 crore has been made during the search.

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. 1350 crore.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT.

 

Ministry of Finance

CBDT invites stakeholder comments on report pertaining to Profit Attribution to Permanent Establishment(PE) in India

Dated: 18 APR 2019

Central Board of Direct Taxes (CBDT) places the report of the Committee on Profit Attribution on online public domain and invites suggestions/comments to be furnished electronically within 30 days from the date of publication of the aforementioned document on the website of the Department. The document can be accessed at www.incometaxindia.gov.in and comments can be sent to email address: usfttr-1@gov.in.

Background:

Taxation of non-residents in India is governed by the provisions of the Income-tax Act, 1961 (“the Act”) and the provisions of the Double Taxation Avoidance Agreement(s) [DTAA(s)] concluded or adopted by the Central Government under the powers conferred under Section 90 or 90A of the Act, respectively. The business income of a non-resident can be taxed in India if it satisfies the requisite thresholds provided under the Act as well as the threshold provided in the applicable tax treaty, by a concept of Permanent Establishment (PE), which is defined in Article 5 of Model Tax Conventions and tax treaties. Under Article 7 in the Indian treaties, profits are to be attributed to the PE as if it were a distinct and separate entity on the basis of the accounts of the PE and where such accounts are not available to enable determination of profits attributable to the PE, the profits attributable to the PE can be determined under the domestic laws. For the application of this method, the Assessing Officer in India can resort to Rule 10 of Income-tax Rules, 1962.

Recognizing the significance of issues relating to attribution of profits to a permanent establishment as well as the need to bring greater clarity and predictability in the applicable tax regime, a Committee was formed to examine the existing scheme of profit attribution to PE under Article 7 of DTAAs and recommend changes in Rule 10 of the Income-tax Rules, 1962. The Committee has submitted its report and it has been decided to seek suggestions/comments of the stakeholders and the general public.

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DSM/RM/KMN

(Release ID: 1570902)

 

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 10th April, 2019

PRESS RELEASE

CBDT conducts search in the case of Sri Gurappa Naidu

The Income Tax Department conducted search on 9 th April, 2019 in Vijaywada at the premises of Sri Gurappa Naidu, a cost accountant. An information had been received on toll-free-number that cash was kept at the residence of Shri Gurappa Naidu which was to be used in General Election. It was only at the time of recording his statement late in the night that he revealed that he was giving services to Shri Galla Jayadaev, MP, TDP also in his capacity as a cost accountant. During the course of search, cash of Rs. 45.4 Lakhs was seized being unexplained.

The person searched, Sri Gurappa Naidu is a retired person who is practicing free lance cost accountancy. No other premise except the residence of Sri Naidu was searched. No premise of the MP candidate Sri Galla Jayadaev was searched.

 

(Y. D. Sharma)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT.

 

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

New Delhi, 8th April, 2019

PRESS RELEASE

Brief highlights of the recent searches in NCR, Bhopal, Indore and Goa

Based upon credible information of large scale collection, possession and movement of unaccounted assets, Delhi Directorate of Income Tax (Investigation) initiated search and seizure action on a group in NCR, Bhopal, Indore and Goa. More than 300 IT officials participated in the operation at about 52 locations in 4 States.

Searches in Madhya Pradesh have detected wide spread and well-organized racket of collection of unaccounted cash of about Rs. 281 cr through various persons in different walks of life including business, politics and public service. A part of the cash was also transferred to the headquarter of a major political party in Delhi including about Rs 20 cr which was moved through hawala recently to the headquarter of the political party from the residence of a senior functionary at Tughlak Road, New Delhi.

Meticulous records of collection and disbursement of cash in the form of hand written diaries, computer files and excel sheets found and seized corroborate the above findings.

Unaccounted cash of Rs 14.6 cr has been found so far, besides 252 bottles of Liquor, few arms and hide-skins of tiger. The searches in Delhi in the group of a close relative of the senior functionary have further led to seizure of incriminating evidence including cash book recording unaccounted transactions of Rs 230cr, siphoning off money through bogus billing of more than Rs. 242 cr and evidence of more than 80 companies in Tax havens. Several unaccounted/Benami properties at posh locations in Delhi have also been detected.

Instances of violations of Model Code of Conduct are being brought to the notice of ECI.

(Y. D. Sharma)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT.

 

Click below to read and download the CBDT Notification No.33/2019 dated 01/04/2019