Ministry of Finance

Income Tax Department conducts searches in Tamil Nadu

Dated: 07 NOV 2020

The Income Tax Department has carried out searches at 5 locations in Chennai and Madurai on 4.11.2020 in the case of a Chennai based group operating in IT Infra sector.

The search has led to unearthing of evidence relating to investments in a Singapore registered company. The shareholding of this company is held by two companies, one owned by the group searched, while the other company is a subsidiary of a major infrastructure development and financing group. It has been found that the company belonging to the searched group has invested a very nominal amount although it has 72% shareholding, while the other company having 28% shareholding only has invested almost the entire money. This has resulted into a benefit/gain of almost S$7 crore, i.e., around Rs. 200 crore, in the hands of the company belonging to the searched group, which was not disclosed by it in its return of income and also in the FA Schedule.  Thus, there is suppression of foreign income received in the form of share subscription equivalent to Rs. 200 crore, which is taxable in India in the hands of the shareholder. Further, proceedings will be initiated under Black Money Act, 2015 for not disclosing foreign assets/beneficial interest in the FA Schedule of the income tax return. The present value of this investment exceeds Rs. 354 crore.

It has been further found during the search that the group had acquired 5 shell companies recently, which were used to siphon out as much as Rs. 337 crore from the main group company by raising bogus bills and without doing any real business in these companies. The siphoned money was transferred abroad and utilized for purchase of shares in the name of the son of the main assessee. One of the directors has admitted that they have diverted funds through these companies.

Evidences have also been found regarding allotment of preference shares worth Rs. 150 crore in 2009 in the group company by passing accounting entries only, to project inflated capital before banks and financial institutions to obtain finances. Allotment of another Rs. 150 crore worth preference shares in 2015 from funds from group companies, who in turn took loans/entries, is being examined.

 During the search, it was also found that the group had borrowed funds from banks on interest and diverted to other group companies free of interest for investments in properties. The total interest disallowance on this count works out to about Rs. 423 crore.

Further, the search also revealed that the group had purchased about 800 acres of land worth at least Rs. 500 crore, in the names of various shell companies from the funds provided by the main group concern. Applicability of the Prohibition of Benami Property Transactions Act, 1988 to these transactions is being examined.

It was also seen that there was transfer of substantial share holdings during the current year at a price much lower than the fair market value to be determined as per IT Rules, 1962. In view of this, substantial additions are likely to be made under section 56(2)(x) of the IT Act, 1961(the  Act) in the case of the buyer and capital gains under section 50CA of the Act, in the hands of the seller. The quantum of this will be determined in due course.

Thus, the search has led to the detection of unaccounted income of around Rs. 1,000 crore, out of which, disclosure of additional income of Rs. 337 crore has already been made by the assessee, besides actionable issues under Benami and Black Money Acts.

Further investigations are going on.

****

RM/KMN

(Release ID: 1670941)

 

Ministry of Finance

Income Tax Department conducts searches in West Bengal

Dated: 06 NOV 2020

The Income Tax Department has carried out searches on 05/11/2020 in the case of one prominent coal trader of West Bengal having premises in Raniganj, Asansol, Purulia and Kolkata. The searches were based on intelligence gathered, which indicated that large scale unaccounted cash was being generated and used for various purposes.

The searches have led to seizure of documents indicating that companies of the assessee group held bogus investments in unquoted equity shares of paper concerns to the magnitude of around Rs. 150 crore, out of which investments of around Rs. 145 crore have been sold. These sale transactions were found to be sham transactions and have been admitted by the assessee in the statement recorded during the search.

The searches have also led to seizure of a substantial number of incriminating documents showing cash generation in coal and sand trading, sponge iron sales etc. Documents have also been seized indicating huge unaccounted expenses for facilitation of coal transport and various trading activities.

The searches have led to seizure of unaccounted cash and bullion of around Rs.  7.3 crore. Further investigations are going on.

****

RM/KMN

(Release ID: 1670627)

 

Government of India

Department of Revenue

Ministry of Finance

Central Board of Direct Taxes

New Delhi, 29th October, 2020

PRESS RELEASE

Income-tax Exemption for payment of deemed LTC fare for non-Central Government employees

In view of the Covid-19 pandemic and resultant nationwide lockdown as well as disruption of transport and hospitality sector, as also the need for observing social distancing, a number of employees are not able to avail of Leave Travel Concession (LTC) in the current Block of 2018-21.

2. With a view to compensate  Central Government employees and incentivise consumption, thereby giving a boost to consumption expenditure, the Government of India allowed payment of cash allowance equivalent  to  LTC fare to Central Government employees subject to fulfilment of certain conditions vide OM No F. No 12(2)/2020-EII (A) dated 12th October 2020. It has also been provided that since the cash allowance of LTC fare is in lieu of deemed actual travel, the same shall be eligible for income-tax exemption on the lines of existing income-tax exemption available for LTC fare.

3. In order to provide the benefits to other employees (i.e. non-Central Government employees) who are not covered by the above mentioned OM, it has been decided to provide similar income-tax exemption for the payment of cash equivalent of LTC fare to the non-Central Government employees also. Accordingly, the payment of cash allowance,  subject to maximum of Rs 36,000 per person as Deemed LTC fare per person (Round Trip) to non-Central Government employees,  shall be allowed income-tax exemption subject to  fulfilment of conditions specified in para 4.

4. The income-tax exemption to receipt of deemed LTC fare by a non-Central Government employee (‘the employee’) shall be allowed subject to fulfilment of the following conditions:-

(a)  The employee exercises an option for the deemed LTC fare in lieu of the applicable LTC in the Block year 2018-21.

(b) The employee spends a sum equals to three times of the value of the deemed LTC fare on purchase of goods / services which carry a GST rate of not less than 12% from GST registered vendors / service providers (‘the specified expenditure’) through digital mode during the period from the 12th of October, 2020 to 31st of March, 2021 (‘specified period’) and obtains a voucher indicating the GST number and the amount of GST paid.

(c) An employee who spends less than three times of the deemed LTC fare on specified expenditure during the specified period shall not be entitled to receive full amount of deemed LTC fare and the related income-tax exemption and the amount of both shall be reduced proportionately as explained in Example-A below.

5. The DDOs shall allow income-tax exemption subject to fulfilment of the above conditions after obtaining copies of invoices of specified expenditure incurred during the specified period. Further, as this exemption is in lieu of the exemption provided for LTC fare, an employee who has exercised an option to pay income tax under concessional tax regime under section 115BAC of the Income-tax Act, 1961 shall not be entitled for this exemption.

6. The clarifications issued by the Department of Expenditure, Ministry of Finance for the Central Government employees vide OM F. No 12(2)/2020-EII (A) Dated 20th October, 2020 and subsequent clarification, if any, issued in this regard shall apply mutatis mutandis to non-Central Government employees also subject to fulfilment of conditions specified in the preceding paras.

7. The legislative amendment to the provisions of the Income-tax Act, 1961 for this purpose shall be proposed in due course.

Example-A

Deemed LTC Fare        : Rs.20,000 x 4 = Rs. 80,000

Amount to be spent    : Rs. 80,000 x 3 = Rs. 2,40,000

Thus, if an employee spends Rs. 2,40,000 or above on specified expenditure, he shall be entitled for full deemed LTC fare and the related income-tax exemption.  However, if the employee spends Rs. 1,80,000 only, then he shall be entitled for 75% (i.e. Rs. 60,000) of deemed LTC fare and the related income-tax exemption. In case the employee already received Rs. 80,000 from employer in advance, he has to refund Rs. 20,000 to the employer as he could spend only 75% of the required amount.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT

 

Government of India

Department of Revenue

Ministry of Finance

Central Board of Direct Taxes

New Delhi, 27th October, 2020

PRESS RELEASE

Income Tax Department conducts searches in Delhi- NCR, Haryana, Punjab, Uttarakhand and Goa

The Income tax Department has carried out a search and seizure action on 26.10.2020 on a large network of individuals running the racket of entry operation and generation of huge cash through fake billing. The search operations have been conducted on 42 premises across Delhi- NCR, Haryana, Punjab, Uttarakhand and Goa.

The search has led to seizure of evidences exposing the entire network of the entry operators, intermediaries, cash handlers, the beneficiaries and the firms and companies involved. So far, documents evidencing accommodation entries of more than Rs. 500 crorehave already been found and seized.

Several shell entities/firms were used by the searched entry operators for layering of unaccounted money and cash withdrawals against fake bills issued and unsecured loans given. The personal staff/employees/associates had been made dummy directors/partners of these shell entities and all bank accounts were managed and controlled by these entry operators. Statements of such entry operators, their dummy partners/employees, the cash handlers as well as the covered beneficiaries have also been recorded clearly validating the entire money trail.

 The searched persons were also found to be controller and beneficial owners of several bank accounts and lockers, opened in names of their family members and trusted employees and shell entities, which they were managing in collusion with the bank officials, through the digital media. The same are being further investigated.

 The beneficiaries have been found to have made huge investments in real estate properties in prime cities and in fixed deposits to the tune of several hundred crores of rupees.

During the search, cash of Rs. 2.37 crore and jewellery worth Rs. 2.89 crore has been found along with 17 bank lockers, which are yet to be operated.

Further investigations are in progress.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT

Government of India

Department of Revenue

Ministry of Finance

Central Board of Direct Taxes

New Delhi, 27th October, 2020

PRESS RELEASE

Payment Date Extended for Vivad se Vishwas Scheme:Finance Secretary urges I-T Department to Reach Out to the Taxpayers.

In order to provide further relief to the taxpayers desirous of settling disputes under Vivad se Vishwas Scheme, the Government today further extended the date for making payment without additional amount from 31^st December 2020 to 31^st March 2021.  The last date for making declaration under the Scheme has also been notified as 31^st December 2020. As per the notification issued today, the declaration under the Vivad se Vishwas Scheme shall be required to be furnished latest by 31^st December 2020, however, only in respect of said declarations made by 31^st December 2020 the payment without additional amount can now be made up to 31^st March 2021.

Meanwhile, Finance Secretary Dr. Ajay Bhushan Pandey today reviewed the progress made so far by the Income Tax Department on Vivad se Vishwas Schemein a high level meeting through video conferencing along with CBDT Chairman and Board members with all Principal Chief Commissioners of Income Tax across the country to expedite the Scheme which, he said, is highly beneficial to the taxpayers, adding further that “We need to advance the Vivad se Vishwas Scheme with greater persuasion and perseverance and must reach out to the taxpayers to facilitate all necessary handholding.”

In the meeting, suggestions and comments of the Field Officers were also discussed regarding the action plan for successful implementation of the Scheme in a time bound manner.

Finance Secretary Dr. Pandey said, “This is a scheme for the benefit and convenience of the taxpayers as they would get instant disposal of the dispute with no further cost of litigation besides monetary benefits in the form of waiver of penalty, interest and prosecution. With this Scheme, on the one hand, a taxpayer would be benefitted with stress-free time to put her/his efforts for more meaningful daily life/routine or expanding business activities while on the other, the government would  be getting its due long pending revenue and also, savings on the huge cost on resources that these disputes consume.”

In the meeting, the Chairman CBDT, Sri P C Mody mentioned the importance of cleaning up of demand for facilitating and persuading the taxpayers for filing declarations under the Scheme. He emphasized on Pr. Chief Commissioners of Income Tax to carry out all possible actions such as disposing pending rectifications, giving pending appeal effects, removing duplicate demands, etc. so as to arrive at a final demand for each assessee so that whenever a taxpayer files Form 1 or 2 under the Vivad se Vishwas Scheme, the Pr. Commissioner of Income Tax concerned is in a position to issue Form 3 promptly.

It was also decided in the meeting to adopt a proactive approach for implementation of the Scheme by approaching taxpayers directly, guiding and facilitating them in filing of declarations and removing any difficulties or problems faced by them in availing the Scheme. It was further decided to have periodic review of the progress of the Scheme every fortnight.

It is pertinent to mention here that the Direct Tax Vivad se Vishwas Act, 2020 was enacted on 17th March, 2020 with the objective to reduce pending income tax litigation, generate timely revenue for the Government and to benefit taxpayers by providing them peace of mind, certainty and savings on account of time and resources that would otherwise be spent on the long-drawn and vexatious litigation process. In order to provide more time to taxpayers to settle disputes, earlier the date for filing declaration and making payment without additional amount under Vivad se Vishwas was extended from 31^st March 2020 to 30^th June, 2020. Later again, this date was extended further to 31^st December, 2020. Therefore, earlier both the declaration and the payment without additional amount under the Vivad se Vishwas were required to be made by 31^st December, 2020.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT