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

New Delhi, 29th November, 2020

PRESS RELEASE

Income Tax Department conducts searches in Tamil Nadu

The Income Tax Department conducted searches on 27/11/2020 in the case of an IT SEZ developer, its ex-Director and a prominent stainless-steel supplier in Chennai. The search operation was carried out at 16 premises located in Chennai, Mumbai, Hyderabad and Cuddalore.

The evidences unearthed include unaccounted assets worth about Rs. 100 crore accumulated by the ex-Director and his family members in the past 3 years. The search further unearthed that the IT SEZ developer claimed bogus work-in-progress expenses of about Rs. 160 crore in an under-construction project. The entity had also claimed capital expenses of around Rs. 30 crore on account of bogus consultancy fees in an operational project and inadmissible interest expenses to the extent of Rs. 20 crore was also claimed by the entity.

The search further revealed certain share purchase transactions relating to the IT SEZ developer. The shares of this entity were sold by its erstwhile shareholders, a resident and a non-resident entity, which routed its investment through a Mauritius intermediary, for about Rs. 2300 crore in FY 2017-18 but capital gains out of this sale transaction were not disclosed to the department.

Investigation is in progress to determine the undisclosed capital gains in the hands of both the shareholders. Other land transactions involving cash payments and an issue relating to Compulsory Convertible Debentures are also under examination.

The evidences found in the premises of the Stainless-steel supplier revealed that the supplier group has been conducting three sets of sales: accounted; unaccounted and partly-accounted. The unaccounted and partly-accounted sales amount to more than 25% of the total sales each year. Further, the assessee group has provided sales accommodation bills to various customers and received commission of more than 10% on these transactions. While the quantification of unaccounted income is being carried out currently, it is estimated to be around Rs. 100 crore. 

The related concerns of the assessee group are involved in financing, money lending and real estate development. The unaccounted transactions conducted by these entities and the unaccounted capital/loan infusion in these entities are estimated to be around Rs.50 crore. The searches, so far, have resulted in the detection of undisclosed income of more than Rs. 450 crore.

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, 26th November, 2020

PRESS RELEASE

CBDT to validate Unique Document Identification Number (UDIN) generated from ICAI portal at the time of upload of Tax Audit Reports

The Institute of Chartered Accountants of India, in its gazette notification dated 2 nd August, 2019, had made generation of UDIN from ICAI website www.icai.org mandatory for every kind of certificate/tax audit report and other attests made by their
members as required by various regulators. This was introduced to curb fake certifications by non-CAs misrepresenting themselves as Chartered Accountants. 

In line with the ongoing initiatives of the Income Tax Department for integrating with other Government agencies and bodies, Income-tax e-filing portal has completed its integration with the Institute of Chartered Accountants of India (ICAI) portal for
validation of Unique Document Identification Number (UDIN) generated from ICAI portal by the Chartered Accountants for documents certified/attested by them.

It may be noted that, in consonance with the above requirement, Income-tax e-filing portal had already factored mandatory quoting of UDIN with effect from 27 th April, 2020 for documents certified/attested in compliance with the Income-tax Act,1961 by a Chartered Accountant. With this system level integration, UDIN provided for the audit reports/certificates submitted by the Chartered Accountants in the e-filing portal shall be validated online with the ICAI. This will help in weeding out fake or incorrect Tax Audit Reports not duly authenticated with the ICAI.

If for any reason, a Chartered Accountant was not able to generate UDIN before submission of audit report/certificate, the Income-tax e-filing portal permits such submission, subject to the Chartered Accountant updating the UDIN generated for the
form within 15 calendar days from the date of form submission in the Income- tax e-filing portal. If the UDIN for the audit report/certificate is not updated within the 15 days provided for the same, such audit report/certificate uploaded shall be treated as invalid submission.

(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

Dated: 20^th,  November, 2020

PRESS RELEASE

Income Tax Department conducts searches at various locations in Uttar Pradesh

The Income Tax Department started a search and survey action on 18/11/2020 in the case of a leading cattle feed producer in Northern India. The search and survey actions are being carried out at 16 locations in Kanpur, Gorakhpur, Noida, Delhi and Ludhiana.

The main allegations against the group are that it has taken accommodation entries of more than Rs.100 crore in the form of non-genuine unsecured loans from certain Delhi-based shell companies; unusually high sundry creditors; suppression of net profit; and also that a related group chit fund company had received unsecured loans of several crore from unknown sources. 

During the course of search action, it has been established that the shell companies from which loans had been taken exist only on paper and have 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. Therefore, it has been established that the accommodation entries of more than Rs.121 crore in the form of unsecured loans from these shell companies are bogus and actually represent the unaccounted income of the group.            

It has been further gathered during the search that one of these shell companies is a chit subscriber in the group’s chit fund concern, which is a violation of the provisions of the Chit Funds Act, 1982.

Search has revealed huge unaccounted investment in the construction of the residences of the main persons of the group. The same is under verification and will be referred for valuation.

Till now gold and diamond jewellery to the tune of Rs. 52 lakh has been seized. The sources of acquisition of the remaining jewellery are being verified. The source of total cash found amounting to Rs. 1.30 crore is being further verified. A total of 7 lockers have been found, which are yet to be operated.

Further investigations are going on.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT

 

Ministry of Finance

Income Tax relief for Real-estate Developers and Home Buyers

Dated: 13 NOV 2020

As part of the AatmaNirbhar Bharat Package 3.0 as announced by Hon’ble Finance Minister on 12th November, 2020, certain income tax relief measures were brought in for real-estate developers and home buyers.

Up to 2018, section 43CA of the Income-tax Act, 1961 (‘the Act’) provided for deeming of the stamp duty value (circle rate) as sale consideration for transfer of real-estate inventory in the case the circle rate exceeded the declared consideration. Consequentially, stamp duty value was deemed as purchase consideration in case of buyer under section 56(2)(x) of the Act. 

In order to provide relief to real estate developers and buyers, the Finance Act, 2018, provided a safe harbour of 5%. Accordingly, these deeming provisions triggered only where the difference between the sale/purchase consideration and the circle rate was more than 5%. In order to provide further relief in this matter, Finance Act, 2020 increased this safe harbour from 5% to 10%. Therefore, currently, the circle rate is deemed to be the sale/purchase consideration for real estate developers and buyers only where the variation between the agreement value and the circle rate is more than 10%.

In order to boost demand in the real-estate sector and to enable the real-estate developers to liquidate their unsold inventory at a rate substantially lower than the circle rate and giving benefit to the home buyers, it has been decided to further increase the safe harbour from 10% to 20% under section 43CA of the Act for the period from 12th November, 2020 to 30th June, 2021 in respect of only primary sale of residential units of value up to Rs. 2 crore. Consequential relief by increasing the safe harbour from 10% to 20% shall also be allowed to buyers of these residential units under section 56(2)(x) of the Act for the said period. Therefore, for these transactions, circle rate shall be deemed as sale/purchase consideration only if the variation between the agreement value and the circle rate is more than 20%.

Legislative amendments in this regard shall be proposed in due course.

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RM/KMN

(Release ID: 1672636)

 

Ministry of Finance

Income Tax Department conducts searches in Tamil Nadu

Dated: 12 NOV 2020 

The Income Tax Department conducted searches on 10/11/2020 in the case of a leading wholesale bullion and Gold Jewellery dealer doing business from Chennai. The search operation was carried out at 32 premises located in Chennai, Mumbai, Kolkata, Coimbatore, Salem, Trichy, Madurai and Tirunelveli.

The evidence unearthed include unaccounted stock maintained by the assessee at various places. Around 814 kg of excess stock valued at around Rs. 400 crore was identified and would be brought to tax. Since it is a business stock, the same could not be seized as Income-tax Act, 1961 restrains seizure of business stock. The data from the system maintained by the group shows a net income of Rs.102 crore outside books for the financial year 2018-19 alone. The data for financial years 2019-20, 2020-2021 available in the system is being culled out using forensic tools. Similarly, the excess stock of 50 kg found in the business premises of related concerns was not seized, but identified for quantification of unaccounted income.

The group has been maintaining a custom made package called Jpac to cleverly conceal the true facts of the business. The goods were transported by raising bills/invoices as rough estimation, which would be destroyed on delivery of goods. The data so obtained will be used to unearth the unaccounted transactions of other parties based on the data extracted. Forensic experts using specialised tools are culling out more data to reach a final quantification of unaccounted income.

The searches, so far, have resulted in the detection of undisclosed income of more than Rs. 500 crore. In fact, the assessee has made voluntary disclosure of Rs. 150 crore out of the undisclosed income detected so far. Investigation into the non-business investments of the group and use of accommodation entries to reduce profits is also in progress.

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RM/KMN

(Release ID: 1672235)