The Department of Income Taxes carried out on July 7 a search and seizure of a real estate, construction, infrastructure and waste management company based in Hyderabad.
Waste management activities are spread across the country while real estate activities are mainly concentrated in Hyderabad.
During the search and seizure operation, numerous incriminating documents, loose sheets and other documents were seized indicating the group’s involvement in unrecorded transactions.
“It was found that the group had sold majority stakes, to a Singapore-based non-resident entity, in one of its group companies during the 2018-19 financial year and had achieved huge plus- values. The group then devised various colorful schemes by concluding a series of arm’s length purchases / sales of shares / subscriptions of securities and the issuance of subsequent bonuses etc. with related parties, creating a loss which was offset by the realized capital gains ”, press release from the IT department read.
He read that evidence / supporting documents were recovered indicating that the loss was artificially created to offset the respective capital gains. The search operation led to the detection of an artificial loss of around 1,200 crore, which is to be imposed on the hands of the respective valuations, he read.
In addition, during the research, it was found that the assessed person wrongly claimed bad debts in the amount of 288 crore due to related party transactions, which was deducted from the aforementioned profits.
During the search procedure incriminating documents related to the artificial / incorrect claim were found.
Unrecognized cash transactions with group associates were also detected during the search, and the amount and mode of these are under review. As a result of the search and seizure operation, and on the basis of various incriminating documents found, the entities and associates admitted to having unrecorded income of 300 crore and also agreed to pay the taxes owed. Further investigation is underway.