The income tax department digs up Rs 700 million of undisclosed income in Tamil Nadu

New Delhi, August 10 () The Department of Income Tax has conducted a search and seizure operation in Tamil Nadu and detected an undisclosed income of Rs 700 million, according to an official statement.

The search began early on Tuesday at 55 locations in various parts of the state, including Chennai, Coimbatore, Thanjavur and also in Kerala, Andhra Pradesh and Goa.

The Income Tax Department conducted a search and seizure operation on August 6, 2019 in the case of one of the main beer producers and IMFL (Indian-made foreign liquor) in Tamil Nadu, said the Ministry of Finance of the Union in a statement.

The location included residences of promoters, key employees and some of the material suppliers, he said.

According to the statement, the search was based on intelligence collected over several months that the business group was incurring a large-scale tax evasion by inflating its expenses on materials used in its production processes.

During the search, the teams found revealing evidence of the modus operandi that implied the overbilling of the purchase of raw materials and bottles, which constituted an important part of the cost of production, according to the statement.

The suppliers received the payment at the inflated value by check or RTGS, but returned the excess cash value to the key confidential employees of the group.

The search teams gathered evidence of such overbilling and cash back by suppliers. Such overbilling inflation led to the abolition of the taxable income of almost Rs 400 million over a period of six years, he said.

The search also resulted in evidence of similar tax evasion by another leading business group in the same liquor industry. Consequently, the department launched a search operation in the case of the second group on Friday, according to the statement.

About seven locations of this group in Chennai and Karaikal were covered in the second phase of the search operation. The search is still in progress and it has been estimated that the suppression of taxable income detected in this group is approximately Rs 300 million, he said.

Acting on a notice, tax officers tracked employees who moved with uncounted cash, intercepted them and recovered Rs 4.5 million rupees from the car in which they had hidden it, according to the statement. The search so far has resulted in the detection of undisclosed income of Rs 700 crore, he added. HMB SID