The Income Tax department has unearthed black money worth Rs 110 crore generated by entities in two states with the alleged connivance of two Chartered Accountants (CAs) using shell companies. The department, in the past few days, had conducted searches in Rajasthan’s Bikaner and Jind in Haryana as part of its crackdown on shell firms and bogus entry operators who route and launder unaccounted wealth by misusing banking channels.
In the first instance in Bikaner, a senior official said the tax sleuths found that a Surat-based CA had “arranged accommodation entries” of over Rs 7 crore through at least four companies.
Accommodation entries are those where large amounts of money are broken into smaller values so that it does not trigger alarms in the banking channels and the transaction is kept under the radar of probe agencies.
They said the CA allegedly admitted to the department during questioning that he had created 10 dummy companies to launder Rs 90 crore black money of his clients in the last five years or so. A huge stack of bank passbooks, blank cheques, stamps, seals and Permanent Account Number (PAN) cards were recovered and seized by the department during this operation, the official said. “The illegal or bogus entries in this case pertain to fake turnover of trading in wool,” a senior officer said.
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In the second instance in Jind, the taxman found that the person it raided had taken entries over a period of 10 years with the help of a CA who
admitted to have routed funds for the group through shell companies based in Delhi. “Initial probe has shown that the black money involved in this case is over Rs 20 crore,” the officer said.
Both the CAs will soon be served summonses for further questioning in the case and to underline their role in aiding black money generation, he said. The department, the official said, will share the findings against the two CAs with their regulatory body — the Institute of Chartered Accountants of India (ICAI).
The I-T department has launched multiple searches, beginning April 1, against a number of people and categories of professionals like bureaucrats, CAs, real estate players and those in the hospitality sector to check the menace of stash funds and instances of tax evasion.
The latest action by the taxman is seen as part of its drive after the Prime Minister’s Office (PMO) asked probe agencies to check the illegal operations and black money generation through shell companies.
A Special Task Force (STF) comprising various agencies has been created in the Finance Ministry to initiate and review action taken in these cases. The Income Tax department is one of the agencies under the STF against shell companies.
Shell companies are firms set up with nominal paid-up capital, high reserves and surplus on account of receipt of high share premium, investment in unlisted companies and no dividend income or high amount of cash-in-hand.
Such firms also characteristically have private companies as majority shareholders, low turnover and operating income, nominal expenses, nominal statutory payments and stock in trade and minimum fixed assets.