I-T dept detects evasion worth Rs 6.5k crore after raids on mobile companies

The Income Tax Department has detected alleged unaccounted income worth over Rs 6500 crore after it recently raided some foreigncontrolled mobile communication and handset manufacturing companies and persons linked to them the CBDT said on FridayThe searches were carried out on December 21 and premises in Karnataka Tamil Nadu Assam West Bengal Andhra Pradesh Madhya Pradesh Gujarat Maharashtra Bihar Rajasthan and DelhiNCR were coveredThe search action has revealed that two major companies have made remittance in the nature of royalty to and on behalf of its group companies located abroad which aggregates to more than Rs 5500 croreThe claim of such expenses does not seem to be appropriate in light of the facts and evidence gathered during the search action the Central Board of Direct Taxes CBDT the policymaking body for the IT Department claimed in an official statement issued hereIt did not identify the entities searchedThe raids brought out the modus operandi of purchase of the components for manufacturing of mobile handsetsIt is gathered that both these companies had not complied with the regulatory mandate prescribed under the Income Tax Act for disclosure of transactions with associated enterprises the statement saidSuch a lapse it said makes them liable for penal action under the IT Act and the quantum could be more than Rs 1000 croreA modus operandi was detected whereby foreign funds have been introduced in the books of the Indian company but it transpires that the source from which such funds have been received are of doubtful nature purportedly with no creditworthiness of the lenderThe quantum of such borrowings is about Rs 5000 crore on which interest expenses have also been claimed it saidThe CBDT said evidence with regard to the inflation of expenses payments on behalf of the associated enterprises etc have also been noticed which led to the reduction of taxable profits of the Indian mobile handset manufacturing companySuch amount could be in excess of Rs 1400 crore it saidThe statement claimed one of the companies raided had utilised the services of another entity located in India but did not comply with the provisions of tax deduction at source introduced from April 2020The quantum of liability of TDS on this account could be around Rs 300 crore it saidIn the case of another company covered in the search action the statement said it was detected that the control of the affairs of the company was substantively managed from a neighbouring countryThe Indian directors of the said company admitted that they had no role in the management of the company and lent their names for directorship for namesake purposesEvidences have been gathered on attempt to transfer the entire reserves of the company to the tune of Rs 42 crore out of India without payment of due taxes it saidThe CBDT said a survey action was also undertaken against certain fintech and software service companies and it was found that a number of such companies had been created for the purposes of inflating expenses and siphoning out fundsFor this purpose such companies have made payments for unrelated business purposes as also utilised the bills issued by a Tamil Nadubased nonexistent business concernThe quantum of such outflow is found to be around Rs 50 crore it saidThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever