Government widen crackdown on tax cheaters

Income tax department has submitted a list of more than 500 officials, from top civil servants to municipal officials, who have deposited huge cash amount during the demonetization. These civil servants are shocked and surprised by ongoing investigation against tax evasion and money laundering, as they are potentially involved in thousands of shell companies for tax evasions.

A finance ministry official who doesn't want to be named said to dna that “Can you believe a Mumbai Municipal official has deposited more than one Crore cash in his account during the demonetization. We have ordered to find out such tainted officials across the country. No one will be let off’. Some official have run petrol pump either in their own name or in the name of shell companies” he added.

Enforcement Directorate (ED), Income Tax and SFIO have started a joint operation against 56,00 shell companies who are allegedly indulged in tax evasion through share premium, money laundering and long term capital gain tax. Investigating agencies are tracking down the real beneficiaries of these companies. More than 9 Lakh shell companies are on the radar of the Income tax department and being scrutinised for their business and beneficiaries. Income tax department has identified about 90 shell companies with 559 beneficiaries who have moved about Rs 8000 crore black money in just three months.

ED has seized assets of senior IAS and former Chhattisgarh principle secretary Babulal Agrawal worth of Rs 36.09 crore, on Tuesday. Babulal Agarwal had used 13 shell companies to convert black money into white.

Babulal had open several accounts in the names of the villagers and then made cash deposits in these accounts.

These cash deposits were further channelised into shell companies as share application money, and after that the shell companies invested the said black money as equity at a large premium in Prime Ispat Limited, a company owned by brothers of Babulal Agrawal.

These equity shares belonging to the shell companies were then purchased by sister concerns of Prime Ispat Ltd, thus leaving the control of the entire black money with Babulal Agrawal and his brothers. This black money was used for investment in the factory building, land, machinery and immovable properties belonging to Prime Ispat Limited.

As per the investigation, during 2006-08, Babulal Agrawal, with the help of his Chartered Accountant, had opened 446 Benami bank accounts in the names of villagers of Kharora and nearby villages with Union Bank of India, Pandri Branch and Ramsagarpara branch, Raipur. With the active connivance of the bank officials, they opened the said bank accounts even though none of the account holders came to the bank branch in person for verification of their signatures, thereby flouting the Know Your Customer (KYC) norms.

Funds were moved from the Benami bank accounts to 13 shell companies, operated by Sunil Agrawal, by way of investment by the Benami account holders in the equity shares of the said 13 shell companies at a huge premium even though the shell companies did not have any operational income. In total, the 13 shell companies received investment in its equity to the extent of Rs 39.67 crore.

As dna has already reported that April is going to be a month of massive action against black money hoarders and their advisers, like CA and Advocate, under Benami Act.

Meanwhile, in an another crackdown, two person’s G Dhanjay Reddy and Liaqat Ali were arrested from Chennai. Both of them had formed a number of shell companies. G Dhananjaya Reddy, an engineering graduate, from Bengaluru for allegedly floating more than 20 shell companies. G Dhanjay Reddy had sent money abroad from a loan he had acquired on forged papers. While Liaqat has shown import and export transactions on papers, the transactions never took place. "He had submitted forged documents of several immovable properties as third-party collateral to the banks and had got loans sanctioned in the name of various shell companies," an ED official said.

In another case, the Enforcement Directorate (ED) has attached assets worth Rs 5 crore of the prime accused in the Rs 5,395 crore Surat hawala money laundering case.

The agency said it has attached fixed deposits of Madanlal Jain in connection with the case that also involves his alleged associate Afroz Fatta. The ED had registered a case against them under the Prevention of Money Laundering Act (PMLA) acting on the FIR of the crime branch of the Surat Police in 2014.

"Investigation revealed that amounts totalling Rs 5395.75 crore were remitted to companies in UAE and Hong Kong by forged bills of entry through the accounts of 9 companies in ICICI Bank in Surat. "In this case involving shell companies, Fatta, Jain, Bilal Haroon Galani and others were involved in sending illegal remittances to UAE and Hong Kong from these accounts of nine companies by forged bills of entry.  "These were shell companies mainly created, controlled and supervised by Jain, using dummy persons as directors/ partners," ED said in a statement. The total attachment, in this case, is now Rs 14.74 crore.

Again, ED has attached assets worth Rs 61.61 Crore of Jagjit Singh & others of drug racket in Punjab. Total attachments in this case now are over Rs 95 Cr.

All These tips that triggered the investigation came from newly created risk analysis wing, a data mining cell of Income Tax Department. All these information has disseminated to different investigating agencies including SFIO and ED.

With India’s tax amnesty, Pradhan Mantri Garib Kalyan Yojna (PMGKY) end last week, and authorities are now setting their sights on those who didn’t participate in it and continue to evade taxes. The government has given way-out to such people under PMGKY, where evaders could declare their amount with 49.9% tax and could have put another 25% in a four-year interest-free deposit under PMGKY.