'Unaccounted income' worth Rs 700 cr found in raid at 2 liquor makers in TN

New Delhi: The Income Tax Department conducted search and seizure operations at several locations linked to different groups associated with liquor business in the region and recorded unaccounted income of around Rs 700 crore.

The first raid was conducted on August 6 involving major beer and IMFL companies in Tamil Nadu.

The raids were conducted in the early hours of Tuesday at 55 locations across Tamil Nadu including Chennai, Coimbatore, Thanjavur, etc along with some places in Kerala, Andhra Pradesh and Goa. The premises included residences of the promoters, key employees and some of the suppliers of materials.

The operation was based on intelligence inputs gathered over several months indicating that the business group was indulging in large scale tax evasion by inflating its expenditure on materials used in its production processes.

According to a statement by the Income Tax Department, the search also revealed telltale evidence of the modus operandi of the group which involved over-invoicing of purchase of raw materials and bottles which constituted a major portion of the cost of production.

"The suppliers received payment at the inflated value by cheque or RTGS, but paid back the excess value in cash to key confidante employees of the group. The search teams gathered evidence of such over-invoicing and return of cash by suppliers. Such inflation by over-invoicing amounted to suppression of taxable income of almost Rs 400 crore over a period of six years", the IT department stated.

IT department also found evidence of similar tax evasion by another leading business group of the liquor industry and launched a search operation against the same on August 9.

About seven premises of this group in Chennai and Karaikal were covered in the second phase of the search operation. The search is still in progress and the suppression of taxable income detected in this group has been estimated to be about Rs 300 crore.

Based on a tip-off during the search action, the tax officers tracked down employees moving with unaccounted cash and intercepted them and recovered Rs 4.5 crore cash from the car in which they had concealed it.

The IT department has so far detected undisclosed income of around Rs 700 crore which was not disclosed for taxation.