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Searches at premises linked to 4 ARCs: I-T

🔴 The search conducted on December 8 found that the ARCs adopted “unfair and fraudulent trade practices in acquiring the non-performing assets (NPAs) from lender banks”.

By: ENS Economic Bureau | Mumbai |
Updated: December 16, 2021 7:06:03 am
The I-T searches found that the minimum cash payout made out by the ARCs to lenders for acquiring the stressed assets were made through the funds of the borrower group.

The Income Tax Department on Wednesday said it has searched at least 60 premises linked to four asset reconstruction companies (ARCs) in Mumbai, Ahmedabad and Delhi for alleged irregularities.

The search conducted on December 8 has found that the ARCs adopted “unfair and fraudulent trade practices in acquiring the non-performing assets (NPA) from the lender banks”.

Without naming the ARCs, the tax agency said it has found “an unholy nexus” between the borrower groups and the ARCs. The tax department has also found that the ARCs have used “shell/dummy” companies in the process.

“The amount at which the NPA has been acquired by the ARC has been found to be far less than the real value of the collateral securities covering the said asset/NPA,” said the tax department in a statement.

The I-T search found that the minimum cash payout made out by the ARCs to lenders for acquiring the stressed assets were made through the funds of the borrower group.

“Such funds have been routed through several layers of dummy companies controlled by the borrower group or through hawala channels,” said the I-T department.

The tax department said it has also found that the ARCs have disposed the assets that were acquired by them from the banks in a non-transparent way.

“More often than not, the underlying assets had been re-acquired by the same borrower group, albeit at a fraction of their real values. The ARCs are found to have concealed the profits on disposal of the underlying assets by diverting the actual profit to their related concerns, under the garb of consultancy receipts or unsecured loans/investments. Through this method, the ARCs have not only evaded the payment of due taxes but also deprived the lender bank(s) of their share of actual profits,” said the tax authority.

According to the agency, one ARC had maintained a parallel set of accounts on Tally accounting software, in a pen
drive. The pen drive was recovered from the custody of the trusted employees of the promoter, said the tax department. This parallel set of accounts has cash transactions of over Rs 850 crore, it claimed.

“Handwritten diaries have also been found during the search, containing detailed entries substantiating the deliberate act of layering of transactions by the promoter group and use of a network of middlemen for the same.

There are also evidences of routing of funds through offshore structures to acquire the assets,” said the I-T.
The tax agency has also seized cash of Rs 4 crore during its search operation.

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