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After raids, I-T alleges Rs 700-cr tax evasion, funds diversion by Dainik Bhaskar Group

The department did not name Dainik Bhaskar but officials in the Central Board of Direct Taxes confirmed the details related to the DB Group in the statement which referred to a "Rs 6,000-crore prominent group" with interests in media, real estate, textiles and power.

By: ENS Economic Bureau | New Delhi |
Updated: July 25, 2021 6:55:50 am
The office of Dainik Bhaskar Group in Bhopal. (Express Photo)

Two days after its nationwide raids on the Dainik Bhaskar Group, the Income Tax department Saturday alleged that the conglomerate had evaded taxes to the tune of Rs 700 crore over six years, indulged in cyclical trading of Rs 2,200 crore, violated stockmarket rules and set up several companies to book “bogus expenses” and siphon funds.

The department did not name Dainik Bhaskar but officials in the Central Board of Direct Taxes (CBDT) confirmed the details related to the DB Group in the statement which referred to a “Rs 6,000-crore prominent group” with interests in media, real estate, textiles and power.

The CBDT said the “voluminous material found during the search operations is being examined”.

The I-T department had conducted searches Thursday at the offices of the Dainik Bhaskar Group covering 20 residential and 12 business premises spread over nine cities including Mumbai, Delhi, Bhopal, Indore, Noida and Ahmedabad.

Calls and text messages to Bharat Agarwal, Executive Director, Dainik Bhaskar Group, did not elicit a response. On Thursday, Dainik Bhaskar had said that the I-T searches were the result of its critical journalism on the Government’s Covid mismanagement.

On Thursday, Divya Bhaskar Gujarat editor Devendra Bhatnagar had told The Indian Express, “First, they tried building pressure through different manners. For the past two-and-a-half months, both the Central and state governments have stopped advertising (in the newspaper). It is their call, they can stop it. Despite that, whenever the government did something good, we published it. And when they did something wrong, we published that too. These raids are a reward for continuous reportage by Bhaskar, exposing the wrongs.”

In its Saturday statement, the CBDT said, “The group has more than 100 companies including the holding and subsidiary companies. During the search, it was found that they have been operating several companies in the names of their employees, which have been used for booking bogus expenses and routing of funds…such companies have been used for multiple purposes namely; booking bogus expenses and siphoning off the profits from listed companies, routing of funds so siphoned into their closely held companies to make investments, making of circular transactions etc.”

The CBDT said that the real estate entity of the group, which is involved in businesses including media, power, textiles, with a group turnover of more than Rs 6,000 crore per annum, had diverted Rs 408 crore out of the loan of Rs 597 crore from a public sector bank to a sister company. “While the real estate company has been claiming expenses of interest from its taxable profit, it has been diverted for personal investments of the holding company,” it said.

“During the search, several of the employees, whose names were used as shareholders and directors, have admitted that they were not aware of such companies and had given their Aadhaar card and digital signature to the employer in good faith,” it claimed.

“The listed media company does barter deals for advertisement revenues, whereby immovable properties are received in lieu of actual payments. Evidences have been found indicating cash receipts in respect of subsequent sale of such properties. This is under further examination,” the statement added.

The tax department is seeking to establish violation of the Companies Act and Clause 49 of Listing Agreement prescribed by SEBI for listed companies along with examining application of Benami Transaction Prohibition Act. “Searches are continuing and further investigations are in progress,” it said.

In a separate statement regarding Lucknow-based Hindi news channel Bharat Samachar, the CBDT alleged detecting unaccounted transactions of about Rs 200 crore in searches conducted on Thursday. The searches were carried out at Lucknow, Basti, Varanasi, Jaunpur and Kolkata. Here too, the CBDT did not name the group in the statement but officials confirmed the details related to Bharat Samachar.

“Cash of more than Rs 3 crore has been seized and 16 lockers have been placed under restraint. Documents including incriminating digital evidence indicating nearly Rs 200 crore of unaccounted transactions have been seized,” the CBDT claimed.

Searches have also allegedly found that individuals as well as shell entities were used by the group to launder funds amounting to more than Rs 40 crore, showing them as loans obtained by media companies, the CBDT said.

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