The Income Tax (I-T) department has claimed to have busted a major racket of cash generation through bogus sub-contractors, over-invoicing and bogus billing in Andhra Pradesh and Telangana, officials said on Thursday.
The department started a search and seizure operation on February 5 as part of its probe across Hyderabad, Vijayawada, Kadapa, Visakhapatnam, Delhi and Pune. The operation covered 40 premises, including one belonging to P Srinivas Chowdhary — former personal secretary of previous CM Chandrababu Naidu — posted in the General Administration Department.
The department did not name any of the companies under the scanner. “The search action included three prominent infrastructure groups based in Andhra Pradesh and Telangana… Several incriminating documents and papers were found and seized… apart from emails, WhatsApp messages and unexplained foreign transactions,” said Surabhi Ahluwalia, Commissioner of IT (Media and Technical Policy) and spokesperson of the Central Board of Direct Taxes (CBDT).
“ A search operation was also carried out on close associates, including the ex-personal secretary, of a prominent person and incriminating evidence was seized,” the statement said.
The department also searched offices and residences of TDP’s Kadappa unit chief R Srinivasulu Reddy, who owns the infrastructure firm RK Infra Private Limited.
Explaining the alleged racket, an official from the I-T department said, “The searches revealed that infrastructure companies had sub-contracted work to several non-existent/bogus entities. Preliminary estimates suggest siphoning of more than Rs 2,000 crore through transactions layered through multiple entities, with the last in the chain being small entities with a turnover less than the Rs 2 crore to avoid maintenance of account books and tax audits. Such entities were either not found at their registered address or were found to be shell entities. Several such sub-contractors were controlled by principal contractors with all their ITR (Income Tax Return) filing being done from the IP addresses of the main corporate office.”
“FDI receipts worth crores in group firms of one of the infrastructure companies are suspected to be ‘round-tripping’ of its unaccounted funds. Unexplained cash worth Rs 85 lakh and jewellery worth Rs 71 lakh have been seized. More than 25 bank lockers have been restrained,” the official said.
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