The direct taxes body said the I-T department had found cyclical trading and transfer of funds among group companies, besides booking of bogus expenses and siphoning off of profits from listed companies, and routing of such funds into their closely held companies to make investments, making of circular transactions.
The board did not name the group.
On Thursday, income tax authorities had searched the offices of the Dainik Bhaskar Group in Mumbai, Delhi, Bhopal, Indore, Noida and Ahmedabad, as well as the residences of its promoters. The action on the publisher of Hindi newspaper Dainik Bhaskar had drawn sharp criticisim from the opposition that termed it as an attack on the freedom of press and vendetta against the group for its pandemic coverage.
“The quantum of income escapement using this modus operandi, detected so far, amounts to Rs 700 crore spread over a period of six years. However, the quantum may be more as the group has used multiple layers and investigations are being carried out to unravel the entire money trail,” the CBDT said.
It added that the activities involved violation of the Companies Act and Clause 49 of the Listing Agreement prescribed by Sebi for listed companies. Application of Benami Transaction Prohibition Act will also be examined, the board said.
“Cyclical trading and transfer of funds among group companies engaged in unrelated businesses to the tune of Rs 2,200 crore has been found. The enquiries have confirmed that these have been fictitious transactions without any actual movement or delivery of goods. The tax effect and violation of other laws is being examined,” the board said.
The real estate entity of the group operating a mall had been sanctioned a term loan of Rs 597 crore from a nationalised bank. Out of this, Rs 408 crore had been diverted to a sister concern as a loan at a low interest rate of 1%. 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, the CBDT said.
The listed media company does barter deals for advertisement revenues, whereby immovable properties are received in lieu of actual payments, the CBDT said. The statement said evidence has been found indicating cash receipts in respect of subsequent sale of such properties. “This is under further examination,” it added.
Evidence has been found which indicates receipt of on-money in cash, on sale of flats by the reality arm of the group, the CBDT claimed, adding that the same had been confirmed by two employees and one director of the company. “The modus operandi as well as the corroborating documents have been found. The exact amount of out-of-books cash receipts are being quantified,” the statement said. A total of 26 lockers have been found in the residential premises of the promoters and key employees of the group, the CBDT statement said.