I-T Dept accuses a unicorn startup for Rs 400-crore fraud

The Income-Tax Department has accused a unicorn start-up group, having an annual turnover of over Rs 6,000 crore, of showing bogus purchases, making huge unaccounted cash expenditures and obtaining accommodation entries, amounting to about Rs 400 crore.

The agency gathered documentary proof showing that the group had booked bogus purchases, indulged in huge unaccounted cash expenditures, and arranged accommodation entries. It had also received huge foreign funding via the Mauritius route, by issuing shares at an exorbitantly high premium.

The department conducted searches at 23 locations of the Pune/Thane-based group that is primarily engaged in the business of wholesale and retail of construction material. The premises were located in Maharashtra, Karnataka, Andhra Pradesh, Uttar Pradesh and Madhya Pradesh.

During the searches, the agency has so far seized an unaccounted cash of Rs 1 crore and jewellery worth Rs 22 lakh.

During the probe, the agency also exposed a complex “hawala” network involving some shell companies operating from Mumbai and Thane that existed only on paper and were created solely for the purpose of providing accommodation entries (bogus transactions) worth over Rs 1,500 crore to various companies, to facilitate tax evasion and for evading detection of other financial irregularities.