Events and Updates

Title: I-T raids on two steel majors in Karnataka unearths sale suppression

Posted on: 21st August 2019

The sleuths reportedly seized unaccounted cash, and jewellery worth Rs 4.7 crore as well as recovered huge volume of incriminating documents and digital evidences showing unaccounted cash sales. 

 

BENGALURU: The Directorate of Income Tax (Investigation), Karnataka and Goa, recently conducted searches on two steel firms — VRKP Steel and A-One Steel & Alloys — in Bengaluru, Hindupur and Ballari.

 

The sleuths reportedly seized unaccounted cash, and jewellery worth Rs 4.7 crore as well as recovered huge volume of incriminating documents and digital evidences showing unaccounted cash sales. “Unaccounted cash of Rs 2.2 crore and unaccounted gold/diamond jewellery weighing 7,380 gm valued at Rs 2.5 crore have reportedly been seized. The total seizure is estimated at Rs 4.7 crore,” said an officer.

 

According to the Income-Tax Department, one of the groups is engaged in making cash sales, which is not accounted in the book of accounts by practising a novel method of sales suppression, termed by them as a 1+1 scheme, wherein for a single GST invoice raised, two loads of material are delivered to the customer – one load accounted and the other unaccounted.

 

“The sale proceeds of one load is received in cheque and the other in cash. The transporters have been found to be paid in cash towards the second load carried. Digital evidence in the form of various messages showing the use of hawala channels for transfer of cash from one place to another have been found in the mobiles of key employees. Various loose sheets, diaries and corroborating messages have been found to show such practice of the group,” the officer said.

 

He added that the searches have also shown alleged misuse of GST input credit by these groups. “The groups are learnt to have taken accommodation bills from bill traders to the tune of Rs 642 crore. Evidence found and extracted from digital data showed that these accommodation bills have been taken to disguise and account for the scrap purchases made in cash and unaccounted production of TMT rods.

 

Statements have been recorded from various employees involved in the entire chain of accounting, purchase, cash handling and weighing in the factories and head office. Further, two of the major accommodation entry providers have reportedly admitted to providing dummy bills of Rs 48 crore to these groups without actual delivery of goods,” the officer added.

 

“The groups have also made unaccounted cash sales. However, all paperwork in this regard has been found destroyed and records deleted from computers and digital devices. With forensic experts, huge digital data has been recovered. The data requires to be further examined to quantify unaccounted sales. A key employee of one of the groups involved in such activity has allegedly admitted to unaccounted sales of Rs 37 crore,” said the officer.

 

He added that the tax officers found cash payments were made to transporters and their employees.