CHENNAI: The income tax department has detected unaccounted income of Rs 1,000 crore following searches conducted against a Chennai-based group operating in the IT infra sector at five locations in the city and Madurai.
According to the income tax department, the group IG3 Infra Limited (formerly known as Indian Green Grid Group Limited), a public incorporated firm in February 2004 which owns Chennai One IT Special Economic Zone (SEZ), also suppressed foreign income received in the form of share subscription equivalent to Rs 200 crore, which is taxable in India in the hands of the shareholder. Sleuths of the income tax department, who conducted searches on Wednesday, also unearthed evidence relating to investments in a Singapore registered company.
According to the income tax department spokesperson, the shareholding of IG3 Infra Limited is held by two companies, one owned by the group searched, while the other is a subsidiary of a major infrastructure development and financing group.
It has been found that the company belonging to the searched group has invested a very nominal amount although it has 72 percent shareholding, while the other company having 28 percent shareholding has invested almost the entire money. This has resulted in a benefit or gain of almost 7 crore Singapore dollars (around Rs 200 crore) in the hands of the company belonging to the searched group, which was not disclosed by it in its return of income and also in the FA Schedule.
It is learnt that the income tax department has initiated proceedings against IG3 Infra Limited under Black Money Act, 2015 for not disclosing foreign assets or beneficial interest in the financial assets schedule of the income tax returns. The present value of this investment exceeds Rs 354 crore.
It has been further found during the search that the group had acquired five shell companies recently, which were used to siphon out as much as Rs 337 crore from the main group company by raising bogus bills and without doing any real business in these companies.
The siphoned money was transferred abroad and utilized for purchase of shares in the name of the son of the main assessee. One of the directors has admitted that they have diverted funds through these companies.
Evidence has also been found regarding allotment of preference shares worth Rs 150 crore in 2009 in the group company by passing accounting entries only, in order to project inflated capital before banks and financial institutions to obtain finances. Allotment of another Rs 150 crore worth preference shares in 2015 from funds from group companies, who in turn took loans or entries, is being examined.
During the search, it was also found that the group had borrowed funds from banks on interest and diverted them to other group companies free of interest for investments in properties. The total interest disallowance on this count works out to about Rs 423 crore.
Further, the search also revealed that the group had purchased about 800 acres of land worth at least Rs 500 crore, in the names of various shell companies from the funds provided by the main group concern. Applicability of the Prohibition of Benami Property Transactions Act, 1988 to these transactions is being examined.
It was also seen that there was a transfer of substantial shareholdings during the current year at a price much lower than the fair market value to be determined as per IT Rules, 1962. In view of this, substantial additions are likely to be made under section 56(2)(x) of the IT Act, 1961 (the Act) in the case of the buyer and capital gains under section 50CA of the Act, in the hands of the seller. The quantum of this will be determined in due course.
Thus, the search has led to the detection of unaccounted income of around Rs.1000 crore, out of which disclosure of an additional income of Rs 337 crore has already been made by the assessee, besides actionable issues under Benami and Black Money Acts. Further investigations are going on.
What is IG3?
IG3 is a leader in developing and managing secure business infrastructure across high growth sectors such as information technology and hospitality.
Incorporated in 2004, as ETL Infrastructure Service Limited (EISL), the group made rapid strides and is acknowledged as a leading developer and manager of secure business infrastructure and hospitality infrastructure in India.
The board of directors includes C Ramachandran, a retired senior civil servant who was instrumental in bringing Ford Motors and Hyundai Motors to set up their facilities in Tamil Nadu while he was industries secretary.