BENGALURU: The Income Tax Department last week carried out searches on two groups engaged in digital marketing and waste management in several cities, including Bengaluru, and unearthed unaccounted investments worth Rs 7 crore and bogus expenses of around Rs 70 crore.
Though the tax officials have remained tight-lipped about the searches, informed sources said that campaign management and image consultancy firm ‘DesignBoxed,’ which was “in the process being officially hired” by the Karnataka Pradesh Congress Committee President DK Shivakumar for political and social campaigns was searched for alleged tax violations at its various locations and premises in its headquarters in Surat and branch offices in Bengaluru, Chandigarh and Mohali.
According to MoF, during the searches, the tax officials found “incriminating evidence that revealed that the group had been engaged in obtaining accommodation entries using an entry operator. The entry operator has admitted to have facilitated transfer of cash and unaccounted income of the group through Hawala operators,” the MoF stated.
“The tax officials detected inflation of expenditure and under-reporting of revenue. The group has also been found to be indulging in unaccounted cash payments. It is also found that personal expenses of the directors have been booked as business expenses in the books of accounts. Luxurious vehicles used by the directors and their family members are found to have been purchased in the names of employees and entry providers,” the Ministry added.
‘DesignBoxed’ is said to be one of the largest political campaign party and has covered six states for Assembly elections for the Congress party- Punjab, Haryana, Himachal Pradesh, Rajasthan, Chattisgarh and Assam. “Karnataka is the seventh state that the firm is signing up to run the party’s political campaign,” said sources.
When contacted, Shivakumar called the searches “sheer harassment of a young, professional company,” he told TNIE. “The income tax searches were conducted for political reasons. We have not signed them up officially for party campaigns. They recently handled ‘Vaccinate Karnataka’ for us on a trial basis. It is unfortunate that central agencies are harassing enterprising and start-up firms,” said the KPCC President.
Meanwhile, Naresh Arora of ‘DesignBoxed’ tweeted stating that the income tax raids on him and his associates "found nothing – no unaccounted valuables of any kind..We are law abiding citizens and proud taxpayers,” tweeted Arora. “The raids are so obviously political. They targeted me and my colleagues only because we have been working for the Opposition and mainly Congress party. Apart from trying to find anything remotely incriminatory against top Congress leaders, the raids were intended to intimidate a self-made professional and political campaign management firm so that we don’t work for India’s main opposition party,” he tweeted. Arora slammed the raids and called them “an outright abuse of tax agencies for political aims, not what democracies do,” he stated on his Twitter handle @nishuarora.
The IT officials searched second group, which is engaged in solid waste management comprising solid waste collection, transportation, processing and disposal services across the country, primarily catering to Indian municipalities.
“During the course of the searches, various incriminating documents, loose papers and digital evidence have been seized. Evidence found reveals that this group has indulged in booking bogus bills for expenses and sub-contracts. A preliminary estimate of such bogus expenses booked is to the tune of Rs 70 crore,” the MoF stated.
According to the Ministry, the search action has led to the detection of unaccounted investment in property of about Rs 7 crore. “Apart from this, the tax officials seized unaccounted cash of Rs 1.95 crore and jewellery of Rs 65 lakh,” it added.