Oct 18, 2016 10:04 AM IST IST | Source: Moneycontrol.com

EXCLUSIVE: Casinos, dabba traders, jewellers, drug exporters under tax lens

Casino operators in Goa, `dabba traders‘, online medicine exporters, realty companies, several premium jewellery and watch traders, a south India-based restaurant chain and a Rajkot-based bullion trader are among scores of people that are under the government‘s scrutiny for suspected tax evasion totalling thousands of crores of rupees.

Gaurav Choudhury
Moneycontrol

Casino operators in Goa, 'dabba traders’, online medicine exporters, realty companies, several premium jewellery and watch traders, a south India-based restaurant chain and a Rajkot-based bullion trader are among scores of people that are under the government’s scrutiny for suspected tax evasion totalling thousands of crores of rupees.

The income tax (I-T) department, which is fortifying its tech capabilities, is clamping down on tax dodgers using sophisticated devices to hide information.

Two south India-based listed real estate companies were found have hidden four terabytes of data of undisclosed income worth Rs 780 crore.

I-T sleuths are also cracking down on casinos that run gaming clubs on offshore ships in Goa accessible only through feeder boats. Tax officials are combing through details of 3900 customers that was stored in a pen-drive in one such casino.

“Cash receipts from individual customers were unaccounted. Settlement of accounts including winnings was done in cash without TDS. Evidence of suppression of gross gaming receipts of about Rs 333 crores was gathered,” sources, who did not wish to be identified, said.

Tax authorities are also keeping a close watch on `dabba traders’ for suspected tax evasion.

Such deals, popularly known as ‘dabba’, is a trade where brokers and speculators illegally bet on future prices of commodities to earn a quick buck.

These cash transactions happen outside the legitimate stock exchanges. Punters exchange traded prices as the reference quote to take bets in the grey market.

The I-T department has detected unaccounted income of Rs 480 crore from a Gujarat-based group has been found to have created locally customized accounting softwares named `Bright Future‘, `New Vayda‘, and FMT 2010 to carry out dabba deals and maintain data.

Medicine traders to overseas online pharmacies are also under the microscope after a Pune-based exporter was found under-invoicing products sold to internet-based drugstores in the US and UAE.

The company used to buy generic or off-patent medicines locally and export these through Singapore and Mauritius.

It later turned out that the company carried out its business entirely out of India, but showed the business profits to a firm registered in a tax-free zone in Sharjah to evade taxes

“The facts and circumstances indicated that it was not possible to carry such a large business from UAE,” the sources said adding I-T field officers have been asked to stay alert to similar traders selling medicines to overseas online pharmacies.

Bullion and jewellery traders are also being keenly watched.

The I-T department’s cyber-forensic experts have found a Bengaluru-based bullion trader hiding unaccounted sales data of more than 1300 kg of gold of more than Rs. 210 crores spread over a span of 17 months.

Tax sleuths have also detected offshore trading and holding of foreign bank accounts of a Rajkot-based bullion trader whose name has now been submitted to the special investigation team (SIT) probing cases of black money stashed abroad and the Supreme Court, sources said.

A Bangalore-based restaurant and hotel chain is also under scrutiny after tax officials found out that the company had installed an accounting software structured to suppress sales.

The suppressed data would be periodically deleted.

A customized billing software, ―Restaurant Management System-- gave the option to decide the percentage of sales to be accounted.

The company would make use of the option on a daily basis and account for only a certain percentage of sales while the rest would be hidden and later deleted.

Tax authorities will collate these data with the recently concluded initiative where more than 64,000 people declared hidden assets worth Rs 65,250 crore availing the `Income Disclosure Scheme (IDS),’ a four month-long window that allowed tax dodgers to come clean or face prosecution.


A total of 64,275 people revealed assets under the IDS, which allowed people to legitimize concealed income by paying 45 percent tax.

The figures will likely go up after the tax department’s final verification.

At 45 percent, the government will earn about Rs 30,000 crore from income taxes—more than two-thirds the annual budget of Rs 38,500 crore set aside for the rural job guarantee scheme NREGA budget.

The IDS began on June 1 and ended September 30 midnight, and declarants can pay their taxes by December 31.

The government has indicated that tough action could follow after September 30. Tax evaders face potential stringent penalties - up to 35 percent tax and a 90 percent fine - and up to seven years in prison if they were found to be hiding income.

The Central Board of Direct Taxes (CBDT) has issued a “Digital Evidence Investigation Manual,” outlining how tax officials should scout for incriminating data stored in computers and mobile phones.

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