According to sources, Mehul Choksi and Nirav Modi also used these fake receipts to show fictitious revenue turnover in their books
The Income Tax department has busted an about Rs 5,200-crore scam of fake receipts, which were used to inflate books and avail loans.
According to sources, Mehul Choksi and Nirav Modi - who are at the centre of the Punjab National Bank fraud - also used these fake receipts to show fictitious revenue turnover in their books.
When contacted by Moneycontrol Mehul Choksi's lawyer said, "I am not aware of the development but I can say it is not true." Nirav Modi's lawyer Vijay Aggarwal also said he is not aware of the development and so will not comment on it.
Two weeks ago, the Income Tax (I-T) department raided a company based in the Bharat Diamond Bourse, in Mumbai's Bandra Kurla Complex in connection to the scam. This company allegedly issued the fake receipts.
Bharat Diamond Bourse is home to about 2,500 diamond traders.
A senior official of the I-T department told Moneycontrol, “There are some businesses that issue sales and purchase invoices, and charge 1 percent of the total value as commission. These invoices are used to inflate revenue in the books. These invoices are used to draw pre and post shipment credit from banks.”
Another source in the investigation agency added: “Department has found that Mehul Choksi and Nirav Modi used fake receipts for inflating volumes in their books. Inflated books helped them take larger amount of loan from banks.”
These fake receipts, issued between 2011 and 2016, could be worth about Rs 5,200 crore.
An executive from a listed diamond company explained the modus operandi. “In diamond market, there are about 10-12 companies that actively use fake receipts."
"These companies issue fake invoices for sales and purchase, without any movement of inventory, for a commission of 1-2 percent. These invoices are used to inflate the sales, and draw higher credit limits from the banks, against receivables. These companies offer local as well as export bills, from their entities based in overseas locations such as Hong Kong, Dubai and Singapore."Another executive from the industry pointed out that a similar investigation was conducted about two years ago, but was dropped due to immense political pressure.