Nov 15, 2017 06:17 PM IST | Source:

15 cash ban villains: A doctor with Rs 11 cr in banned notes, jewellers fudging sales

Here are a 15 instances, collated from the I-T department’s report, of how people deposited large previously undisclosed cash amounts to dodge taxmen.

Gaurav Choudhury @gauravchoudhury
(Representational Image)
(Representational Image)

Moneycontrol has exclusive details from the I-T department’s status report on “Operation Clean Money” collated in May 2017 based on cash deposits made in banks during the demonetisation drive.

Here are 15 instances, collated from the I-T department’s report, of how people deposited large previously undisclosed cash amounts to dodge taxmen.

#Case 1: Hyderabad-based Jeweller

A Hyderabad-based jeweller had deposited cash of Rs 97 crore in demonetised currency notes. During investigations, they claimed to have received cash from various customers on November 8, 2016 from 9:00 pm onwards towards advance for purchase of bullion.

The I-T department, however, found several irregularities in this claim.

It was claimed cash advances of Rs 90 crore were received on November 8, 9.00 pm onward from 5,200 customers. Declaration letters were, however, furnished for only 65 persons.

It was also seen that cash receipts and sale invoices for these advances were for amounts of less than Rs 2 lakhs and did not have PAN details.

The security guard on night duty told the I-T department no one had visited the premises from 8:00 pm onward on November 08, 2016.

Even though the premises was under CCTV surveillance, no footage for November 8 was available, which the director claimed had been overwritten.

According to the I-T department findings, two companies had facilitated conversion of unaccounted cash of beneficiaries into bullion through dubious claims of receipts of cash advance from 5,200 persons without any evidence.

The case has also been referred to the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) for appropriate action.

#Case 2: Bhopal-based Jewellers

The I-T department had specific intelligence about a sudden spurt in three jewellers’ sales shortly after November 8, 2016.

One entity with annual turnover of approximately Rs 8 crore had booked sales of more than Rs. 17 crore in first week of November, out of which Rs 10.7 crore was booked as advance against future sale.

Instances were detected where bills of large amount were split in multiple bills of less than 2 lakhs each. The names of customers on these bills were found to be partial and incomplete.

There were inconsistencies in the bills. For example, bill number 1001 was issued before bill number 1000, raising suspicions of deliberate backdating. The jewellers admitted undisclosed income of more than Rs 15 crore.

#Case 3 Patiala-based jeweller

A bank reported a sudden spurt in cash deposits—of Rs 11 crore—in the bank account of a Patiala-based jeweller on November 11, 2016. According to I-T officials, it appeared that the books had been manipulated to engage in cash sales in demonetised currency notes after November 8, 2016.

A forensic analysis of the digital data resulted in recovery of certain deleted or modified files, which revealed the jeweller had manipulated sales invoices by back dating the bills for the period between October 1, 2016 and November 8, 2016.

The bills issued during this period were found to have been generated in the system after November 8, 2016.

#Case 4: Rajkot Based Petrol Pumps

An analysis of cash deposits data during November 9-December 30, 2016 showed there were more than 110 petrol pumps in the city that had deposited cash of Rs 190 crore during this period.

On average, it was found that one-fifth of these cash deposits were above the sales made in the corresponding period.

This data was compared with the average monthly sales of 2015. The bank statements were also analysed to check to inconsistencies in periodicity and magnitude of cash receipts and payments.

#Case 5: Delhi-based bitumen trader

A Delhi-based bitumen and jewellery trader deposited cash of Rs. 150 crore in multiple bank accounts after November 8, 2016.

All entries of local cash sales that were disclosed during the cash deposits in bank between November 8 to December 30, 2016 were found to be of exactly the same amount—Rs. 1,99,500.

According to evidence that the I-T department has collated, these deposits were sought to be explained as cash sales by making backdated entries in the accounting software.

The trader also accepted cash in demonetised notes and facilitated purchase of gold after November 8, 2016. Two major parties, to which gold was sold, were shown to be in Jaipur. A spot verification by I-T department sleuths, however, found no such buyer existed in the given addresses.

According to the trader’s books of accounts, the total sale to these parties was around Rs. 135 crore. When confronted with evidence from Jaipur, one of the firm’s partner admitted that he had accepted that cash in demonetised notes from various parties, which he had deposited in his accounts and had in turn supplied gold bars to them.

#Case 6: Bangalore-based contractors

Two major companies engaged in government civil contract projects in Karnataka were alleged to have inflated expenses and investment of unaccounted income in property purchase of immovable properties.

Discreet enquiries also revealed that they were helping in conversion of unaccounted cash in banned notes held by other persons after November 8, 2016. Bank transactions data showed that funds were transferred to related entities such as vendors and sub-contractors through the banking system and subsequently received back in cash.

In the offices of one of the companies, bank passbooks of 34 persons were found. The company’s managing director admitted that these accounts were used to generate cash and the account holders merely lent their names.

He also accepted that several bank accounts were opened in the names of subcontractors, many of whom were relatives or friends of the companies’ directors. These bank accounts were used to withdraw cash for non-business expenses. The company also paid nearly Rs.1.3 crore in banned notes to their labour on November 9, 2016 and booked it as labour expenses. Subsequent investigations show undisclosed income of Rs 167 crore.

#Case 7: Hyderabad Based Doctor
A Hyderabad-based doctor was found to have deposited more than Rs 11 crore in banned notes after November 8, 2016 in three bank accounts.

During questioning, the individual could not provide any document to substantiate the source of the deposits, which was later admitted as undisclosed income.

#Case 8: Government employee in Bhubaneswar

A government employee’s home and offices were searched on the basis of information on unexplained cash deposits in multiple bank accounts in own name, as well as, in the name of his family members.

Investigations also revealed that his wife, a homemaker with no ascertainable sources of income, had purchased land in Bhubaneswar by making cash payment of Rs. 53 lakhs, the sources of which could not be explained. A total cash of Rs 2.28 crores has been seized.

#Case 9: Cooperative bank at Alwar

A survey was conducted in the case based on a reference by the police on seizure of cash of more than Rs 1.3 crore from a vehicle carrying three directors of a cooperative bank in Alwar.

On investigations, it was found that the bank was used for conversion of personal unaccounted cash of Rs 2 crore by the chairman and his family.

New currency notes were brought from the chests of State Bank of India (SBI) and State Bank of Bikaner and Jaipur (SBBJ) in the name of the cooperative bank and replaced illegally.

It was also found that the directors had cheated the bank of crores of rupees by fraudulently obtaining loans in the names of around 90 persons, whose identities are doubtful.

#Case 10: Cooperative bank at Delhi

A cooperative bank in Delhi used demonetisation as an opportunity to earn illegal commissions for handling unexplained cash.

The chairman and his associates, the I-T department has found, systematically opened benami and fraudulent accounts to launder cash for beneficiaries.

More than 1200 new accounts were opened and 600 dormant accounts were made after November 8, 2016 in the name of third persons or on the basis of fake identity and know your customer (KYC) documents.

A total of more than Rs.120 crore was deposited in the bank by December 26, most of which were routed back to the beneficiaries.

The I-T department has carried out preliminary verification in more than 2500 accounts with cash deposits above Rs 1 lakh and available balance above Rs 1 lakh in this bank. Eleven Benami accounts have been identified for action under Benami Transactions (Prohibition) Act, 1988 (as amended by Benami Transactions (Prohibition) Amendment Act, 2016.

#Case 11: Unexplained cash deposits in name of employees

An Amritsar-based company has been found to have deposited Rs 2.5 crore in about 700 accounts of his employees. The AGM Finance of the company admitted under oath to have deposited Rs 2.1 crore of old currency in 780 bank accounts of the workers of the factory without their consent or knowledge.

This deposited cash was later withdrawn from the bank using the withdrawal slips already in custody of the company’s human resources department. The actual bank account holders were not aware that their accounts were being used for deposit of the cash of the company.

#Case 12: Chennai-based Trust

The chairman of a Chennai-based Trust was found to be distributing unaccounted money of banned currency notes to employees for purpose of conversion to new currency.

The Trust had planned to convert Rs 8.18 crore of unaccounted income held in cash through its 650 employees by depositing cash in the employees’ bank accounts in amounts of less than Rs. 50,000.

The I-T department report says that during interrogation, the chairman admitted that the unaccounted cash belonging to the Trusts was kept in the lockers, which was distributed to the employees after the announcement banning the old Rs. 500 and Rs. 1000 notes was made, in order to convert them into new currencies. The money represented unaccounted anonymous donations to the Trust.

#Case 13: Kolkata-based entry operator

After November 8, 2016 a Kolkata-based entry operator had provided entries of Rs. 103 crore to more than 120 beneficiaries, most of which were Delhi-based. Entries were provided through 198 bank accounts linked to shell companies through real time gross settlement (RTGS) and cheques.

#Case 14: Shell Company at Delhi

A vehicle carrying cash of Rs. 3.7 crore in old currency was intercepted in November 2016. The carrier confessed to have deposited nearly 35 crore of cash in old denomination note in the bank since November 11, 2016. The bank accounts were opened in the name of paper companies.

Cash was collected from various parties, deposited in the bank account of one such fake company, then transferred through RTGS from one company to another company’s bank account and after several such layerings, were finally deposited in the account of original owner.

All these accounts were operated by a single person. This was done with active involvement of the bank’s branch manager at a commission 1 percent on the sums deposited.

Deposits were made in the names of three paper companies. The bulk cash deposit was accepted by the bank based on declarations on respective letter heads of the proprietorship firms, where it was disclosed that the deposits were out of the cash sales.

Several anomalies were found in such declarations including declarations of separate concerns written on common letter heads in similar font, style, type of paper. The signatures appeared to have been put by same person.

The declarations did not contain reference numbers or PAN details. The deposits were made on one particular day of the weeks after 6:30 pm – after the closure of banks’ business hours. These bank accounts had no cash deposits before November 8, 2016.

#Case 15: Abuse of exemptions provided for North eastern states

The tribal people of five north-eastern states –Tripura, Manipur, Mizoram, Nagaland and Arunachal Pradesh are exempted from tax under Section 10 (26) of the Income Tax Act, 1961. Instances were found where the exemption was abused to deposit unaccounted cash.

In Dimapur, Nagaland, large quantity of cash in a private plane was dropped and the people flew back by the aircraft to Delhi, where they were intercepted by the Air Intelligence Unit, Delhi.

During questioning, one of the persons stated that after the announcement of demonetisation November 8, 2016, he had an arrangement with his friend to transport cash from Delhi to Dimapur. The understanding reached was that he would receive the cash in Dimapur, deposit the same in his bank account in Dimapur and return it via RTGS or in cash at a later date.

According to the I-T department report, the beneficiary, in this case, has admitted that Rs. 8.5 crore was transported from Hisar to Dimapur on two occasions.
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