I-T Raids at 44 Locations on BMC Contractors Allegedly Unearth Rs 735 Crore in Financial Irregularities

New Delhi: The Income Tax Department has detected alleged irregularities to the tune of Rs 735 crore after conducting searches on civil contractors working for the Brihanmumbai Municipal Corporation (BMC), the Central Board of Direct Taxation (CBDT) said on Thursday. The CBDT is the policy-making body for the tax department.

The search and survey operation was started at 44 locations in Mumbai and Surat on November 6 on entry providers and beneficiaries who have been engaged in the execution of civil contracts, mainly in BMC, it said. BMC is one of richest municipal corporations in the country.

The department said incriminating evidence collected during the raids show "large-scale tax evasion and money laundering".

Sources said the I-T sleuths also carried out surveys at the premises of a few BMC officials.

"Raids were carried out on entry providers and beneficiaries who have been engaged in execution of civil contracts mainly in Brihanmumbai Municipal Corporation (BMC)," the Income Tax Department said in a statement. "There were reports that certain contractors had taken entries in the form of loans, etc., from entry providers and also inflated expenses in the books of accounts to suppress income."

In its statement, the CBDT said reports had shown certain contractors had taken entries in the form of loans among others from entry providers and also inflated expenses in the books of accounts to suppress income. "Incriminating evidences showing large scale tax evasion and money laundering have been found," the tax body said, adding it has so far detected irregularities to the tune of Rs 735 crore and the extent of accommodation entries is being quantified.

The operation "also led to the detection of the use of bogus companies (floated by entry providers) for giving entries to businesses in the form of loans or bills for expenses, among others", it added.

"In the case of the entry providers, systematic modus operandi of bank fraud and forgery has been detected whereby the promoters have made investments in immovable properties and shares of group companies by siphoning off the bank loans," said the CBDT.

In the case of the contractor groups, several instances about inflation of expenses by bogus purchases/sub-contracts and taking of loans from entry providers have been identified, the statement claimed.

Investigations are in progress, including identification of the remaining beneficiaries, the CBDT said.