Raids on BMC contractors unearths Rs 735-cr financial irregularities: I-T dept

The Income Tax Department has detected alleged irregularities to the tune of Rs 735 crore after it conducted searches on civil contractors who work for the Brihanmumbai Municipal Corporation (BMC), the CBDT said on Thursday. 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 Brihanmumbai Municipal Corporation (BMC), it said.

The Central Board of Direct Taxes (CBDT) is the policy-making body for the tax department. "There were reports that 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 evidence showing large scale tax evasion and money laundering have been found," it said. So far, it said, detection on account of the above-mentioned issues is to the tune of Rs 735 crore and 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". "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," it said.

In the case of the contractor groups, several instances about the 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.

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