Raids on three leading fish processing units in coastal Karnataka revealed huge tax evasion of Rs 195 crore of undisclosed income and led to seizure of Rs 88 lakh unaccounted cash, a senior tax official said on Monday.
"Raids, searches and surveys of the fishing units resulted in unearthing of Rs 195 crore undisclosed income and seizure of Rs 88 lakh from them so far," Income Tax Department Joint Director G. Ramesh told IANS in Bengaluru.
The official, however, did not give a break-up of the undisclosed income or cash seized from the three units as investigation was underway and incriminatory documents of the last six years were being scrutinised.
"The amounts are likely to go up as our officials plan to investigate all related parties and concerns, their bank transactions in India and overseas and investments made abroad without disclosing them," asserted Ramesh.
According to sources in the intelligence wing of the tax department, the three processing units are Mukkan Seafood Ltd, Janath Fishmeal and Oil Products Ltd and Goan Fresh Marine Export Ltd, located at Mangaluru and Udupi in Dakshina Kannada district, 350-400 km from Bengaluru on the west coast.
"The raids were conducted by 150 officers from Karnataka and Goa since February 8 on 20 premises and surveys in 23 premises of the units spread across six states, including Karnataka, Goa, Maharashtra, Tamil Nadu, Telangana and Andhra Pradesh," reiterated Ramesh.
Premises of some agents which supported the units in procuring the raw fish and other seafood like prawns were also searched, besides that of some end-users of the processed food.
"The raids preceded discreet inquiries for over three months when our officials learnt about the modus operandi of various fish processing units. They also identified the whole chain, from raw fish suppliers to the end-users and swung into action on last Thursday," said Ramesh.
The tax officials also found that the processing units, with the help of their agents, had bogus creditors in the names of fishermen and payment of huge cash to the agents in the names of other fishermen, violating the provisions of the Income Tax Act, 1961.
"Officials also noticed that various benami (anonymous) entities were floated in the names of relatives and employees to make unaccounted investments, in violation of the Benami Property Transaction Act 1988.
"Instances of Customs Act violation came to light during the raids on the units, which were importing fishmeal and the same was re-exported for making false claim of duty drawback.
"Plant and machinery imported were under-invoiced, causing loss of huge customs duty," said Ramesh in a statement.
In other instances, commission was being paid by a unspecified Chinese firm to the Indian middlemen outside India and the same was re-routed through hawala channels to Dubai, Oman, Mauritania and other countries in the Africa and the Gulf region.
"Inspection of seized documents showed that many agents and processing units splitting their income in the names of relatives, employees and fictitious entities in gross violation of the Income Tax Act," added Ramesh.
According to another official, the same or similar modus was followed by many entities and individuals connected with the multi-crore fishing sector.
"We appeal to all such entities and persons to come forward and pay due taxes on their own to avoid raids, seizures, penal action, fine or penalty," said the official.