Unholy nexus between ARCs and debtors discovered after IT raids: CBDT


The Income Tax Department has discovered an “unholy nexus” between 4 asset reconstruction companies (ARCs) primarily based in Mumbai and borrower teams after they had been raided not too long ago, the CBDT mentioned on Wednesday. The searches had been launched on December 8, and a complete of 60 premises in Mumbai, Ahmedabad, Delhi and few different locations had been coated.

The division seized Rs four crore money and a “massive quantity” of paperwork and digital data, the Central Board of Direct Taxes (CBDT) mentioned in an announcement.

The policy-making physique for the division mentioned it was discovered throughout the raids that the “ARCs had adopted varied unfair and fraudulent commerce practices in buying the non-performing belongings (NPA) from the lender banks”.

“It has been discovered that an unholy nexus existed between the borrower teams and ARCs and within the course of, a maze of shell or dummy considerations have been used,” the assertion claimed with out figuring out the ARCs.

The tax officers discovered that the quantity at which the NPA has been acquired by the ARC was “far much less” than the true worth of the collateral securities overlaying the mentioned asset.

Minimal money payout made out by the ARCs to lender financial institution(s) for buying the careworn belongings have normally been utilizing the funds of the borrower group, it mentioned.

“Such funds have been routed by means of a number of layers of dummy firms managed by the borrower group or by means of hawala channels.

“…the ARCs have been following non-transparent strategies in disposal of belongings that had been acquired by them from the banks,” it mentioned.

The CBDT mentioned it was discovered that “most of the time, the underlying belongings had been re-acquired by the identical borrower group, albeit at a fraction of their actual values”.

“The ARCs are discovered to have hid the income on disposal of the underlying belongings by diverting the precise revenue to their associated considerations, underneath the garb of consultancy receipts or unsecured loans/investments,” it mentioned.

The ARCs, by means of this technique, haven’t solely “evaded” the fee of due taxes but in addition disadvantaged the lender financial institution(s) of their share of precise income, the assertion claimed.

“One of many ARCs was discovered to be sustaining a parallel set of accounts on Tally accounting software program, in a pen drive, recovered from the custody of the trusted staff of the promoter.

“This parallel set of accounts contained money transactions aggregating to greater than Rs 850 crore,” it mentioned.

The division discovered some handwritten diaries containing detailed entries substantiating the deliberate act of layering of transactions by the promoter group and use of a “community of middlemen” for a similar.

“There are additionally evidences of routing of funds by means of offshore buildings to amass the belongings,” it mentioned.

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