At a time when Maharashtra is going through a political crisis, the Income Tax department raided contractors hired by Brihanmumbai Municipal Corporation, a stronghold of Shiv Sena.
In a statement released on Thursday, the I-T department said it raided 37 properties of civil contractors in Mumbai and Surat.
Apparently, irregularities to the tune of Rs. 735 crore was detected in the process
Here's what happened.
The raids were conducted few days ago, revealed I-T
The raids were conducted on November 6, I-T's statement revealed.
"A total of 37 premises were covered under search action and 7 premises were covered under the survey. 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," the statement read.
I-T claimed large scale tax evasion took place
Further, I-T claimed there was enough evidence to show large scale tax evasion happened.
"It has 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, etc," the statement added.
Notably, two contractors who were raided were blacklisted by BMC in 2017.
The accused promoters invested in immovable properties and shares
Explaining how the accused worked, I-T said the promoters allegedly invested in immovable properties and shares of group companies. They siphoned loans they took from banks.
"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 press release said.
The raids could be given political colors
Speaking about this development, a chartered accountant told ET that artificial expenditures aren't only used to reduce taxable income but also to arrange payoffs.
"Only a detailed investigation and tracing the money trail will indicate the ultimate beneficiaries. Since some may give political color to the raid, the I-T department will have to thorough in establishing its point," the official said.