The income tax department has collected evidence showing that Hero MotoCorp made fake purchases, made huge unaccounted for out-of-pocket expenses and obtained accommodation imports totaling more than Rs 1,000 crore. The department has also found more than Rs 100-crore cash transactions for a farm in Chhattarpur, Delhi, according to reports. This is what is known so far:
Search and Seizure Operations
From March 23-26, the Division conducted search and seizures on several Hero Motocorp buildings as part of a tax evasion investigation. The raids were also carried out on the offices and residences of the chairman and general manager of the company Pawan Munjal.
Company statement
The company called the raids by the tax authorities a “routine investigation”. “We have been informed that this is a routine investigation, which is not unusual for the end of the fiscal year,” Hero MotoCorp said in a March statement. 23.
In another statement, it said the company is a “law-abiding company, with robust internal financial controls” and that its “financial statements are duly audited.”
What was the result of the raids?
Officials looked at financial documents and other business dealings from the country’s largest two-wheeled automaker and its promoters, the reports said. The searches, which seized a large amount of evidence in the form of paper documents and digital data, covered more than 40 buildings across various locations in Delhi-NCR.
Farm in Delhi-NCR
Munjal bought a farm in Chhattarpur where the market price of the farm in Delhi was manipulated to save tax. And black money was used to pay more than Rs 100 crore in cash, which is a violation of Section 269 SS of the IT Act, an ANI report citing sources said.
Under the provisions of the Income Tax Act, accepting an amount of Rs 20,000 or more in cash from the buyer while dealing in real estate will incur a penalty of 100 percent.
What does CBDT say?
The Central Board of Direct Taxation said it issued a statement confirming the raids on the group, along with a charter airline company and a Delhi-NCR real estate group, which occupies more than 35 buildings. “Incriminating documents and digital evidence have been found and seized, suggesting that expenses allegedly declared for business purposes are not fully supported by evidence,” it said.
Expenses totaling more than Rs 800 crore have been booked under the guise of purchasing services from a specific event management entity, it said, adding that the company has transferred funds through stratification.
The tax authority’s policy-making body said such claims for non-business purposes are inadmissible expenses under the provisions of the Income Tax Act.
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