Bengaluru: The Income Tax department, in its most intensive raid of the fish processing businesses in coastal Karnataka, has reportedly unearthed alleged tax evasion and undisclosed income of Rs 195 crore. Making details of the recent operation public, the department also said that it had detected the role of a Chinese firm, in some instances, such as "paying commission" to local middlemen outside India. This was being routed through hawala channels to countries like Dubai, Oman and Mauritius, and nations in the Middle East and Africa. The department has also detected some foreign account holdings and investments after it conducted searches and surveys at a total of 43 premises across five states in the last week in this case.
"The anti-tax evasion action was undertaken against three major groups involved in fish processing business in Mangalore and Udupi regions of Karnataka. The investigation wing of the department based here spearheaded the operation," a senior I-T officer said. The department has far seized "unaccounted" cash to the tune of Rs 88 lakh. The operation, which involved over 150 sleuths from offices in Bengaluru, Mysuru, Hubbali, Belagavi and Panaji, was launched on February 8.
"The searches also resulted in unearthing undisclosed income of some Rs 195 crore so far," said the department in a statement. This amount is likely to go up further with the department planning to investigate "all related parties and concerns, bank transactions in India and abroad and investments made on foreign shores." The groups have not been identified. It was found that the processing units are, through agents, showing huge bogus creditors in the names of fishermen, under which the agents were also paid large sums. Various benami entities were floated to make unaccoutned investments.
Other forms of malpractice were also brought forth, including lab reports on quality being doctored, fish oil adulterated with lower grade substances and misuse of the diesel subsidy.
The fishermen, found the department, are under the mistaken impression that their income is exempt, much like that of agriculture. The department also raided the agents who support them in procuring raw fish and conducted verifications with "end users of the processed food."
A similar modus operandi is believed to be followed by many entities and individuals connected with the fishing industry. "All such persons may like to come forward and pay due taxes on their own," said the IT Department statement.