The Income Tax department today said that it had unearthed alleged tax evasion and undisclosed income of Rs 195 crore in its first-ever major action against fish processing businesses in coastal Karnataka.
Making details of the recent operation public, the department also said that it had detected the role of a Chinese firm, in some instances, in "paying commission" to local middlemen, outside India.
This was being routed through hawala channels to countries such as Dubai, Oman and Mauritius, and nations in the Middle East and Africa, it said.
It said 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, till now, has seized "unaccounted" cash to the tune of Rs 88 lakh as part of these operations that were launched on February 8 by involving over 150 sleuths from its various offices in Bengaluru,Mysuru, Hubli, Belgaum and Panaji.
"The searches also resulted in unearthing of nearly Rs 195 crore undisclosed income so far.
"This (total tax evaded amount) is likely to go up further as the department plans to investigate all related parties and concerns, bank transactions in India and abroad and about investments made in the foreign shores," the department said in a statement.
It did not identify the groups.
The department said that during the searches, it was found that "the processing units are, with the help of agents, showing huge bogus creditors in the name of fishermen.
"It was also found that huge cash was paid to the agents in the name of fishermen, violating the provisions of the Income Tax Act," the department said.
It said that tax sleuths also noticed that "various benami entities were floated in the name of relatives and employees to make unaccounted investments", in alleged violation of the recently enforced Benami Transactions Act.
The searches, it said, also brought forth some of other malpractices like "the lab reports were being managed for the quality report on the fish food".
"The fish oil is adulterated in a few instances with other lower grade oils and the diesel subsidy is misused by procuring the boats on various benami names, as law regulates only one boat eligible per person for such subsidy," the department said in the statement.
It said the processing units were importing fish meal and the same was "re-exported for making false claim of duty draw back."
"The plant and machinery imported was under invoiced, causing loss of customs duty," it said.
The department said that sleuths who were part of the raid operations found these firms were maintaining "posh guest houses to extend hospitality to the persons with whom they deal with".
It was also detected, it said, that many agents and processing units are splitting their income in the name of relatives, employees and fictitious entities, in violation of the tax law.
"It was also noticed that some of the fishermen are under impression that their income is exempt, like agriculture income, which is not correct," it said.
The department, apart from searching the three un- identified groups, also raided the agents who support them in procuring raw fish.
It said the taxman also conducted verification with some of the "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," it said.