Income Tax Department's searches in NCR, Haryana & WB reveal large scale under-invoicing of imports

Last updated: 17 October 2021

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The Income Tax Department has conducted extensive search and seizure operations across the NCR, Haryana, and West Bengal targeting an importer of electronics. The investigation uncovered a significant operation involving the under-invoicing and misdeclaration of imported goods, primarily laptops, mobile phones, and parts. This scheme aimed to evade customs duties by declaring lower values or incorrect descriptions of goods, with payments often made through unofficial channels.

The Income Tax Department carried out search and seizure operations on an importer and trader of laptops, mobile phones and peripheral parts. The search operations commenced on 10.10.2021 and were spread across the National Capital Region, Haryana and West Bengal.

During the course of the search, several incriminating documents, diaries and digital evidences have been found which reveal that the group is entrenched into large scale under-invoicing and wrongful declaration of goods imported by it. Large number of evidences indicating unrecorded transactions, unaccounted investment in properties, bogus loans taken, etc. have also been gathered.

The modus operandi involves import of goods in the name of shell entities at under-valued and/or wrongful declaration of description of goods imported, with an intent to evade customs duty. Upon clearance at port(s), such goods have been found to be distributed throughout India by way of out-of-books cash transactions. This aspect has been fortified while searching one of the containers at Kolkata Port, where the bill of lading declared the goods as ‘HDMI cables’ valued at Rs 3.8 lakh. However, on de-sealing and searching the same, it has been revealed that the actual goods imported are high value items like laptops, mobile phones etc which are valued at Rs. 64 crore.

Income Tax Raids Uncover Massive Import Under-Invoicing

The evidences found and seized during the course of the search reveal that the payments for such under-invoiced goods to the foreign consigners have been made through hawala channels. Almost the entire business has been found to be run through such modus-operandi.

Though the value of imports declared at the port of entry by the use of such shell entities in the past 3 years is about Rs. 20 crore, it is estimated that the actual value during this period could be more than Rs. 2000 crore, given the scale of massive under-valuation detected.

The wealth, so generated, has been used for acquisition of high value immovable properties; disguising of cash introduced in the form of bogus rental income and bogus unsecured loans; and deposits in foreign bank accounts.

During the course of the search, unaccounted cash of Rs. 2.75 crore has been seized.

Further investigations are in progress.

FAQ :

The scheme primarily involved the import of laptops, mobile phones, and peripheral parts.

The search operations were spread across the National Capital Region (NCR), Haryana, and West Bengal.

The importer used under-invoicing and wrongful declaration of the description of imported goods, often using shell entities.

While declared imports over the past 3 years were around Rs 20 crore, the estimated actual value could exceed Rs 2000 crore due to massive under-valuation.

Payments to foreign consigners were reportedly made through hawala channels.

Unaccounted cash amounting to Rs 2.75 crore was seized during the search operations.

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Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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